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Remember: David SLEW Goliath!
By
James Grandillo,
Senior Retail Consultant
OK, no more posturing, no more false bravado.
Let’s admit it out loud: WE’RE ALL SCARED OF THE BIG BOXES!
(Now…don’t
you feel better??? What’s that...you don’t? Hm…)
There is good reason to be afraid of the Big Boxes, because they do so many
things well. They advertise heavily, they promote aggressively, they have
huge selections, great locations, and usually have beautiful stores. The
product they show is what people expect to see and what they want to buy.
They have liberal credit and discount policies and their prices are
perceived as being low – in fact, most of them guarantee their prices to
be the lowest in town.
Why
wouldn’t you be afraid of the Big Boxes?
I, for one, am not. Many years ago as a successful small retailer I learned
that, in order to capture and keep sufficient share of the market to survive,
I had to beard the lion in his own den (translation: meet the enemy
face-to-face on the field of battle). The simplest response to the Chicken
Little outcry of “The Wal-Marts are coming! The Wal-Marts are coming! WHAT
DO WE DO???” is this:
You do what
they can’t do, you do it well, and you tell everyone in your trading area
about it!
Here are
some examples: The Big Boxes have large staffs. Yes, they do. But
these folks are often poorly-trained shelf-stockers and not salespeople
the way we define them. Solution: Train your sales staff so they know
their product cold. Help them become room planners and problem-solvers,
teach them to develop a personal relationship with every client they
encounter.
The Big Boxes have lower prices. Sometimes they do. But usually only on
heavily-promoted, loss-leader items. If you make a habit of visiting them
often to check, you will find that on most items their prices are comparable
to yours. And the cost of additional services – such as delivery and
warranties – are often much higher than yours. Make sure EVERY customer
you speak to in your store is aware of these differences. In addition, for
further protection, the successful small retailer ALWAYS has his own Low
Price Guarantee. Properly constructed, it can protect your competitive image
while costing very little.
The Big Boxes look so fresh and clean! Duh! Why doesn’t YOUR store look
‘fresh and clean?’ What does a coat of paint cost? Or a carpet cleaning
once a year? The Big Boxes look clean because SOMEONE CLEANS THEM EVERY
DAY! And you can’t?
The Big Boxes have all the newest stuff. Not usually true: Big Boxes stick
with tried-and-true merchandise, they are usually not innovative
merchandisers because, at their large volumes, they can’t take chances with
radically-new products. But YOU can! The small retailer can bring in small
quantities of state-of-the-art products and because of this exclusivity
enjoy a higher than average margin when they sell – or blow them out quickly
if they don’t. By the time a ‘fad’ turns into ‘fashion’, the small retailer
can have moved on to the Next Best Thing! But if you hold on to obsolete
merchandise or last year’s ‘look’ your store will quickly look stale.
The Big Boxes are always on sale! Again, this is perception, not reality. Many Big Boxes use “establishing prices;” i.e. they put products out initially at extremely high markups (jewelry and clothing stores are notorious for doing this). After several weeks, they slash the price to 40% off or more – but since these items were priced at 3-4x cost – they are still making margins in excess of 50%. If your product is new enough and not in every store in town, this is possible. Also – on the other end of the merchandising timeline – products that started off at healthy margins, as they near the end of their life cycle, are often marked down in order to release open-to-buy dollars to buy and introduce new products. The small retailer can do this also but few do – because it’s a lot of work to plan, manage, and keep all this straight. However, if you don’t, Goliath will win.
The Big Boxes advertise so well, so often! They sure do. Their advertising
is designed to make their name a household word, to achieve a top-of-the-mind
awareness that the Little Guys can’t match. But the Little Guy has things
to say the Big Boxes can’t: he’s been serving his community for 10, 20, 30
years (maybe more, if his dad or grand-dad started the business), he’s
locally-owned and operated, he’s there to service what he has sold – and if
you need to, you can come in and talk directly with the guy whose name’s up
on the sign! You might see him in church on Sundays or in the grocery store
some weekend. Your friends and neighbors have been shopping there for
years, and you may even have gone to school with his staff members. You
stand behind what you sell, and the money your store earns stays in the
community. You have the same products – if you work at it – that the Big
Boxes do, but you are friendlier, will spend time listening to them, and
you will not rest until they are satisfied that they have made the best
purchase for their needs.
I could go on and on, showing you many more ways that David can slay
Goliath. You don’t stand toe-to-toe with him and trade punches because
you will go down and stay down. But a small stone, accurately thrown where
he can’t protect, will bring down Goliath. The bigger they are, the harder
they fall. You can win against the Big Boxes, if you study where they are
vulnerable and be very good at what they cannot or will not do.
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