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.


Learn How Curiosity Can “King” the Cat

Amanada Lang, co-host of CBC’s The Lang & O’Leary Exchange and senior business correspondent for CBC News, has a unique perspective on competitive advantage.

Over the years of her business reporting and interviewing, she’s come to believe that curiosity is a key source of individual and organizational competitive advantage.  In her recent book The Power of Why, she outlines why curiosity is so important to success and how you can leverage it in your personal, and business, life to achieve your goals.

You can read my full review of the book at PROFIT Magazine.


The Difference Difference Can Make


As you can tell, I believe that understanding and communicating your BIG Diff is one of the most important things an organization can do.

In my last post, I talked about how Toyota is able to align with a greater purpose – something that’s only distantly related to cars – to differentiate itself.  This is a real feat considering that many people would consider cars in Toyota’s competitive set (e.g. Honda, Kia, Hyundai, etc.) as overall being “generic” or “commoditized”, i.e. there’s little to tell them apart (that wouldn’t apply to Toyota’s Lexus brand though).

So here’s an example from another “commoditized” category – beer – that should act as a warning of what NOT to do.  This TV ad is filled with generic scenes (golf, the beach, a patio) and talks about generic things that really mean nothing (“you’re a complicated diverse creature”).  You could substitute Michelob beer with a host of other low-calorie beers and you wouldn’t need to change a thing about the ad, in either look or content.  The only reason I noticed it at all was  because my business background gives me a different POV on ads.  At least Coors Light creates a somewhat differentiated personality for itself.

So how do you avoid becoming generic? Once again, it comes down to defining your BIG Diff first.  It could be found in the product itself (as Lululemon or Canada Goose do), the personality (as Coors does), in a higher purpose (as Toyota does), or the experience (as Porter Airlines does), but you need that defining idea first before anything else. Once that’s done, you then have a clear understanding of what makes your product/service different from the competition, and you can execute your marketing to focus on those things to build your business.

That’s the difference your difference can make.

Tying your BIG Diff to a greater purpose


Toyota makes cars.  Good cars.

That’s not news and it’s not a lot different from what Honda and other quality car makers do.

But once you’ve watched this video, I bet you’ll feel differently about Toyota than you do about Honda (and the rest).  It has little to do with the cars themselves and it may even influence your next car purchase.

So why is that?  What does this video do that helps Toyota differentiate themselves from the competition in a way that their existing and prospective customers will value?

As the title of this post suggests, it comes down to associating Toyota’s “BIG Diff” to a greater purpose.  One of Toyota’s “BIG Diff’s” is its approach to making cars (aka lean manufacturing).  That, in itself, offers consumers a great reason to buy Toyota because it ensures high quality cars at low cost.  But when they apply that same manufacturing expertise to helping those in need – a greater purpose beyond cars – it elevates the company in the mind of the market to a different place, a more emotional place.  And considering how important emotions are in the buying process (research shows it’s responsible for at least 50% of any decision), this ability to create an emotional connection is critical.  Now, Toyota can be associated with not just great cars (rational) but also with enabling a better community, society and even world, and its this emotional link that is differentiating and valuable to the market.

The question of how to do this is complicated and warrants its own post.  But, at the simplest level, you can ask yourself how the net benefits of your product/service can be expanded to positively influence your community or society.  For example, if you run a hair salon, you could tie your company to the greater purpose of helping people improve their confidence, instead of just focusing on cutting and styling hair.

It may at first seem a small thing but I’d argue that it’s a critical difference in an economy where there are so many options for your clients and prospects to choose from, and one that can help you develop your BIG Diff to grow more profitable.