Big Box Beware: Small Businesses Can Play Too

In today's market, independent retailers are faced with more competition than ever. The success of on-line drop shippers is just one of a plethora of growing challenges. Perhaps one of the most relentless threats is from bricks-and-mortar stores in your own market—we're talking about big box retailers whose volume purchasing, minimum-wage labor, and huge advertising budgets make them a force to be reckoned with regardless of what you small local business is selling. But as a small business owner you can beat the big box, if you play your own game and not theirs.

Cut-throat pricing is the biggest advantage the major chains have over the little guy. There’s no escaping their ability to buy in volumes that get the best terms, thereby allowing them to undercut the independent substantially. They also don’t generally pay their service people and installers much (if they have any), so their labor costs are lower, too.

You can’t beat them at that game, so play to your own strengths instead. Price isn’t the only reason a consumer chooses one place over another. Quality of service is just as important as price, especially when it comes to installing customer purchases in their homes or cars. Do your potential customers really want some minimum-wage-inspired mechanic learning how to cut up a headliner to drop in a sunroof by practicing on their car?

You, on the other hand, either do that work yourself or supervise a trained, experienced technician so your customer knows the job is going to be done right the first time. That should be worth a few dollars more.

Make your size work for your customers

Small size may actually be an advantage, too. The big store has to be a wide but shallow river—it carries a lot of different inventory but isn’t very deep in any one line. As a specialist, though, you can become known for having everything the customer needs for one type of purchase (including the expertise to get it installed right). You don’t have to worry about carrying faucets, lighting fixtures, and air conditioners, for example, if your shop is the kitchen cabinet design leader in the market.

The trick is finding a market segment the megastore can’t serve very well. The ideal niche is one where one size does not fit all and where installation requires knowing more than just which end of the screwdriver to hold.

You also offer the customer something else the big box can’t: a personal relationship. The next time your customer has the urge to remodel the family room, she can come back to the team that did the kitchen—yours. Your staff knows her, knows her house and family, and has built a level of trust that only a long-term relationship can inspire. Go back to the megastore and see if you can find the guy who did your last job. If it’s been more than nine months, he’s probably been replaced, along with the department head and even the store manager.

A solid niche market and good personal relationships with your customers give you another advantage over the big box. You can be very successful at selling add-ons to your current customers whereas the clerk in the megastore (if you can find one) is charged with doing little more than ringing up the sale and processing your credit card. For you, on the other hand, selling a new countertop to the customer who came in for cabinets should be an automatic. Plus, you can probably show the customer some price advantages of doing multiple jobs simultaneously.

Yes, your advertising can compete, too

Then there is the matter of advertising, where, believe it or not, you actually have an edge as well. You have a message about something other than price and you have the ability to target your promotion in ways the big guys can only drool over.

First the message. You know about the level of service you provide, the friendly personal touch, technical expertise, and dedication to quality you deliver. Does your potential customer know? He or she will if you reach out to them with some pro-active marketing that carries that message.

You can also tailor your message almost to the individual customer level, which is something a big box multi-department retailer can’t do. Because you know your customers as people, you better understand exactly what turns them on, what bells and whistles appeal to them and which ones are repellent. You can use that knowledge to shape your promotion.

Chain retailer advertising—circulars full of specials, full page ads touting the deal of the day, TV spots in the Super Bowl—is hugely inefficient when it comes to reaching the one best customer for a specialized product. Advertising media like that work for the megastores because they build total store traffic, something you don’t have to worry about.

You can run small-scale-big-impact campaigns with little or no waste if you pick and choose your media and venues based on your knowledge of your customers. When the only people who see your ads are those in the market for your product, the return on your advertising investment skyrockets. Ads in home show programs, signage at the shows, your logo on a builder’s dream home, post cards sent to the local garden club’s members—these are ways you can promote your business without breaking the bank.

Tired of battling the big guys? Just step back and count the ways you can compete. If you use your natural advantages, there are plenty of ways to beat the big box.