Published: September 07, 2008 02:36 am            

‘There’s a place for the little guy’

Superior product, service focuses for small businesses

FAIRMONT — Where small businesses find their competitive advantage is completely different from the big box stores, said Dr. Jack Kirby, associate professor at the Fairmont State University School of Business.

Mom-and-pop stores have the ability to give personalized customer service, he said. Small businesses need to develop some kind of niche or focus strategy that can shield them from the large businesses. A niche can be a superior product or service, or items not typically offered by the large chain stores.

“Wal-Mart can’t provide those kinds of services,” Kirby said. “Those are simply the kinds of services that the big-box stores have a difficult time offering.”

He doesn’t believe that large retailers have a dramatic impact on the failure or success rate of small business, and he sees the need for both types of stores.

“I think they operate with two different dimensions (in one place),” Kirby said.

Mom-and-pop retailers focus on specialty products and personalized customer service, and there’s a big market for small business, he said.

When a Wal-Mart store comes into a small community, two groups generally form, Kirby said. One faction is happy because Wal-Mart brings jobs, while the small-business owners believe that their stores are going to collapse.

“If you focus on what you’re really good at, you can stand in front of the big businesses,” he said. “You can kind of insulate yourself from the big-box stores by coming up with one of those competitive advantages.”

Kirby was director of the Small Business Development Center in Fairmont for four years. When Grafton got a Wal-Mart store, he heard quite a bit of concern from small-business owners.

“We tried to work very hard with the small businesses in Grafton to encourage them and give them some assistance and some education on how to compete with Wal-Mart coming in,” he said. “We actually brought in a retail consultant out of Florida that presented a workshop on how small businesses can compete.”

In West Virginia, Wal-Mart works with more than 400 local companies that provide products for its shelves and services to keep its stores running, said E.R. Anderson, regional media director for Wal-Mart.

“We really strive to be a store of the community, and I think Wal-Mart can be a friend to small and medium-sized businesses,” she said.

Anderson said customers want to see local products from their community on Wal-Mart’s shelves. Shoppers are looking for items that are familiar to them.

“We really do want to source things locally,” she said. “We are really trying to reach out to local farmers.”

Anderson said Wal-Mart frequently works with business partners, such as local mom-and-pops, to get products in its stores.

“The fact of the matter is our broader economy is very dynamic,” she said. “It’s always changing.”

Entrepreneurs are constantly thinking of new ideas and in turn develop new jobs, Anderson said. Wal-Mart oftentimes creates new jobs by seeking out suppliers.

Wal-Mart’s 400 suppliers in West Virginia employ more than 15,000 workers, she said. The state has 35 Wal-Mart supercenters, and Wal-Mart and Sam’s Club stores have just over 13,000 employees in West Virginia.

“The first reason that people shop at Wal-Mart is for the good prices and because you can get most everything ... in one place,” Anderson said. “A one-stop shop really is helpful.”

“Wal-Mart does seek to be a friend of small business.”

Paul Drass, instructor at the Marshall University Lewis College of Business, has worked in big business across seven or eight industries and has had a couple different small businesses himself. He also provided small-business consulting in Maryland before moving to West Virginia.

Wal-Mart has existed long enough for businesses to be aware and realize that there’s always potential for one of these stores to move in, he said.

“There’s always so much written about Wal-Mart, and it’s a company that people love to hate,” Drass said. “They haven’t become the No. 1 corporation in the world (by doing things wrong).”

Americans live in a very consumption-oriented society today. Wal-Mart allows people to stretch their dollars, and many find that Wal-Mart adds to the value of their lives, he said.

“If it weren’t for (consumers) voting with their dollars, Wal-Mart wouldn’t exist,” Drass said, “so they must be providing a valuable service to the community or people wouldn’t go there to shop.”

However, there’s room for various niches that aren’t filled by the big-box stores. He said Wal-Mart has changed the landscape of business communities and has forced businesses to be more efficient — “sort of a survival of the fittest.”

“Small businesses need to be very focused,” Drass said. “The ideal way for the small business to not only survive but also thrive is to focus.”

Consumers have a desire for the individualist things that small businesses offer. Because mom-and-pop stores tend to carry unique, unusual and eclectic products, they’re often able to command much higher prices, Drass said.

He said sometimes when small businesses are struggling to pay bills, they have a tendency to take on any opportunity that looks like it might produce revenue. Then instead of getting a special product, they’re left with something not so unique.

“The big things that hurt small business, in my opinion, are lack of clear product and brand identity,” Drass said.

Sid Absher, chair of the Upper Mon Valley Service Corps of Retired Executives (SCORE) Chapter 537, said small businesses can compete against the big-box stores.

SCORE is made up of volunteers — mostly retired people — who provide free advice to persons who want to start a business or are already in business. The nonprofit organization, which the Small Business Administration sponsors, holds workshops several times a year on various business-related topics.

“They’re successful for a reason,” Absher said of the big-box stores. “They provide a lot of products. Sometimes the small guy just can’t afford to stock that much material.”

Large retailers offer price, a variety of items, and one-stop shopping. Small businesses probably can’t compete with the inventory of these big stores, but “definitely you can beat them on service if you try,” he said.

To succeed, mom-and-pops have to offer more service, be able to answer questions, and provide assistance. Absher said people are looking for businesses that are knowledgeable and can steer them in the right direction, and they’ll pay more money to get those services.

Small businesses must get in a niche to differentiate themselves from the box stores, he said.

“There’s a place for the little guy,” Absher said. “You’ve just got to work hard and work smart and do something that they can’t do. That’s the key, I think.”

E-mail Jessica Legge at jlegge@timeswv.com.

        

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