By  on August 13, 2007

Differentiation, defining a niche and increased customer service are helping small town business owners survive under the shadow of a Wal-Mart.

Case in point is Brattleboro, Vt. Tucked in the southeastern corner of Vermont along the borders of New Hampshire and Massachusetts, this bucolic town of 8,000 people seems an unlikely candidate to withstand the impact of a retail giant coming to town. But it did more than that in the wake of the arrival of Wal-Mart over a decade ago: The town is thriving.

Vermont was the last state to allow Wal-Mart to build inside its borders, holding out for years in an effort to protect its local economy. However, in the mid-Nineties Wal-Mart built a store in sales tax-free Hinsdale, N.H., less than two miles over the Vermont-New Hampshire border from Brattleboro. There are four Wal-Marts in Vermont.

That border is defined by the Connecticut River running along one side of the downtown retail district. The only route to the Wal-Mart is through a heavily traveled intersection and bridge located at the southern end of Main Street.

When it first became apparent to town businesses and officials that Wal-Mart intended to build a store in their backyard, the town did its best to develop a strategy to help them survive. Consultants were hired to advise the existing businesses.

"Everybody was frightened enough to try to figure out what to do, and to do it as a group. Having a consultant come in and having the dialogue about what it takes to survive were extremely important," said Donna Simons, owner of A Candle In the Night, an independent store that sells oriental rugs and furniture. The store has been located downtown since before Wal-Mart opened.

The consultant's suggestions included focusing on customer service, retooling inventory, expanding operating hours, improving return policies and finding a niche, she said.

The specialist who came to Brattleboro pointed out that in the Midwest, where Wal-Mart had opened stores miles outside or on the edge of towns, the life was often "sucked out of downtown areas" because traffic patterns shifted, said Greg Worden, owner of three businesses located on Main Street in downtown Brattleboro. Worden and his wife own Vermont Artisan Designs, Kitchen Sync and Melange, which sell the works of local artists, kitchenware and bath and body products, respectively. Brattleboro's location as the gateway from Vermont over the river to the Wal-Mart in New Hampshire was a boon, he said."If you're going to have a Wal-Mart, it's best if they can be next door versus being on the other side of town," said Brad Borofsky, who operates Sam's Outdoor Outfitters on Main Street. "They draw a lot of traffic. If they steal 5 to 10 percent of our traffic and we steal 2 percent of theirs, who really comes out ahead?"

Sam's, which has been a family-owned business since 1932 and includes two other department store locations in the region, sells women's and men's apparel, footwear, outdoor gear and sporting goods.

Local business owners who were in town when the Hinsdale Wal-Mart opened said there wasn't an immediate impact on the downtown area. Anecdotally some say there were rumors in town that the Hinsdale Wal-Mart was one of the most profitable in the country in its first years. But while they are careful to point out that business cycles can't only be attributed to the retail giant's arrival in the area, most admit it eventually affected business.

"I can't quantify how much was Wal-Mart-related, but it clearly had an impact on downtown [Brattleboro]," said Don Webster, president of the board of Building a Better Brattleboro, or BaBB, a local nonprofit organization dedicated to the preservation the downtown. Webster also operates a restaurant called The River View, which is situated on the Vermont side of the bridge to New Hampshire and the Wal-Mart.

The BaBB was established in 1998 by a group of local business owners, merchants and local professionals who were concerned about the state of retail in the town. At the time, there were more than 20 empty storefronts in Brattleboro, organization members recall. The organization's stated mission is, "to support and nurture the economic, cultural, residential and educational environment of the Town of Brattleboro with primary emphasis on downtown. A thriving downtown will serve the goals of the entire community."

Since its inception, the BaBB has acquired $3.1 million in grant funds to improve the town infrastructure, administered a program to do facade improvements and sprinkler installations in buildings downtown, created two public spaces in the downtown area, established and coordinated a number of annual town events to draw people downtown, helped the town raise funds for and build a new parking structure, and developed a business recruitment package and recruited new businesses. Today the number of vacant retail storefronts is five or six, and its been much lower than that for many years.Business owners said that downtown-focused events ranging from sidewalk sales to the annual literary festival, agricultural festival and the monthly Gallery Walk party have helped keep downtown a destination for shoppers.

For a downtown to stay viable it needs a good mix of businesses offering a strong product mix, and it needs reasons for people to go downtown, Borofsky said.

"A downtown is never going to sell itself by trying to portray that it has the lowest prices around....The key is that you want the downtown to remain viable for as many reasons as possible. Good food, good drink and good fun are strong factors in attracting people. Good parking helps, too," he said.

For the stores that have survived in the downtown district, good business practices have also been key to their survival.

Early on, Borofsky said he took note of the Wal-Mart's loss-leader strategy. Sam's had already started to shift its product focus to more upscale lines and higher quality merchandise prior to the arrival of Wal-Mart. That position helped them survive, plus they stayed price competitive on the products Wal-Mart had designated as loss leaders. In the grand scheme of things, it was doable to carry some products alongside Wal-Mart, Borofsky said.

As is often stressed, providing a differentiation point builds a loyal customer base.

"Find a niche to go after and be the expert in that field," said Gary Chabot, area business advisor for Southeast Vermont with the Vermont Small Business Development Center, a nonprofit organization whose mission is to advise small businesses. Prior to joining the VTSBDC, Chabot was a consultant who did work around the impact of Wal-Mart.

"It's a two-way street. If we give our customers good service and value, they reward us with their loyalty," said Paul Putnam, owner of Brown & Roberts, a local hardware store. His store has made service a centerpiece of the business with longtime, knowledgeable employees who know the customers by name, Putnam said. Wal-Mart isn't known for its hardware department, and what tools it does sell are often lower grade and come with little in the way of service.

Currently downtown Brattleboro boasts numerous clothing stores, shoe stores, jewelry stores, restaurants, a natural foods cooperative, thrift stores, book stores, music stores, home furnishings stores, a hardware store, an independent drugstore, sporting goods stores, banks and other financial institutions, art galleries and a computer store that just opened and set up wireless Internet access. Some of those businesses have been there for years, but many are recent additions.The town could face a new challenge from Wal-Mart, in the form of a proposed new Supercenter, also in Hinsdale. The company would like to move from its current 105,000-square-foot location to a 190,000-square-foot site further from the Vermont border. The company has 10 years of a 25-year lease left on its original site.

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