Small Business Lesson – What Does Wal-Mart Know That We Do not?
Today I heard that Wal-Mart is expanding its number of stores in the USA by about 150. That means a ton of new jobs and stores. So what does Wal-Mart know that we do not? Obviously with the economic downturn, people are turning more and more so towards the stores that sell for the lowest prices. This represents quite a change from 18 months ago when price was no issue for the buying public. People were spending without any real concern about price. Today the consumer has become very price sensitive. So Wal-Mart is doing better and better, with their low cost model.
Wal-Mart's expansion plans have clearly had a hiccup through this recession. They obviously have an understanding of the economy that we should be taking note of. Perhaps they see this recession as being really cut and drawn out. Under these circumstances the public will still demand low priced products.
Alternatively Wal-Mart is planning for the future by expanding now. They will be ready when the recession has turned around and the public have started buying again.
So in either scenario price sensitivity seems to be the new norm. One thing that seems to be a new reality is that recession or not the buying public will not be spending as freely in the foreseeable future as they did just a short while ago. Wal-Mart looks to have really understood this change in the public's buying patterns.
This means that retailers and service providers had better be more competitive on price than they have been in the last decade or more.
To survive in business today, pricing will become even more cutthroat, margins even smaller and competition even fiercer.
So if you have not already started doing so, start negotiating with your suppliers for the best deals that you can possibly get. Start thinking of new and creative ways that are perceived as adding value to your products and services to entice new buyers. People are doing price comparisons on their purchases. Give them something that makes price only one component of their purchase decision, like offering better service, speedier delivery, more flexibility on terms, and longer warranties.
Put yourself in your customer's shoes and see this new reality through their eyes. What would bring you to buy your products from your business today?