Friday, February 10, 2006

Which SL Businesses Will Be Hurt?

According to research done by Dr. Ken Stone, ISU professor of economics:

"I have two intuitive rules of thumb I use in determining which merchants get hurt and which ones get helped. Rule of thumb No. 1 is that merchants in a host town that are selling something different from the supercenter often experience an increase in sales, as they benefit from the spillover of Wal-Mart's high-traffic draw. Examples of these businesses are furniture stores, restaurants, various service businesses, upscale stores, and so forth.

Rule of thumb No. 2 is not so pleasant for existing merchants. It is that anyone selling the same merchandise as a supercenter is in jeopardy and will probably lose sales unless the store is repositioned to capitalize on its own strengths and the supercenter's weaknesses. Local grocery stores are usually the hardest hit, with sales declines of some independent stores reaching 25 percent or more per year.

An earlier study of Wal-Mart supercenters in Texas showed that drugstores in the host town suffered a substantial loss of sales after the opening of a supercenter. An ongoing study in Iowa reveals that there also are sales losses to several other types of stores in the host town, including those selling apparel, jewelry, sporting goods, tire and lube services, eyewear, photo services, and any other, similar merchandise to Wal-Mart's.

Looks like Wal-Mart will be good for the Hair Salon Business.

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