Herein lies the profound difference between the small business owner and the Big Box retailers: Big Box retailers sell commodities at the lowest possible price, often as loss leaders in order to get consumers into their stores. This is their modus operandi. It is a transaction-based business.
The first determination in a small retail business is to clearly understand the differentiation between your business and the Big Box stores. First and foremost, you are not in competition with these guys and if you think you are you’ve already lost the battle. ‘These guys’ have simply too many resources, namely money, massive selection, strategic location and corporate might for you even to consider them in your ballpark. So where does that leave you?
Let us begin with the Transaction side of the ledger. This is the area where, for the most part, the Big Box Retailers operate with rare exceptions.
Price: The Big Box Retailer’s world is price-driven and this is very attractive to consumers in general. The logic is simple. Most people do not earn enough to buy whatever they want whatever the price. Plus, we are overtaxed and therefore have less disposable income. For most people, shopping for the best deal is not only prudent, but in most cases, it’s essential.
Commodity: Big Box retailers sell everyday commodities at the cheapest price possible. Sometimes they’ll price it low enough to be a loss leader to get the maximum number of consumers into their stores and also to compete among what I call the rarefied air of the Big Box, making their money on volume and not necessarily on profit per item. And make no mistake; they are very good at what they do. Should you be in the commodity business, then your only advantage is to add more value to your offering by way of intangibles, in order to differentiate your business. Otherwise, you could be in trouble.
Minimum contact and no connection: Aha! This is where most Big Boxes fall down and what provides most hope to the smaller retailer/service business. As we move deeper into the impersonal world of online buying and Big Box commodity buying, the human condition is still – and will remain – one of relationship and connection. With minor exceptions, Big Box to date has not appeared to be overly keen to develop relationships with even their best customers for a multiple of reasons: it is not their culture, there is really no time, and they are in the MERCHANDISE SELLING business.
Nevertheless, some Big Boxes like Home Depot are also moving toward better service by offering the customer courses and training with regard to useful projects. Their staff is also typically more knowledgeable and they cover all bases so they are a formidable competitor.
Win/Lose: Here again, by their nature, Big Box stores attract consumers who make it a blood sport to get the best possible price, and who will travel miles to save a quarter. No doubt you have encountered this kind of consumer. You know the type. They come into your business and haggle you down until all you are left with is your tie and underwear, and then walk out and go elsewhere because they think there is a better deal somewhere out there.
I have good news for you. THEY ARE NOT YOUR CUSTOMERS. Before you start drinking double scotches for breakfast, you are looking for the customer who wants what you have to offer and is willing to pay the price you ask.
No Loyalty: This is the way a lot of consumers view their relationship with the Big Guys. There is very little loyalty, due to the transaction nature of their business. The Big Guy has the product and the price, and the rest doesn’t matter – therefore, no loyalty.
This is where your turbocharging strategy originates. It is the beginning of your differentiation from the Big Boxes. A fundamental shift must exist for you as small retailer/service business in how you view your customers, how you feel about them, and about understanding what makes them tick.
Article Author: Roy Prevost is an internationally recognized retail trainer, keynote speaker and customer service activist. He is the author of Turbocharge Your Retail Business: How to Outmaneuver and Outperform the Big Guys. Roy has spent the last 25 years working in and with thousands of businesses worldwide helping them grow their business and increase revenues by showing them how to compete in a hyper-competitive world through relationship building and going the extra mile with customers. He is passionate about turning business owners into ‘Customer Service Superstars’. Click Here to receive your complementary guide: 10 Topics to Discuss Before You Hire a Web Design Company.
Article Resources:
Turbocharge Your Retail Business: How to outmaneuver and outperform the big guys by Roy Prevost
Photo Source: courtesy of photostock / Free Digital Photos