Are Chains Better Than Mom & Pop’s at Community Outreach?
New research co-authored by the University of Alabama in Huntsville not so surprisingly finds that that as much as 40 percent of retailers’ consumer support comes from community-building factors. The surprise was that larger retailers had more readily embraced these community practices and sponsorships than smaller stores.
"If you are going to be local, you have got to understand what it is to be local," said UAH’s Dr. Timothy Landry in a press release. "But I see increasingly that it’s the big guys who understand this, not the little guys."
Over 200 non-student adults in a large Midwestern city were asked which retailers were their favorite and probed how they felt "connected" to them. Researchers rated those connections based on four community social functions: socialization, mutual support, social participation and social control.
Overall, the study found consumers were more loyal and willing to pay more at a retailer actively supporting the community.
Among the four community social functions, the research found socialization "strongly influential" in generating both loyalty and willingness to pay more. Socialization involves "appreciating the core values and norms of a target group and making sure those are reflected in products and services."
Mutual support, in which a retailer supports local organizations and activities such as a Little League team or communitywide event, was also positively associated with customers’ willingness to pay more. Also beneficial for a retailer is social participation, where the retailer facilitates interactions or gatherings between community members.
Only social control, where a retailer establishes standards to enforce community norms for others, did not result in greater loyalty or willingness to pay more. An example would be a store censoring certain music lyrics on compact discs it sells.
While the study showed that larger retailers seem to have adopted community-building practices more quickly than the small stores, the study was inspired by instances of small mom-and-pop stores thriving with the aid of community-based efforts despite mass retailers opening nearby.
The study, which appears in the Journal of Marketing Theory and Practice, was co-authored by researchers at Oklahoma State University and the University of Texas-Arlington.
Discussion Questions
How important is local community outreach to retail store performance? Do you see either large chains or independents having an advantage when it comes to local outreach?
In my opinion, independents have a huge advantage when it comes to outreach, primarily because independents can make faster decisions and already have boots on the ground. For example, our community needed $50,000 for some fireworks. The independent offered it up immediately and got all the credit. The local chains would have to get that kind of action approved by someone at HQ and never allow their community glad-hander to make such a decision.
Chains have too much bureaucracy and usually don’t allow their public outreach people authority to make fast decisions. With an independent or small regional chain, the owner/president often serves as the go-to person for community outreach.
This is something that many independents have been doing for years and years. There are many good ways to serve your community through time, talent, or treasure, and with the Big Box love affair with customers, we sometimes get lost in the shuffle.
Walmart did not invent the greeter, or philanthropic events, but with their power in the media, and their capital, it seems that way.
The unfortunate thing with outreach is that it has gotten to the point where you have to pick and choose what you can donate to in terms of money, because the demand for this has far exceeded the ability to please everyone. This in no way relieves us of our responsibility to our community, as I have done other things to reach out in many positive ways, which costs me my time, and has been a positive effect in our local schools.
Take time to do motivational talks with senior high kids, and do reading programs for the elementary grades, and challenge the classes with reading goals, then reward them with a lunchtime pizza or snack if they meet their reading goals.
Get involved with job shadowing for teenagers, and send down evaluations to the schools on how best to enable the students to achieve. This costs nothing to do, but makes an impact on how you are perceived.
Pure donations these days, as I said, are getting harder to do, as many charities do not support your businesses, but are willing to ask for your donations. I have to pick and choose what I can give, and do so all the time.
Finally, it is crucial to do what you can to make your town better, by being honest with those you deal with, and help out where you can, because that is who we should be in the first place. Giving back is part of our business, and you can make a difference with your time and abilities just as good as the Big Boys can, all year round. Yes, I am sticking up for the little guy, but I can’t help it.
Community outreach can have a major impact on a retailer’s traffic and bottom line. What Mom & Pop shops sometimes overlook is the fact that the outreach investment is not necessarily a contribution, but advertising spend. Instead of putting a local ad in the paper every week, sponsor a Little League team, or host a charity event at your store, or donate items to local charity auctions.
The Mom & Pops that get this do very well.
