"We had to completely change our business," he says. "Our bread-and-butter became rent-to-own electronics and furniture."
Small-business owners may celebrate when a giant retailer like the local Wal-Mart decides to move away. But many small shops may be more dependent on the big box than they realize. How do they cope when the giant leaves town?
Twenty years ago, Wal-Mart opened a store in Bunkie, La., a small farming community whose main claim to fame is being the birthplace of renowned jazz drummer Zutty Singleton. In the view of Bunkie entrepreneur Craig Pujol, that’s fitting–he says the gigantic retailer’s primary effect on Bunkie was to pound the small-business community as hard as Zutty wailed on his snare drum. “They ran 20 mostly locally owned businesses out of town,” Pujol says.
Pujol’s own 50-year-old family-run business, a Western Auto franchise (a retail shop that sells everything from tires and motor oil to garden equipment and sporting goods) had to adapt to survive Wal-Mart’s arrival.
“We had to completely change our business,” he says. “Our bread-and-butter became rent-to-own electronics and furniture.”
The median household income in Bunkie is a mere $14,745. “In rent-to-own, we take a chance on our customers, and they get the merchandise they need from us,” he says. “A lot of people here don’t have enough money or credit,” to shop for furniture and electronics at Wal-Mart.
These days, however, even people with cash in hand can’t shop at the Bunkie Wal-Mart. Last year, Wal-Mart closed the 44,000-square-foot store and opened a larger supercenter 20 miles away. Bunkie mayor Gerard Moreau aggressively lobbied the retailer to stay. The community, which sits on some of the most fertile land in the Louisiana Bayou, had leveraged the traffic generated by Wal-Mart to build a sizable commerce center. Bunkie has four automobile dealerships, two tractor dealerships, banks, drug stores and more–a lot for a city of 5,000 people.
“I organized a petition to keep the store open and collected 5,000 signatures,” says Moreau, whose petition surprisingly included the names of several small-business owners. “I put political pressure on them from everyone in the state, from the governor on down. George Bush was about the only one I didn’t have call them. But they [Wal-Mart] didn’t give a flip.”
And so Bunkie joined the numerous cities throughout the United States with a “dark” Wal-Mart that has been closed when the company moved to a larger space. Wal-Mart critic and activist Al Norman pegs the number of dark stores at around 380; the corporation contends it has been able to re-tenant all but about 150 of the abandoned stores. But whether 150 or 400, many small-business people harbor the same dread of a Wal-Mart’s leaving and taking its traffic flow as they did when the mega-retailer came in the first place.
Pujol remembers the reaction of his father (who ran the business before Craig took over) when he first learned Wal-Mart was moving in.
“He wasn’t too happy about it all,” says Pujol, “because they [Wal-Mart] get tax breaks that aren’t offered to small-business people.”
But after the small-business owners had gotten used to the local Wal-Mart, many started depending on the foot traffic it generated. Oddly enough, many of the small-business owners in Bunkie formed a peaceful co-existence with the retailer they loved to hate. Now that the store has packed up and moved, Bunkie business owners are forced to reinvent themselves again.
Coping with the loss of a Wal-Mart, as with the disappearance of any anchor tenant, takes ingenuity. In some ways, Bunkie is a case study in how small businesses and a community can respond to losing a Wal-Mart.
Greg Kojis owns a number of small businesses in Bunkie that are all within walking distance of the old Wal-Mart, including a restaurant and garden center. He instantly saw Wal-Mart’s departure as an opportunity. He knew, for example, that Wal-Mart was the local dealer for Pavestone, the fast-growing maker of modular concrete pavers and retaining walls. “As soon as I heard Wal-Mart was leaving, I called Pavestone and grabbed them,” Kojis says. “I’ve sold quite a bit.”
He also noticed that Wal-Mart left an opportunity for selling pool supplies. He added those to his garden center and started a pool distributorship. “Instead of sitting on the curb crying, everyone should look for things that Wal-Mart sold that they can add to their business,” he says. “People just have to be creative.”
Pujol, owner of the Western Auto Supply franchise, has taken a similar tack, though to a much smaller extent. With the competition from Wal-Mart gone, he expanded his product line to include more lawn mowers, electronics and other goods. “I added a few products here and there, but I couldn’t go all out because I didn’t know how people would react,” he says.
Since the store just closed last year, Pujol’s conservative approach is to wait until two or three customers ask for a product before adding it to his mix.
For many smaller communities, an even bigger question is what to do with the old store that is left behind. Ken Stone, a professor emeritus of economics at Iowa State University in Ames and author of Competing With Retail Giants, notes that finding new occupants for the old Wal-Marts in small communities can be a challenge. In some cases, the abandoned Wal-Marts have been put to unusual purposes, such as churches, but those don’t generate sales taxes and jobs, or create much traffic for nearby merchants.
Having lost the battle to save the store, Moreau, the mayor of Bunkie, demanded that Wal-Mart give the old store to the city. Surprisingly, the retailer did. “They dragged their feet, but completed the donation in July,” Moreau says. “I threatened to do a picket on national TV, and they didn’t want the negative publicity.”
