Long ago, small shops littered the retailing landscape. Products were designed, created, and sold by independent business owners to buyers within the surrounding community. Times have changed. The retail world has adopted a new dynamic that threatens the long-term viability of smaller businesses. Mass-market chain stores have penetrated cities throughout the nation, offering massive inventories and lower prices. For independent retailers, this intrusion represents more than mere competition; it embodies a risk to their survival.



Below, I'll provide you with a strategic framework for competing against the chain retailers. You'll discover 4 keys for not only rising to their challenge, but outmaneuvering them on the path toward building stronger customer loyalty and increased sales.

#1 - The Power Of Superior Service

Even though the big box stores can offer a larger inventory within any product sector, they're unable to provide a high level of service. The breadth of their product selection precludes educating their staff about any particular item. What's more, their pricing strategy prevents them from offering ancillary services or help. By contrast, smaller merchants can provide a much higher level of customer service. That might include offering useful advice about a new bicycle, disposal of an old refrigerator when buying a replacement, or well-trained employees who can be simultaneously engaging and helpful.

#2 - Keeping A Lean Inventory

The days of stocking extra merchandise in an area that receives no customer traffic are over. Because retailing competition has escalated in every sector, conserving your operational cash flow has become critical. Each dollar invested in products that receives zero exposure to the buying public is a dollar that cannot be spent on marketing, promotion, and new opportunities.

To compete with the megastores, you must keep your product inventories lean. That means moving your stock from your storeroom onto the floor where your customers can see it. It can also mean that you decline late shipments from your vendor or send back extra product that was shipped to you in error.

#3 - Managing Staffing Needs

It's expensive to support unnecessary staff hours. Paying for a greater number of employees than your customer traffic can justify represents a useless drain on your cash flow. You'll need to study your floor traffic patterns to identify your staffing needs throughout the day.

Also, keep in mind that a lot of families have dual-income households; both adults may be working during the day. That means they won't have the opportunity to visit your store until the evening or during the weekend. If that's the case, consider opening and closing your doors later. That will help you maximize your employees' time, lower your staffing costs, and increase your availability to your customers.

#4 - Building Your Network

If a large discounter moves into your community, organize a joint promotional effort with other local merchants. By forming a network of cooperating businesses, you can leverage each other's customer bases. For example, if you operate a hardware store, you can offer a 10% discount to customers who show you a recent receipt from the local home gardening shop. Each independent retailer in the network would cooperate with each other, referring customers to each other's shops.

Leveling The Field

Mass-market merchants represent a very real threat to the long-term survival of small retail shops. But, it's important to realize that you can compete against them. The big box stores are incapable of matching the level of service that you can provide. Plus, by closely watching your inventory and staffing needs, you can conserve your operational cash flow. Finally, a cooperative network of local merchants, each providing a high level of service and product quality, can help stem the tide of a megastore takeover. Competing against the giant chain stores is well within your control.