In their quest to carve a niche for themselves, many small retailers out there have devised ingenious means and ways of getting and retaining customers, reports TONIA ‘DIYAN
For many startups in the retail business, the fear of competition from the bigger retail outlets is real. Usually, the comments you hear often, range from, “the big stores are taking over the small ones; how will I cope when the bullish stores have everything it takes to run the business, including sourcing for products at the cheapest possible rates.’’
It is true that as shoppers become more value focused, they turn towards big-box retailers thereby making small retailers boost sales by targeting wealthier shoppers who are less price-sensitive and are willing to pay premiums for better service. Findings have shown that upper-income households often display unique perception of value than lower-income shoppers.
But thankfully, some small retailers have since found answers to some of these worries by employing time-tested and simple success strategies.
Success strategies that work
As small retailers, they really cannot win price wars against the bigger chain stores. But what they need to leverage on over the chains, is personal relationships with customers and the ability to deliver superior service. These and many more are some of the secrets of many successful retail businesses over the years.
Alhaji Rabiu, Chief Executive Officer, Brazilian Jewelries Store, who has been involved in the retail trade over the years, shares his perspective.
Waxing philosophical, he said, the best way to woo and retain customers is to constantly be in their mind.
“If as a retailer, I am savvy and communicate well with my customers, I can draw them into my store before they go into the national chains. One way to do that is through attractive discounts and cutting-edge prices across board, this for sure, will encourage loyal customers to spend more. That is a lot smarter than putting a 70 per cent off sign in front of my store,” he said.
For independent retailers to compete with their larger counterparts in whatever market they are targeting, retail experts’ advice small retailers to encourage their best customers, maximise the one-on-one personal relationships that they have with customers, saying it is the secret weapon they have against big national chains.
Through attractive programmes, experts say retailers can strengthen their relationships with their best customers, and as well appeal to those shoppers’ bargain-hunting mood at the same time.
Beyond customer service, experts say small retailers need to keep inventories lean to keep costs down. They say it is important that these small store owners are vigilant in refusing late orders and that they should avoid over-shipments to avoid having merchandise they would not be able to sell.
In addition, small retailers have been advised to take a cue from large chains that display as much merchandise as possible, by displaying theirs on the shop-floor, rather than holding inventory in the stockroom. This expert advice will increase their advertising spending, though to a smaller extent. Many small stores now cater for more affluent customers which will make them do better.
Small stores have also been advised to watch their staffing levels to control costs. They should adopt the strategy to staff to the peak hours as much as they can, especially in the evenings and at weekends, as most busy families have little time to shop during the day. Businesses, experts advise, might decide to open earlier in the morning and extend hours at night to reach more customers, unlike the big retailer who has opening and closing time.
Big retail stores slash prices and increase advertising budgets whenever sales are low. But many small retailers without the same financial muscle are stepping up efforts within the limit of their resources to attract customers.
Analysts have maintained that the existence of the informal retail sector would not be threatened by market circumstance, but rather, operators would bring in innovations to retain their market share.
They have also presumed a situation where the small shops will sustain their dominance with the ability to offer lower prices than the big shops who have invested much to achieve international standard. And these are already playing out.
An expert on retail practices, Ivan Friedman, once said: “The ability of small stores to react quickly and directly to customers may be one of the most effective weapons they have. They can easily determine what is selling, and then place orders without wading through a cumbersome bureaucracy. They don’t have to go to the corporate office, wait for their request to be analysed and then ship to them.” There is need to stress the fact that “small shops” and “big shops” are rather indistinct and that the classification of a unit of business as big or small is different in different places and has changed significantly with the passing of time.
Big retailers suffer from high operational costs. However, the illegality of the operations of the small shops puts modern grocery retailers at a distinct disadvantage. Modern retailers have higher fixed costs; they cannot easily evade taxes because of their visibility and they have to source their supplies from legitimate channels.
Analysts have maintained that the existence of the informal retail sector would not be threatened by market circumstance, but rather, operators would bring in innovations to retain their market share. They have also presumed a situation where the small shops will sustain their dominance with the ability to offer lower prices than the big shops who have invested much to achieve international standard. And these are already playing out.