The city thought a local business owner would do a better job of re-tenanting the 44,000-square-foot space than Wal-Mart’s real estate department could. Bunkie officials put the structure up for public bid and sold it to a local developer for $188,500 after he pledged to use the site for retail rather than warehousing. The old building has been remodeled, and the mayor hopes it will soon be filled with four new tenants. The sales price will make up for a year’s worth of lost sales tax from the old Wal-Mart.
“The building was shut down for six months, and we had to pay to keep the lights and air conditioning running so the property wouldn’t deteriorate,” Moreau says. “People in the community wanted it to happen overnight and it never does.”
Bunkie businessman Kojis says that Wal-Mart donated a “worn-out old building” and got a hefty tax write-off as a result. Yet, such giveaways have not been repeated, partly because the retailer often leases the property on which its stores rest.
Typically, “a lot of communities vote to allow a new supercenter to replace an existing, smaller Wal-Mart without any hard-and-fast plan for what to do with the older store,” activist Al Norman says. “The cities give a permit to open a new supercenter down the road and become the proud parent of an empty store that may sit there for years and become a public blight.”
One community that took steps against this happening was Evanston, Wyo. In 2000, Wal-Mart said it wanted to vacate its existing 66,000-square-foot store in Evanston and move to a larger site on the outskirts of town. Paul Knopf, Evanston’s city planner, said the city immediately put a moratorium on issuing building permits for big-box stores while they studied the request.
Before allowing Wal-Mart to build a supercenter, Evanston city officials laid out a number of restrictions. First, they said the new store had to go on the property adjacent to the old store, partly so the other businesses that depended on Wal-Mart’s traffic wouldn’t be left in the lurch.
“It would have been devastating to those businesses if Wal-Mart had moved to the other side of town,” says Rick Lunsford, the city’s community-relations manager. “Those businesses located there because of the traffic that Wal-Mart generates.”
The city also enacted an ordinance that required Wal-Mart to properly maintain the abandoned building, such as keeping it well lit and painted. “Because this is a city ordinance, we can enforce any violations in city court and hold the store manager as the defendant,” Knopf says. “This isn’t just a feel-good thing with no consequence.”
Local small-business owners are thankful for the city’s quick thinking. Consider Alan Griffin, who owns a 30-employee Domino’s Pizza franchise in Evanston, Wyo. Griffin attributes about 15 percent of his sales to the nearby Wal-Mart. The traffic isn’t Wal-Mart customers specifically, but truckers and RV drivers who are allowed to use many of the chain’s parking lots nationwide.
“I deeply appreciate the fact that Wal-Mart allows those travelers to use their parking lot,” says Griffin, who admits his pizza shop could not exist if he relied only on local customers. “If Wal-Mart refused to allow them to park in their parking lot, we wouldn’t have access to them.”
Even though the new supercenter in Evanston is adjacent to the lot where the old building stands, traffic flow changed, and Griffin’s Domino’s shop is no longer in as visible of a spot. This slight move made a small dent in business, he says.
“I never thought the Wal-Mart would move far because this was the most logical part of town for them to be in,” he says. “But I’m sure glad I didn’t have to find out what the result would have been to my small business if they did.”
City planner Knopf admits that Evanston had more leverage over Wal-Mart than other communities. “They simply couldn’t move down the road and put up the store in the next city,” he says. “This is a rural area, and the nearest city is 30 miles to the east, and it doesn’t have the population to sustain a Wal-Mart.”
Most communities–and nearby businesses–don’t have that advantage when Wal-Mart decides to pack up and move. So what are the small businesses left behind to do?
“The important thing is to keep doing what made your business successful in the first place,” says Western Auto owner Pujol. “You just have to find different ways to diversify to stay alive. The rent-to-own approach worked for us. And now, with the Wal-Mart gone, we’re getting more traffic flow. People that I haven’t seen in many years are coming into the store looking for things.”
In the end, small businesses are perfectly suited to react to changing marketplaces. People who live where they own a business have a much better gauge of what customers need than any manager in corporate headquarters several states away. And the small businesses that survived the coming of a Wal-Mart will surely survive its departure.
“Let them go,” says Bunkie Mayor Moreau. “We were here before Wal-Mart, and we’ll be here afterwards.”
Web Extras: Learn more about coping with retail giants by going to the “Web Extras” section of http://www.NFIB.com/toolsandtips
When the Big Box Closes
How can your small business cope?
As this story shows, not all small businesses are thrilled when a local mega-retailer moves on. You’d think local mom-and-pop shops would celebrate the reduced competition. But many of them actually rely on the increased foot traffic generated by the Wal-Marts of the world. Here’s what to do if your local price-cutting giant vacates:
Expand product lines. Like Greg Kojis, look for brands that Wal-Mart sold exclusively and go after them.
Proceed with caution. Don’t expand too quickly. Survey regular customers on what products they’d like to see in your store before stocking your shelves.
Get involved. Be active in your community. Get involved in local government so you can help implement big-box regulations like the towns in this story did.