Wal-Mart Worries: What Happens When a Giant Comes To Town?
Jul. 06, 1992
GLOVERSVILLE, N.Y. (AP) _ Townspeople banded together when told that a giant was headed their way. Some were afraid. Others vowed to fight.
But after hearing tales of its strength, one thing was clear: No David could slay this Goliath, so they'd better make room.
Wal-Mart was coming.
The nation's No. 1 retailer is building a store outside the small city of Gloversville this summer in its continuing crusade into the Northeast. The empire built by the late Sam Walton, with $44 billion in sales last year, encompasses close to 2,000 stores in 43 states.
Announcement of any new business would be big news for this economically depressed area, which reigned in the 1940s as the glove-making capital of the world until manufacturing shifted overseas.
But the announcement from the Bentonville, Ark.-based retailer was different.
Wal-Mart has a pro-consumer, pro-American image and calls its employees ''associates.'' At the same time, it is known for under-pricing and outselling rivals - even drumming competitors out of business.
''We've never had to deal with anything like a Wal-Mart before,'' said Lisa DiCaprio, who is on a one-year assignment to help the community prepare for Wal-Mart.
''People were nervous and concerned because they had heard about Wal-Mart's reputation as the merchant of death,'' she said. ''They were concerned that as soon as Wal-Mart opened their door, that every other store would go under.''
DiCaprio is a good example of how seriously this community about 45 miles northwest of Albany is taking Wal-Mart. Telecommunications giant GTE Corp.'s New York division is paying her to help local businesses survive Wal-Mart competition to protect the local economy and its customer base.
Business leaders sought help from a university professor who lectures around the country about Wal-Mart towns.
Merchants chartered a bus to visit another Wal-Mart and merchant groups were revived. The downtowns of Gloversville and nearby Johnstown were spruced up with paint and flowers. Promotional events were held.
Local newspaper headlines carried word of each Wal-Mart development.
DiCaprio traveled to Viroqua, Wis., another small community, to learn how businesses flourished after Wal-Mart opened there.
All this may sound excessive, but not to Barbara Vasilik, who has fought the Wal-Mart giant twice before - and lost. Vasilik saw the demise of two downtown shopping areas where J.C. Penney's stores she managed closed after Wal-Mart opened.
Though the downtown economies of Weston, W.Va., and Meadville, Pa., were already in bad shape, she said Wal-Mart's arrival drove the final nails in the coffin. She now manages a Penney's store about 40 miles east of Buffalo in Batavia where Wal-Mart is planning yet another store.
How merchants fare once a Wal-Mart opens depends on how they react, according to Kenneth E. Stone, the Iowa State University professor sought for his Wal-Mart expertise.
''Good operators find a niche and work around Wal-Mart,'' Stone said.
Studies show that Wal-Marts increase total sales in an area by encouraging residents to shop locally and by drawing customers from outlying areas.
But at the same time, Wal-Mart drains sales dollars from existing retailers - particularly those that sell the same kinds of general merchandise, Stone said.
Wal-Mart also brings jobs. It will add about 180 positions in Gloversville, which has an unemployment rate of more than 10 percent.
Merchants need to figure out how to get the increased Wal-Mart traffic to their store, said Stone. He recommends that merchants sell items that Wal-Mart doesn't, or stock different varieties. Chances are a small retailer can't match Wal-Mart's prices, he said.
Merchants need to stay open in evenings, learn what items to mark up and which ones to mark down, offer topnotch service, customer satisfaction, free delivery and have liberal return policies, Stone said.
Ed Jutras, who owns Ed's True Value Hardware in Johnstown, took the bus trip to see the Wal-Mart store and left feeling that the competition was overstated.
Prices were competitive, but not unmatchable, he said.
''I'm not saying that I won't have to make some changes,'' said Jutras, who is moving his store in August from downtown to the strip of highway that leads to Wal-Mart.
Wal-Mart maintains it is a friend - not a foe.
Company representatives will even travel to communities to speak with concerned merchants, if asked, said spokeswoman Sandy Brummett.
''We want to come together as one and help the community,'' she said.
Now that the Gloversville and Johnstown merchants have learned more about Wal-Mart, they are much more optimistic about its arrival, DiCaprio said.
The businesses that will fail, she said, are the ones that don't want to compete. But she cautioned Gloversville-area merchants not to underestimate the store Sam Walton created.
Vasilik advised that stores shouldn't ''try to beat him at his own game.''
''You have to work around him because there is no way, there is just no way you can go up against him,'' she said.