Beat The Big Box
The Dynamic Manager’s Handbook Of
Winning The Retail Battle
by Dave Donelson
Donelson SDA, Inc., Smashwords Edition
Copyright 2011 Dave Donelson
ISBN: 978-1458167422
A note from the author
The Dynamic Manager Handbooks are for entrepreneurs, managers, and others who want to succeed in small business by learning more about management techniques, operations, and best practices. Each volume in the collection is devoted to a single topic. The material was extracted from the Dynamic Manager Guides, my series of books based on my experiences as a business journalist, consultant, and entrepreneur.
Table Of Contents
Chapter 2 - Case Study: Schweser’s
Chapter 3 - The Magic Of Pricing
Chapter 4 - Two Ways To Compete
Chapter 1
“Because you know your customers as people, you better understand exactly what turns them on.”
Independent retailers face more competition than ever before. On-line drop shippers are a known and growing problem. But one of the most persistent threats is from bricks-and-mortar stores in your own market—big box retailers whose volume purchasing, minimum-wage labor, and huge advertising budgets make them a force to be reckoned with regardless of what the small local business sells. You can beat the big box, though, 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.