Retailing is an old business model that goes back a few thousand years. Only in the last hundred years has there been some drastic changes. Customers today have more choice than ever before. They can buy from small to giant retailers. They can buy local or buy from the other side of the planet via ecommerce. The growth of giant retailers, shopping malls and technological advances have put a lot of pressure on the small retailer.
Giant retailers make it hard for small retailer to compete. Giant retailers have become so powerful that most of consumer spending is done in a handful of large companies. These giant retailers have strong purchasing power to buy their inventory for less than the smaller retailer does. They also have collected an incredible amount of information on their consumers. Big Data allows them to analyze trends so they know exactly where to place items in their stores and get the consumer to buy.
Online retailing is another growing trend set to take away small retailer business. Sites such as Amazon, eBay and even the retail giants have their own websites that offer more products than a small retailer can handle. Over the last several years, online retailing has grown quickly taking a larger piece out of total retail sales.
Mobile apps are also affecting retailers. Deal apps allow consumers to quickly scan the barcode or search while looking at the product in store. It quickly tells them where the best deals are. Most of the time small retailers cannot compete on price so the mobile app steals the customer away right under the nose of the business owner.
Small retailers need to know that the way consumers shop today is also different. Consumers shop for an adventure. It is an experience. It gives us a chance for people watching, to see what others buy and to catch up on new trends. This affects both the location of the small retailer’s business, the appearance of the store and the manner in which employees interact with the customers.
Employee training is also very important to small retailer’s success. If employees do not know what they are selling, they may provide inaccurate or misleading information that may inadvertently prevent a sale. Small retailers need to make sure that all employees understand the product line and they empower their employees to make the right decisions.
Marketing to consumers has also become a greater challenge. With so many communication channels, small retailers cannot afford to put their message everywhere. Determining the most effective communication channel for their business is crucial. They also need to ensure that the message is consistent through all channels.
Small retailers must be careful which consumers they target. They can mitigate this issue by having a deep understanding of the consumer. They should know as much of the demographic and consumer behaviours of their target.
It may seem that there is a mountain of challenges against small retailers. Small retailers do have some advantages over the giant retailers. Due to their size, they can be agile and evolve quickly. They have less administrative overhead or information silos found in large business. Their organization structure has fewer layers and no senior management. This allows small retailers to make faster decisions in a changing environment.
With the many factors putting pressure on small retailers, it makes it difficult to compete. To remain competitive against giant retailers and ecommerce sites small retailers need to consider both external and internal factors. They need to offer personalized service, streamline marketing and ensure that they communicate their message clearly and consistently. If small retailers train their employees correctly and ensure the appearance and location of their business fits with their target consumer’s expectations they will not only survive but also prosper in a challenging environment.