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2004-01-17
Plano, TX. Wal-Mart Brews A Challenge to Starbucks, iTunes

In its never-ending quest to take someone else's market share, Wal-Mart has wandered into gasoline sales, used cars, travel services -- whatever turns a profit. Fortune magazine reports in its January 26, 2004 issue that Wal-Mart has steamed up a deal to provide instore space to Benny Medina's Kicks Coffee Cafe in one of its Wal-Mart stores in Plano, Texas. This Kicks store is designed to see if Wal-Mart can give Starbucks a run for its beans. Wal-Mart is just the landlord in this relationship, and has announced no plans to rollout the concept. "We've got the one," said a Wal-Mart spokesperson, "and we'll watch that. We tend to test things quietly at Wal-Mart and see if things meet the fancy of our customers." Fortune magazine called the Kicks Cafe a "dead ringer" for a Starbucks store. Starbucks has nearly 7,500 stores today. In a related move, Wal-Mart is moving into digital music downloads, a direct run at Apple computer's iTunes product. The American Press in Louisiana says that Wal-Mart is now offering an online music service at 88 cents per download. "The test phase for this new service is important to gauge customer feedback," Wal-Mart said, "so that we can deliver a quality music download service that customers will want to use again and again." What Wal-Mart sells on its download system will be the same as it offers on its CD racks at its stores -- in other words, Wal-Mart edited music. The company says that some songs on its list will be labeled "edited" to indicate that the song has ben recorded without lyrics that Wal-Mart censors find offensive. "We see digital music downloads as a natural extension of the music seletion offered in Wal-Mart stores," the company said.



What you can do: Let's state the obvious: Any product on the market today, from parakeets to petrol, can be considered "a natural extension" of Wal-Mart's market share. Gasoline is a product that many oil retailers did not expect Wal-Mart to plunge into, yet now the Arkansas retailer is soaked in gas. The same in 1988 with groceries. I remember food retailers telling me that Wal-Mart would never make a go of groceries, and now Wal-Mart/Sam's controls at least 20% of all food sales in America. Music downloads, Starbucks knock-offs -- there is no product in the universe that Wal-Mart will pass over if there is money to be had. Any retailer who waits for their niche to be found, is waiting for the inevitable disaster. Retailers would do far better to begin conversing with their local city or town officials about zoning changes that would limit the size of stores, than waiting for Wal-Mart to limit the size of their sales receipts.










 
 
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