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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