Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, May 25, 1994                   TAG: 9405250147
SECTION: BUSINESS                    PAGE: C-8   EDITION: METRO 
SOURCE: By ADRIENNE PETTY STAFF WRITER
DATELINE: ROCKY MOUNT                                LENGTH: Medium

HOW TO LIVE WITH WAL-MART

By the summer of 1996, retail businesses in Franklin County and Rocky Mount will be pitted against a Wal-Mart Supercenter, a store the size of about 21/2 football fields.

The little leaguers aren't expected to go head-to-head with the majors, said Ken Stone, an Iowa State University professor who spoke at a workshop Tuesday on how small-town merchants can compete with Wal-Mart. But they certainly can survive.

The workshop, organized by the Franklin County Chamber of Commerce and Michael Hensley, director of Virginia Tech's Economic Development Assistance Center, was the first of several scheduled to assist local merchants.

"We're ahead of the curve," said Russ Merritt, head of the chamber. "We're proactively positioning ourselves so the local community can be ready to deal with Wal-Mart."

Stone, who has researched Wal-Mart's impact nationally, spoke to about 40 merchants and community leaders who came from as far away as Culpeper.

The economics professor outlined common-sense steps retailers can take to make "lemonade out of lemons."

In a word, retailers must find niches, Stone stressed.

Stone suggested that local merchants frequently visit Wal-Mart's store to look for voids in the mass merchandiser's inventory.

"Many local merchants don't set foot in Wal-Mart," he said. "How can you compete against someone if you don't know what they're doing?"

Also, merchants should learn to play a game that Wal-Mart has mastered: lowering prices on items for which consumers generally know the going rate while raising the prices of goods for which shoppers don't know the best bargain.

Offering special services, such as delivery and extended hours, also may help the local stores.

Stone's studies found that total sales in Iowa towns where a Wal-Mart located were 5.3 percent above the state average in the three years after the discounter opened. But Stone found winners and losers among merchants.

Wal-Mart captured the lion's share of increased general merchandise sales, Stone found. Other winners were stores that sold furniture, which Wal-Mart generally doesn't carry; sales there were up 11.8 percent.

Losers, including stores carrying the same items as Wal-Mart, saw sales decline an average of 11.8 percent. Hardware stores dropped 10.3 percent; apparel shops fell by 9.1 percent.

The presence of Wal-Mart can sweeten merchants' chances of racking up big sales, however, through "spillover," Stone said. Bob Mills, owner of Angle Hardware Co. in Rocky Mount, doubts spillover will help. He's located about three miles away from the Wal-Mart site, but he's sprucing up his merchandise and boasting about the service the store provides to gear up for Wal-Mart.