March 23, 2009
Prior research into the impact that Wal-Marts entry has on
incumbent retailers has focused mainly on the incumbent retailers sales and
other outcome measures. Little is known, however, about how incumbent retailers
adapt their marketing mix activities in reaction to the Wal-Mart
Costco has a large
line of private label products. People who do not want to buy name-brand
products and pay the premiums can buy similar products created for Costco and
buy them at a substantial discount. The trend is moving to Wal-Mart (WMT) and,
because of its size, the move could cost premium product producers a lot of
Via Independent Street, I see a new study on how Wal-Mart affects
small retailers. The study found that when Wal-Mart comes into town, local mass
merchandisers, supermarkets and drug stores all see significant sales declines.
For supermarkets, cutting prices only "mitigates" the harm, and doesn't work at
all for mass merchandisers and drug stores, the study found.
If Wal-Mart opens a store near yours, don't try to copy it by lowering your
prices. It won't help, and it may hurt, according to a new study.