Wal-Mart has gained a reputation for driving out mom-and-pop stores,
the city of Charlottesville, Va. represents an example of how homegrown
stores and the retail giant can coexist.
discount store arrived in the historic town of 40,000 people more
than 10 years ago.
vice president of the Charlottesville Chamber of Commerce, said
like other college towns, Charlottesville -- home to the University
of Virginia Cavaliers -- has a variety of customers from those
seeking upscale stores to those looking for basic retail items.
And the key
for "smaller stores to live in a Wal-Mart world," according
to CATO Institute Chairman William Niskanen, is to specialize
in products and services that Wal-Mart or other large retailers
do not provide.
Such is the
case for some of the existing businesses in Charlottesville. Although
some of its merchandise is similar to Wal-Mart's, the JCPenney
department store was largely unaffected by
the arrival of Wal-Mart, said JCPenney store manager Karen Rogers.
The two stores
draw "totally separate" customers, Rogers explained.
Wal-Mart customers tend to be one-stop shoppers, whereas customers
of JCPenney, which is located in a shopping center, often plan
to spend the afternoon going from store to store, she observed.
expect more customer service and are willing to pay for it,"
Hurka, owner of The CatHouse, a boutique of jewelry, clothing
and home decor in a feline motif, said her specialty store doesn't
often overlap with Wal-Mart's stock, and she works to keep it
end up getting the same thing -- which I try not to do -- people
will buy it there," she said. "Some things they sell
at retail are less than what we pay wholesale."
So Hurka has
adopted a tactic: "If I hear someone say, 'I bought that
at Wal-Mart,' I don't reorder it."
store manager Robert Stokes said his gourmet store, Food of All
Nations, does not compete with Wal-Mart's staple groceries, and
the clientele are different as well. "I deal with the upper
crust," he said.
A call to
a direct competitor, Charlottesville's K-Mart, was referred to
the company's national headquarters, which did not return the
of Wal-Mart's low prices
said Wal-Mart is able to sell things so cheaply basically because
of its "economies of scale" purchasing. In other words,
since Wal-Mart buys such a large quantity of items, it can purchase
them at a lower rate and then sell them at lower prices.
retailers tried to match Wal-Mart's purchasing power, rather than
individually dealing with wholesalers, they could get some of
the advantages of Wal-Mart's economies of purchasing scale, Niskanen
professor at the University of California, Berkeley, who specializes
in labor issues, said in addition to economies of scale, Wal-Mart
leads the pack in efficiency in how it warehouses and inventories
products, and employs some hardball tactics when dealing with
make or break a product based on whether it makes it to Wal-Mart's
shelves, said Shaiken.
are disgruntled suppliers in any industry but with Wal-Mart, no
one wants to go on the record" for fear of losing its Wal-Mart
contracts, he said.
only way (for smaller businesses) to survive is providing niche
goods or services. If it's a generic product you're selling, [Wal-Mart]
will undercut your prices," Shaiken added.
said in general Wal-Mart's arrival is "disruptive to small
businesses and can change the whole fabric and tenor of a community,"
bringing in traffic, and while it brings in jobs as well, they
are low paying with low benefits.
Wal-Mart store manager Shannon Moon said a Wal-Mart opening in
a community can also improve the surrounding economy.
when he opened a Wal-Mart in the small town of Oakland, Md., "the
community was fairly skeptical, especially the business owners."
The town was not a destination point, he continued, but after
Wal-Mart arrived, it provided jobs for hundreds of workers who
would normally have commuted to other places.
surrounding restaurants and specialty shops that were not direct
competitors saw increased sales, Moon said, adding that he did
not know how direct competitors fared.
Back in Charlottesville,
Wal-Mart may soon see a challenge of its own. Banner said he just
received word that Target, a slightly upper-end large retailer,
is coming to town.
to shop where it is convenient and prices are affordable, Banner
said. "Will [Target] challenge Wal-Mart and K-Mart? Sure."
But competition among retailers is a good thing and the customer
will benefit, he said.
By Larisa Epatko, Online NewsHour