RSR Research: Death of the Small Store Owner?
Through a special arrangement, what follows is an excerpt of a current article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
A friend of mine who owns a store in a small mountain town in Colorado recently called me with a question that rocked me back on my heels: "Am I crazy to try to run a retail store in this day and age?"
Her store focusing on "green" baby products has been open for a little over a year now and, with basically no investment, has cleared about $1,000. And in that time, she moved from a tiny store in a not-so-heavily trafficked area to one almost twice as big — all with virtually no advertising.
Until owning up to her doubts, I’ve thought she’s done remarkably well. But her fears tell a somewhat scary story for the times we live in:
- She has no website. She’s older, as you may have guessed, and she’s a little afraid of technology. I told her she needs a website that sells products. Her son is now helping her. But she’s not happy about that. Considering her customers — young mothers with money to spend — I don’t think she has much choice in the matter.
- She must battle showrooming. I was surprised by this, because she sources a lot of her products from women who sew and craft. But, even with her unique mix, she’s finding herself comparison-shopped. Trying to counter this with events and classes, she found attendees taking pictures of the products with their phones and heading home without buying anything.
- She must battle vendors. One vendor, that has strict controls on how she can price merchandise, ran an online sale via their direct-to-consumer site that it never would have let her run. When she called to complain, she was told she could match the promotion. But the discount was so steep that she made no money off of it.
- She must battle segment blurring. As soon as she moved her store to the higher traffic area, a nearby gift shop and bookstore — already there at the time — immediately added her product categories to their assortments.
- No one will lend her money. She’s grown to the point where she really needs to be able to buy inventory on credit in order to stock up for the holiday season, but no bank will lend her money even with the inventory as collateral. She’s considering refinancing her home.
My heart goes out to my friend. To think that retailing has become so tough that someone with a good idea and a lot of passion can’t make it the traditional way truly speaks to the end of an era. It may not be "Goodbye, retail store," but it may very well be, "Goodbye, retail store owner."
Discussion Questions: What new challenges face mom & pops today? Is it becoming tougher for retail start-ups, or has it always been this tough?