Panicky Merchants Seek Ways to Resist Wal-Mart

Gun your car 27 miles north of Belle Fourche on a stretch of two-lane blacktop called South Dakota Highway 85, drive out away from people and plunge into the truly lonesome. Watch as the Black Hills, the sun glinting off their shoulders, fade into your rear-view mirror; then stare straight ahead to the horizon, into the grand emptiness of the prairie’s sea of grass.

And stop. Right there. Brake quickly. Because you might miss it.

By the side of the road, next to the rest stop and restrooms, stands the secret weapon that the merchants of downtown Belle Fourche plan to use against Sam M. Walton and the everyday low prices of his giant Wal-Mart discount chain, which is about to invade the Black Hills.

It is the sign marking the geographic center of the United States.

But the United States won’t be spread out equally around this desolate point much longer, at least not officially, not if the nervous merchants of Belle Fourche (pronounced Bell-Foosh) get their way.

The reason is that storm clouds are brewing over Belle Fourche.

Wal-Mart is coming.

And Wal-Mart, you see, is at the center of one of the hottest controversies going today in towns like Belle Fourche in the Midwest and South, where Wal-Mart is mounting a voracious expansion program.

Wal-Mart, the first national retailer to set its sights on the northern Black Hills--now home to cozy, relaxed, mom-and-pop department stores with names like Snoozy’s and the Four Seasons--is opening up just 10 miles down the highway from Belle Fourche.

That’s like being right next door out here in the Badlands, and that’s bad news for the local store owners, who know they simply can’t compete head-on with Wal-Mart’s deep discounts and massive selection.

“The mood is panic right now,” admitted Kevin Kuchenbecker, the coordinator of the Belle Fourche downtown merchants’ association.

So, sometime this year, the frightened and intimidated business leaders of Belle Fourche, with the approval of the South Dakota Department of Transportation, plan to counter Wal-Mart’s move with one of their own: They are going to move the center of the United States, or at least the marker for it, right into Belle Fourche and will say that their downtown is the center of the nation.

Tourism, they are sure, will suddenly blossom in Belle Fourche, population 4,700.

“We really believe we can get a lot more people to stop, to get them to come downtown,” said Kathy Wainman, executive director of the Belle Fourche Chamber of Commerce. “We have got to be creative here, and pretty soon.”

In fact, merchants in Belle Fourche and other small towns all around the Midwest and South will try just about anything to defend themselves against Wal-Mart.

“Wal-Mart has a reputation among small-town merchants, and that reputation says that it’s nearly impossible to compete with them,” said Ann Nielsen, executive director of the chamber of commerce in Waverly, Iowa, which now has a Wal-Mart on the edge of town.

“I’d be a fool to say I could butt heads with Sam Walton (Wal-Mart’s founder) and say I’m going to come out ahead,” added Joe Mitchell, owner of Eufala Hardware in Eufala, Ala., where Wal-Mart is building a new store.

Wal-Mart frightens mom-and-pop retailers so much because, unlike K mart or Sears, its two biggest discount rivals, it has focused its growth strategy on small towns like Belle Fourche, not on America’s big cities.

Wal-Mart has found almost no serious competition in these tiny markets, long ignored by national retailers, and as a result has achieved remarkable success and explosive growth.

Yet, as a result of its relentless growth strategy, one that makes the chain seem almost like a force of nature to small-town businesses in the Midwest and South that get in its way, criticism of the chain is mounting. Civic and business leaders argue that Wal-Mart is bulldozing over the local stores--the five-and-dime, the independent grocery, the old-line women’s apparel shop--that were once the backbone of America’s villages. Until now, these hamlets have been the last markets in America not completely dominated by shopping centers and national chains.

“It’s a big issue in these towns because they are taking business away from our people, our merchants,” noted Harry Thomas, director of the chamber of commerce in Independence, Iowa. “Wal-Mart is picking up sales that the downtowners would have had.”

“They are predatory,” complained Rod Horn, owner of a women’s clothing store in Belle Fourche. “They are going to come in and steal sales from existing retailers and pay a few more cents and steal our employees. I seriously doubt we’ll gain much from them coming here.”

The problem is this: Wal-Mart sets up shop out on the edge of town, offering just about everything under one huge roof, from groceries to clothes to medicine to hand tools, like a K mart, a grocery and a drugstore rolled into one. Lured by Wal-Mart’s free parking, late hours and unbeatable prices on name brands, shoppers stop frequenting the small retailers downtown. Wal-Mart vacuums up the consumer dollars.