Three factors are killing our cities or at least severely wounding them. 1) The lack of citizen engagement. 2) The lack of alignment between the components of the city/community. 3) The inability or refusal to see the possibilities. We still haven’t come to recognize that the community is one integrated whole and when we don’t strengthen that ‘whole’ it dies. It’s like trying to get fit by exercising your left arm. There’s sure no lack of evidence for that including Detroit ‘discovering’ it gave away billions to union cronies.
But here’s the key thing: is “community outreach” driven by strategy or by spirit? The former has a company seeing the community as something ‘out there’ – thus the term “outreach.” If we “outreach” and do nice things people will buy more stuff from us.
A spirit driven approach sees the community as themselves. It’s an ‘inreach’; it’s helping the collective ‘ourselves’; it’s seeing a ‘grand US’, an integrated whole. Spirit-driven engagement isn’t a plan, it’s a purpose that can’t be stopped.
The ancient admonition is ‘you love your neighbor as you love yourself’. Building community is always an inside job.
Examples of great community outreach and charitable programs abound with all sizes of retailers. The reality is that ‘big’ retailers do a great job of giving back in most cases (and all too often aren’t recognized for what they do). Millions of dollars and thousands of hours are invested back into the communities.
While small retailers don’t have the money or time that the big guys do, you can see many (not enough, sorry) stepping up and getting involved. And given the payback that they get when they do, these local retailers need to stay or get more involved. Hats off to those that do … and a kick in the pants for those that don’t.
In the smaller markets, the local Mom & Pop retailer is generally integrated into the community, and this makes a great difference when there are few players in the market. Chains are in the larger markets and can have an advantage over a Mom & Pop retailer due to size of store, newer stores, and sometimes lower prices.
Consumers will pay a slightly higher price when they see community benefit. But when the chain has a few stores in the market, that puts the Mom & Pops at a disadvantage.
Independents should always be able to outperform chains on the big three variables: service, fresh, and local. By local I mean working with local product providers as well as being the community champion. Human nature dictates that we like to interact with people and institutions that have mutual common interests.
Being a member of the community means more than having a 25 year membership in the local country club. It means engaging the community on things of importance to the community members, your potential shoppers.
Community outreach is one of the key levers independents can and should be pulling – and they don’t. At least, not enough.
Part of it is certainly the “power (or pinch?) of the purse” for independents as Tony mentions. Another issue is that “ROI” is often not obvious.
But these are the things that build what analysts call a “wide moat” between the independent and chains over a long period of time. They are the things that can save your business in the downturns. They will not completely negate the impact of price, nor will they prevent your shoppers from cherry picking the 4/$10 soda 12 pack sales at Walgreens.
Letting this obvious business lever slip away to your hometown Kroger is not good.
The saying is that the more you give the more you get. Community outreach is important. Give back to the community and they will appreciate you. The chains have a more difficult time of acting “local” because they aren’t. It’s up to the manger, who is usually local, to bring that flavor into the chain. In the end, the true local retailer has an advantage of truly being local – because they are.
Engage in the community. Give back to the community. Be seen in the community. And, be a part of the community. Your customers will see you out a restaurants, at their church, where they vote, etc. And, they will see you giving back and being part of the community. That’s an advantage that the national chains don’t have. But don’t be fooled into thinking that they can’t deliver a local feel. As mentioned, the right manager can help localize the national chain.
Our research shows that among supermarket shoppers more than 80 percent believe that community involvement by retailers is very/somewhat important yet 33 percent of shoppers don’t know if their store is involved in the community, and another 40 percent indicate their store is somewhat or not too involved.
Whether supermarket or other retail, the local retailer should be fully engaged in the community and communicating what they are doing to address local needs or support local causes. Many times independents are reticent to talk about their local efforts but in today’s world if you don’t, the chains will talk about what they are doing and take credit for being locally involved.
Community outreach is growing in importance as it is one of the better ways to give consumers a reason to continue to shop brick and mortar and discourage showrooming.
I’ve seen both national chains and local independents do outreach really well. Social media has become a critical component of community outreach efforts and national chains may have an advantage there since they are more likely to have scale and talent with social channels.