TRR photo by David Hulse Presenter Heather R. Martin of Do It Best Corporation says independent business should use “big-box” store tactics to compete with them. (Click for larger image)

Preparing for box avalanche

By DAVID HULSE

MONTICELLO, NY — They’re big, smart and they’re coming and if you want to stay in business with them around, you had better be as smart as they are… was the word on “big box” stores given to the Sullivan County Chamber of Commerce last week.

Heather Martin carried the message in a four hour, May 29 chamber workshop. Martin is the communications director of an Indiana home and building supply cooperative, Do It Best Corporation, which started spreading the word on tactics after doing a year-long research project on its “big box” competitors, like Home Depot, Lowes, Wal Mart, and Staples.

She told about 20 area business people that they could compete and succeed, but she also painted a picture of stiff competition. The big boxes did $555 billion in gross sales last year, and they’re rapidly expanding into smaller markets of 20,000 people or less.

How do you compete with a Wal Mart store that stocks 80,000 to 100,000 items in the majority of its stores and boasts 100 million customers every day?

In general Martin said that you study what works for them, use it, and beat them in things that their size often doesn’t allow them to do.

The big boxes aim for customers to help themselves as much as possible. They use many illustrated marketing devices on their shelves such as huge price and department signs to cut down the number of questions that will keep their staff from their principal job of getting inventory on the shelves, she said.

Independents can use many of the same devices, but Martin said experienced employees are often the key to competition; employees who know how things work and the differences in quality between brands and price range.

This, Martin said, is one reason the big boxes often try to recruit employees from independent stores when they move into new areas. Home Depot, she said, customarily hires twice as many employees as they need for a new store, and then pares the payroll after six months, often leaving former employees of competing stores unemployed.

The big boxes price-shop existing stores in a new area to find how low their prices need to be to compete and budget for “loss leader” items that are sold at a loss to draw business. Highly advertised, competitively priced brand items are kept close to cost while so-called “blind” items, are often priced much higher.

You may, for example, want to refurbish your bathroom and know what the competing paint stores are charging, for comparison. But the customer is less likely to know what prices are competitive for “blind” items such as plumbing fixtures and fasteners.

Competitive independent retailers can compete by retaining good employees, carefully monitoring which inventory moves and which doesn’t, using technology, advertising and loss leaders wisely. Cheaper store brands the big boxes sell are also available for independent retailers, and other wholesalers are often willing to offer concessions to independents who do not demand the level of services from them that big box stores do.

Martin said that local businesses can expect to be hurt in the first year after any new big box opens locally, but the tide often turns.

“People are inherently curious. They will explore, but don’t overreact. They will come back again and your goal is to make them comfortable.”

Using the “what doesn’t kill you makes you stronger” argument, Martin said that the big boxes will make you better at your own business.

“You can do it, but you have to plan for it. Most people say they wish they had started earlier,” Martin said.