The Secret Any Small Retailer Can Use to Defeat Walmart


There’s been a resurgence of talk lately about how Walmart is killing small retailers, and that it’s unfair for Walmart to charge prices that are putting retailers out of business.

Assuming that Walmart’s on the up-and-up and not selling below their cost, I couldn’t disagree more.


Because I know the secret any retailer can use to defeat Walmart: supply and demand.

After all, it’s not Walmart that’s forcing people to shop there – people shop there because Walmart offers products they want at a price they like; in other words, Walmart is providing supply for a demand for low-priced goods.  And while that supply-demand approach gives Walmart a competitive advantage, it can work just as well for the small retailer.

The reason being that price is not the only factor that’s important to people as they decide where to shop.  There are many other aspects that people value and are willing to pay higher prices for.  I know this because there are some things I’m willing to pay more for, due to:

  • A more enjoyable shopping environment – I prefer to buy my groceries from the higher-priced  Loblaws than from its lowed-priced sister company No Frills because the physical store environment, layout and design is nicer (to me) than at No Fills.  It’s not about selection, because they both offer about 90% of the same products (including the all-important private label brand President’s Choice) being owned by the same company, but No Fills (as the name suggests) offers those products at lower prices with a similarly no-frills approach to the store design.
  • Better customer service – I prefer to shop at my small, local hardware store, and pay more, because the customer service is better than shopping at the huge Canadian Tire.
  • Product-specific characteristics I value – I’ll buy a cut of beef from a boutique butcher (and pay more) instead of a larger grocery store (where I’ll pay less) because I value the organic, grass-fed-ness of the beef, and the expertise and access to the butcher.

These are all examples where I’m willing to pay more because of factors that go beyond price.  So how can small retailers apply this to compete against Walmart?  Again, it comes down to supply and demand, and there are a few ways to figure it out:

Supply then demand: stock products that Walmart doesn’t offer, then find the demand (i.e. a different clientele) who wants those products using marketing, promotions, and word of mouth.  It’s not easy, especially given Walmart’s selection, but easier than going out of business.

Demand then supply: better understand what your existing clients need/demand/value that’s related to your existing products and store, and then supply it to them.  As already mentioned, it could be through better customer service or through a different shopping environment.  It could even be by aligning yourself with a greater purpose.

Regardless of whether you change your product selection and find different clients, or keep your products, and get to know your clientele better in order to supply their other demands, either option provides smaller retailers with a means of competing (i.e., developing their BIG Diff) that has little to do with price and everything to do with growing a profitable business.