Speaker tells businesses how to survive

Individualized customer service and pushing a stores value can help Wadena compete with Wal-Mart, an Extension educator told business people on Monday night.

Ryan Pesch, a University of Minnesota Extension regional educator, spoke to about 40 people gathered in Wadena at a meeting sponsored by Partners for a Healthy Wadena Region.

He suggested business owners develop strategies that keep customers, even when faced with competition from big-box stores.

Wal-Mart plans to build a 100,000-square-foot Supercenter in the area behind the Pamida area. The store is expected to open in spring 2007.

Pesch asked everyone to talk with others at the meeting to spot trends. The group said that people travel to shop at big-box stores in surrounding communities including Alexandria, St. Cloud, Brainerd and Fergus Falls.

Pesch said that shoppers traveling out of town is a typical dilemma for towns like Wadena.

City Councilwoman Jeanette Baymler said people had the perception that Wadena stores dont carry a variety. But, she said, the merchandise is often there or can be ordered if customers ask. In addition, she said, Wadena stores offer services big box stores dont.

I dont see Best Buy driving to Wadena to service your appliance or whatever you bought there, she said.

Pesch said changing demographics also have affected retail sales, big-box stores have had a large impact. He quoted Ken Stone, an authority on Wal-Marts effect, who identified big box retailers as the single largest threat to the survival of small-town retailers.

Pesch showed a graph detailing the effect of Wal-Mart over 10 years. He said towns with Wal-Mart increased sales overall by 20 percent, but he didnt have figures breaking down how much of that increase was Wal-Mart sales.

Towns without Wal-Mart, however, Pesch said, lost sales. After 10 years, however, the sales differences leveled out, he said. Often, however, another Wal-Mart had been built nearby.

Mondays audience questioned the studys validity because it ended in 1997 and did not include Supercenters.

Pesch said that University of Minnesota research also included 2004 interviews of 27 successful storeowners in Cambridge, Grand Rapids and Montevideo. Those owners pinpointed marketing, merchandising, customer service and business operations as strategies.

Pesch said merchants must know the trade area and demographics.

He said customers are less loyal. Merchants need to develop customers trust, Pesch said.

This is where an individual retailer can really get a foothold, he said.

To better compete, Pesch said merchants need to determine the value of their stores the reason people should shop there instead of somewhere else.

He suggested that business owners focus on a few price-sensitive items that most customers know the price of, such as 60-watt light bulbs. Pricing on these items gives the impression that everything in the store is cheaper than competitors merchandise, he said.

Other suggestions included:

" Identify competitive advantage and advertise that advantage. Feature price-sensitive, seasonal and new items in ads.

" To offer better customer service, provide employees with knowledge training on store and product knowledge.

" Shop the competitors stores to find out their strategies and pricing.

How can you find your niche if you dont fully know what youre competing against? Pesch asked.

Merchants at Mondays meeting said they were worried that Wal-Mart will drive out businesses, then raise prices.

Pesch said the Supercenter would have an impact. He also said customers are already leaving town and that businesses must develop strategies.

How much has already been lost and what hope do you have of retaining those customers who are already leaving the community, he said.