Competition

I was fortunate to see and hear Bill Simon, President and CEO of retail behemoth Walmart, deliver a keynote speech at the NRF Big Show 2013 in New York earlier this week.

While the majority of representatives in the 27,000 attending this conference were big business connected, small business numbers were significant. For Simon, almost every other retailer is small given the size of Walmart.

I found Simon’s presentation compelling. It made me question the time and energy we in small business spend worrying about, talking about and complaining about big business. Walmart is serving its shareholders. To do that it needs to make more money. The key ways it can do that is to get bigger, to buy better and to be more loved by shoppers. If we in small business want to grow we have to do the same things.

Simon announced some initiatives, initiatives we could announce. The size of is company got his announcements noticed. We in small business and in channels like newsagencies need to do a better job at getting noticed for good initiatives. This is our biggest challenge – getting known and trusted for the value we bring to our communities. What Simon announced was not all that great but it got excellent press the next day because it was an announcement from Walmart. We need to be perceived y journalists, editors and publishers to be as important.

Here are some unedited notes I took (with the wonderful Evernote on my iPad FYI) during the presentation:

There is a national paralysis waiting for someone to do something.  i.e. private sector waiting for the government to report on how many jobs the private sector has created.

Can we create a bigger pie, a bigger pie from which we can attract sales.  This starts with us reaching outside what we are in business.

Three initiatives from Walmart.

1. Support good retail jobs. Stand up for the jobs. Bring structure to the role of the jobs. To create a reason, a strength and happiness.  This is where Tower can play a role and fit through our training program.
2. Supporting US veterans.  Identifying that veterans can be a terrific group to tap into to drive country and business prosperity. Calls on retailers to hire veterans. Walmart offering a job to any honourably discharged veteran within a year of their discharge.
3. Supporting American manufacturing.  Items made, sourced and grown in the US account for around two thirds of their products. Labour costs in Asia are rising, transport costs high. Tipping points indicate that bringing more jobs home can work.  Walmart to buy $50B more US products over next ten years.

Got all veterans in the room to stand. Loud applause.

The tyranny of average. Average is not good enough. Average is below average. We have to act with passion, excitement and convistion. We have to do good. This is what differentiates us. This is what differentiates success.

It’s not about big or small. It’s about having a vision for your business and pursuing this to success.

Committed to working hard every day to get better and be more successful. This is a big business versus small business lesson – big business is not standing still.

This was a compelling presentation with plenty of takeaways even for this small business person. The breakout was Simon’s passion for business and retail.

The opening of Australia’s first Costco store in Melbourne has been big news over the last few days.  It is the first time we have seen this US style of retailing here in Australia on this scale.

While our newsagencies are built on customer service and our local community connections, Costco is unashamedly about price.

For us to understand this new model in the context of what we try and do in our newsagencies we should make a field trip and see Costco for ourselves. This is essential if we claim that our prices are better than others in any major product category.

The arrival of Costco is good for retail in Australia.  It forces us to look at ourselves and to focus attention on our points of difference and ensure that consumers value these.  They certainly appear to value the Costco price pitch.

The Federal Government yesterday announced that small retailers, those with stores under 1,000 square metres, will be exempt from mandatory unit pricing.  This will be of interest to newsagents selling grocery products, those covered by the regulations.

While this looks like a victory for small business, it, in my view, widens the gulf between them and big retailers. 

Unit pricing is not that difficult since the work is done by the software and the data included on shelf talkers and other labels produced.  I certainly plan on using unit pricing and eliminating an opportunity for a customer to prefer a bigger competitor over one of my businesses.

The Australian has more on the Government’s announcement.

A new Dick Smith store opened opposite our newsXpress Forest Hill store (next to Australia Post) on Monday.  We are thrilled to have a national retail brand open so close to us.  With Australia Post, the other national brand tenant at our end, closed at key times (evenings, Saturday afternoon and Sunday) it will be good to have someone else drawing customers to our end of the centre.

Dick Smith features ink, an important category for us.  While we are comfortable with or competitive position on price, they will keep us on our toes in this category.  I suspect they will drive a response from our Australia Post store on ink prices and positioning.

On the Dick Smith store itself, it is an excellent design – very open, bright, welcoming and nicely zoned.  Each department is clearly identified.  The Dick Smith brand frames the entire offer inside and out.

It was good to see the ACCC block the takeover of a supermarket in Queanbeyan this week.  Independent retailers are crucial to offering consumers competition on price, service and range.