How do small retailers compete and succeed while doing business with big-box stores today? Most experts suggest the following “simple” formula- Sell quality products, continuously offer out of this world customer service, find suppliers where you can obtain higher markups and avoid discounting at the expense of sales down the road, right? Those of you in the trenches every day know that this is not always easy to accomplish. I say we try something a bit simpler and back to basics- Start to improve your business today by watching your cash—and then letting it help you grow.
For just about every small retailer, cash is king. Whether the focus is on daily and weekly sales to assure that there's money in the bank to meet payroll and other expenses, or on building a cash balance during the busy season to get you through the slower times, most small retailers keep a very close eye on cash flow.
Since the big box chains don’t have this “daily” worry, they spend their time negotiating with vendors and driving down costs to offer their customers the lowest price for commodity or near-commodity goods. They understand that for these items the vast majority of shoppers are highly price sensitive.
But for any item, and especially for those that are not commodities, there is a critical segment of customers who are not price shoppers, who focus instead on product quality, service, and a relaxed, friendly experience. Small retailers, enter here.
In other words, small retailers should avoid competing on the basis of price, because there will always be a competitor with larger, deeper pockets, instead, you should focus on finding unique, high quality, and compelling products that the big box stores don’t even look for in the marketplace. Competing on the basis of product quality and uniqueness enables a small retailer to present to their customers a compelling value proposition and maintain critical price integrity.
Thus it follows that strategic positioning for small independent retailers leads directly and most importantly to the product selection and pricing policy of a store. By selling higher quality, specialty products on the basis of their intrinsic value, and the product knowledge and customer service that accompany them, you can insulate your store from price competition, and your store can obtain a higher initial markup, avoid price promotions, and other incentives that eat into margins.
How is this done? Here are a few specific ideas to help position your store as a premium destination for the finest products, knowledge and service, and generate the margins you’ll need to assure continuing positive cash flows:
Once you tie these elements together, my guess is your CA$H picture will look a whole lot better!
Lynn Switanowski is the founder of Creative Business Consulting Group, a Boston, MA based Strategic Planning and Retail Consulting firm. CBCG works with businesses to develop creative programs across a variety of business processes that will improve sales and profit margins.
Lynn draws on twenty three years of retail industry experience with Fortune 500 apparel and consumer products companies delivering increased sales and profit margins, helping companies re-engineering traditional business models and creating long term programs to reduce expenses. Her management skills and leadership ability have led to the successful growth of niche businesses and have allowed her to establish the strategic direction for companies launching new brands and revitalizing large-scale mature businesses across many product categories.
Want more information? Call Creative Business Consulting Group- 617-437-9191 today. Or E-mail us at email@example.com
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