Competing With Endless Options

In Blog by Jerad HillLeave a Comment

The world sure has changed a lot in the last 15 years. Like so many, I am from a city where local business used to thrive. When I was a child we had very few large stores, in fact they were called department stores then. Today we call them big box stores who bring us endless choices. While growing up there were not many options compared to today. The Walmart movement ushered in the large stores that have it all, corporate stores that have options. This made it near impossible for local business to keep up. There is no way to provide the flexibility to the customer that a large store can and still afford to pay rent. I watched as local business after local business closed down shortly after it’s bigger corporate replacement moved into town. It has even effected the bridal industry.

A few years ago I watched as David’s Bridal came to Modesto. This really hurt the strong local market that Modesto had for formal wear. Several bridal boutiques closed their doors because they could not compete with the discount formal wear provider. The only local boutiques left standing are the smaller specialists. The same goes for electronics, appliances, furniture and more.

During the holidays my Mother gift wraps for a locally owned retailer I have decided not to call out by name that has been in Modesto for many years. My Grandmother worked at this retailer for 35 years. This retailer is where you go in Modesto for fine china, beautiful decor and housewares items. They are known for their beautiful Christmas displays. They are much nicer than Macy’s, which we also had in Modesto for many years.

Earlier today my Mother was explaining to me that they had not had many Brides register for 2010 compared to years in the past. She said everybody is going to Macy’s. In the past this local store was the place to register when it came to fine china and the best housewares. Their location in Modesto is what you would call Modesto’s higher end shopping center. Everything in McHenry Village is fancy and a bit pricey, but it’s really nice stuff. I do not believe that their lack of registries has anything to do with there being less weddings going on, or people spending less money. I think it has to do with options.

When my wife and I got married we registered at Macy’s and Bed Bath and Beyond. I was not really into the whole fine china idea so the retailer I have been speaking of didn’t even cross my mind. What did cross my mind is that if we registered at Macy’s and ended up with extra stuff to return, we could get gift cards and buy clothes. My Wife and I live in a 3 bedroom 3 bathroom home, but it has a small kitchen. We just don’t have room for a bunch of housewares. Though I would love to have a big KitchenAid Mixer (ad) on my counter next to other fancy stuff that makes it appear that all we do is cook at home, I knew it was not going to fit so we didn’t register for it. Despite the easy to read registry, we still ended up with multiples of some items. With the gift cards that we obtained from the returns we were able to get a few clothing items we really wanted.

I know that there are options when it comes to returns. Most stores allow you to return something and exchange it for something else. However when your store is a specialty store, it limits the possibilities that a person would have should they end up with a credit to the store. How can a specialty fine housewares store compete with a store that has similar items but also has awesome jeans and shoes?

How does a local business win over customers when options are what people are looking for and from the outside looking in, corporate competition has the advantage?

Since we have been talking about this local retailer, lets use them as an example. I am using them as an example because I believe in local business and supporting those in my community. You could also say that this retailer has been a big part of my life being that my family has been such a big part of them as well, over the years.

Looking at what I know about their business I understand that they are the premier store for fine china and home goods in Modesto. Their clientele is a bit older and more established, maybe even more traditional then average. Their customers appreciate the staff who are specialists in what they sell. What are some of the stumbling blocks that they are probably facing?

  • Younger generation is more tech savvy. They research what they want online first and can find it on their own.
  • More players in the game then there was 10 years ago which has created more options for the customer.
  • People are spending less right now due to the recession.
  • Needs have changed over the years. More households are dual income which means less time spent in the kitchen.
  • Younger generation is making more decisions on their own. Priorities are different.

Here are some ideas that I think can help local business thrive not only in this economy but in the ever changing attitude that people have about options and flexibility in spending.

Incentives
Incentives are a great way to get business when you don’t have the options your competitor can provide. Incentives can be free items, addons or package deals. From recent home good purchases I have made myself I understand that many vendors have rewards and incentives for purchasing their products or spending a certain amount on their brand. There are many ways that a store can offer incentives with out it costing them a lot of money especially when the vendors have programs they can offer. I think one of the biggest misconceptions that business owners have is that by offering incentives it will effect their bottom line. What they forget is that an incentive is not a giveaway. An incentive is something that is given once the customer has spent money. This means that if the customer chooses to spend money based on your incentive then this is a sale you would not have received otherwise. We justify spending money on advertising the same way. Even if the incentive means offering up something free, it is a sale you may not have had otherwise. Free gift wrap service is not a strong enough incentive anymore. If your competition also offers it then it’s no longer an incentive, it’s whats expected.

The big box stores have their incentives, but as a consumer I still find them hard to understand. I have a Bestbuy rewards card, and I spend some coin at Bestbuy. I have something like 5,000 whatever points but I have no idea what those will get me. I get coupons in the mail which I assume are offers that cater to what Bestbuy believes I am most interested in. However I never use them and probably never will until they make them easier to understand. Like many others I am to busy to spend time figuring out how I can make the best use of my Bestbuy rewards, if they are rewards at all. The problem many of these large stores have is that their incentives are to hard to understand. I wonder if any of the employees at Bestbuy could explain even the basics of it to me. I would guess not.

If you make your incentives unique and easy to understand you will win over new business. The simplicity of it allows people to “get it” in a world where so much is spoken over our heads to keep us from asking to many questions.

Lastly, make these incentives known. They are no good to the outside world if they have to come into your store to hear them. Integrate yourself into the places where people are online and share your offerings with them.

Promote Where The People Are
I was sent this video earlier today. It is about how Ikea engaged with Facebook users to market their products directly to potential customers. The story made it all over the web. Even though it was Ikea that did this, I am sure that it was someone on the local level that came up with the idea. Corporations just don’t come up with great ideas like this because they have to run it through all of their bureaucratic hoops. How can you promote your products or services to potential customers in your local community? Facebook is a great tool for marketing right now with it’s ever-growing membership.

Cross Promote with other local businesses that have a similar customer base. Using our local fine home goods store as an example. Where do the husbands of their typical female customer spend their time and money? Is it at the local country club or upscale fitness center? What organizations are your customers involved in such as Chamber of Commerce, Business Networking Organizations or Rotary Clubs? How can you get involved and tie your business into what the people in your community are doing with their time?

Keep It Simple
If you have heard anything from this article it’s my desire for keeping it easy to understand. The one thing that the emasculating commercials of our time have right is that guys often don’t pay catch on unless it’s plain and clear in front of us. The truth of the matter is that if we are not actively looking for it we don’t know we need it. It is your job as a local retailer to figure out where the big box stores are unable to think. They can think big but when you aim broad you miss the specific targets. If you can find the specific targets that are not being met in your area, you will succeed.

Suggested Reads: Long Tail, The, Revised and Updated Edition: Why the Future of Business is Selling Less of More, Buyology: Truth and Lies About Why We Buy, The Paradox of Choice: Why More Is Less. If you enjoy these books there are others I can suggest, feel free to email me for more suggestions.

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