“Stores competing against Wal-Mart,” observed Ken Stone, a specialist in rural economics from Iowa State University, “tend to lose to Wal-Mart.”

Added Woody Whyte, a retailing analyst and Wal-Mart observer with Stephens Inc., a Little Rock, Ark.-based brokerage: “When you see Wal-Mart coming, you’ve almost got to say: ‘I’m either going to get out of the business, or change my business to offer something that Wal-Mart isn’t offering.’ ”

Wal-Mart executives, concerned that their firm’s image as an all-American, gung-ho company is being tarnished as it sweeps across the nation, stress that Wal-Mart has a positive overall economic impact on the markets it enters.

Wal-Mart, they say, can actually act as a magnet for its communities, attracting more shoppers from a wider trading area. Thus, they add, the fears of local merchants are unfounded.

“It’s just the fear of the unknown,” Wal-Mart spokeswoman Jane Arend said. “Once we enter into a community and demonstrate our involvement and commitment to the community, then it works out well. There has been fear in some communities, but we can put those fears to rest.”

A University of Missouri study--financed by Wal-Mart--supports the company’s view that overall economic conditions improve in small towns that gain a Wal-Mart.

“I think the criticism of Wal-Mart is undeserved,” said Edward Robb, a researcher at the University of Missouri who is completing a second study, free of Wal-Mart funding, to respond to critics who charge that he has just toed the company line.

Yet, despite such reassurances, worried store owners and other business leaders in small towns throughout the nation, from Iowa to Alabama, are banding together to find ways to counter Wal-Mart’s invasion.

Often, their efforts lead them to Ken Stone.

The 54-year-old Iowa State economist specializes in watching and measuring as Wal-Mart tears through small towns.

But now, after studying Wal-Mart’s impact when it entered Iowa in the mid-1980s, Stone has turned his academic interest into a kind of crusade, to warn small-town merchants in the rest of the country about the retailing steamroller heading their way. During the last year, he has visited more than 40 towns in the Midwest and South, giving talks to local merchants about how best to survive and compete in what he calls the “Wal-Mart environment.”

That’s why Stone, a tall, gaunt figure who looks equal parts mild-mannered economist and quiet hired gun, recently came to Belle Fourche.

“I see lots of stores here that aren’t going to make it,” Stone said firmly, staring down Belle Fourche’s main street under a clear azure sky. “When Wal-Mart comes, they won’t know what hit them.”

Although Stone and other observers would like to see Wal-Mart curb its appetite, they are also ready to criticize the small-town merchants who fail to change and adapt to meet the new competition.

Wal-Mart’s invasion is simply forcing small-town businessmen to realize that “things are not the same as they used to be,” said Steve Taylor, a store owner in Scotts Bluff, Neb., who has successfully competed against Wal-Mart there and who also gives lectures in other towns about how to battle the giant chain.

Indeed, the heart of Stone’s presentation to merchants in towns like Belle Fourche is to provide a list of things they can do to “coexist” with Wal-Mart. If they match Wal-Mart’s longer hours, offer more upscale products not sold at deep discounts at Wal-Mart and provide unmatched personal service and liberal policies on refunds and returns, they can survive.

Wal-Mart’s invasion “should just be a hook to get these merchants to do what they should be doing already,” Stone said.

The problem, he said after his Belle Fourche speech, is that too many small-town merchants aren’t willing to change.

“In most of these towns, the store-owners won’t even stay open in the evenings,” Stone said, “and then everyone goes to Wal-Mart at night.”

Stone’s efforts to get local merchants to recognize that they must adapt has gained support from a surprising source--Wal-Mart. “I believe most of the statements he makes are true, concerning how local businesses can compete with Wal-Mart,” Wal-Mart spokeswoman Arend said. “If the local businesses have fair prices, good service and offer goods not available at Wal-Mart, then that will generate more sales for the entire community.”

And at least some merchants in Belle Fourche are already working to do just that. Doug Miller, owner of the local Ben Franklin five-and-dime, said he plans to offer the town’s first custom picture-framing service to lure shoppers downtown.

Said Miller confidently: “Wal-Mart’s the first big boy on the block up here, but it’s not going to close up Belle Fourche.”