Compete With the Big Guys
Originally published September 23, 2004. Rhonda Abrams Columns.
Are they building a new Walmart in your community? Has a Starbucks opened
down the street? How about another Home Depot or Lowes? Are your customers
now buying off the Internet instead of from you? Does this mean you’re
doomed? What can you do to compete with the big guys?
In virtually every retail segment – and many service industries as
well – mega-companies are edging out
small businesses. More money is
being made by fewer players. From 1997-2002, retail sales increased by over
three-quarters of a trillion dollars, while the number of companies decreased
by almost 100,000 (US Census Bureau figures).
Don’t close up shop just yet! While it’s certainly difficult
to survive in today’s retail environment, it’s not at all hopeless,
and many small companies are managing to thrive. Here’s what the survivors
are doing:
* Compete on your terms, not theirs. The single most important thing to recognize
is that you’re never going to be able to win playing the big boys’
game. You won’t be the low-price leader; they will. So don’t try.
* Differentiate. You know that you’re different from the big competition,
but your customers might not be so discerning. You have to offer a mix of
products and services that are clearly distinct from the big competitors.
Convenience or service alone is unlikely to be a sufficient differentiator.
One office supply store added more and more gift items as they recognized
they couldn’t compete on price with the office superstores.
* Do something. Recognize that you’re going to have to make some changes
– in product selection, services, employee training, marketing, and
more. If you just sit there, you’re going to get run over.
* Outsmart them. Big companies move slowly; you have the advantage of being
able to adapt to new trends and market developments much more quickly. Stay
abreast of industry and market trends. Keep informed. You can’t just
take care of day-to-day business; you have to plan a strategy for even the
smallest company.
* Link special services to purchases. It’s incredibly frustrating to
provide great pre-sale advice, but then have the customer make the actual
purchase at a cheaper store or website. Look for ways to offer desirable or
unique services as an add-on benefit as part of, or after, the purchase. When
I purchased my barbecue grill at a local hardware store, they included free
delivery and assembly – services I would have had to pay extra for at
the hardware superstore. One local bookstore hosts special events with leading
authors – free to those who purchase books.
*Use inexpensive marketing approaches. Big companies have to spend a fortune
on marketing. Keep your marketing costs low by using approaches such as trade
shows, public relations, customer retention and referral programs.
* Have terrific employees. Small companies can be at a distinct advantage
in providing employees with a better place to work than most superstores.
In addition to offering better wages and benefits, also provide a better place
to work – more communication and recognition, less workplace politics
and bureaucracy. Say thank you – a lot. Offer unique benefits that show
you value your employees – I give employees paid “well days”
so they can take off when something really good happens – a new love,
a fun outing with their child, a gorgeous day to go to the beach.
* Improve employee training. Megastores often provide better training –
at least in sales techniques – to their workers. Small companies often
neglect to train their workers adequately. Make sure they know the products
and know how to interact positively with customers.
*If you can’t beat them, join them. Some superstores, such as Home
Depot, contract out services (such as roofing or kitchen remodeling), often
using local subcontractors. Perhaps you can get a piece of this action, but
don’t allow your whole business to become dependent on this source.
*Band together. There’s been a remarkable resurgence in local downtown
areas as businesses have joined together in business improvement districts
(BIDs) or Mainstreet USA programs. Likewise, independent bookstores formed
“Booksense” to offer joint programs and marketing, helping them
compete against bookstore chains and Amazon. There’s definitely strength
in numbers.
Rhonda Abrams has two new books in bookstores nationwide:
“Six-Week Start-Up” and “What Business Should I Start?”
She is the President of The Planning Shop, publisher of books and other tools
for business planning. For Rhonda’s free business planning newsletter,
register at www.PlanningShop.com
Republished with kind permission. Rhonda's Columns. All rights
reserved, 2004.
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