Tough times mean that consumers will be more likely than ever to turn away from small independents and head to big box chain stores in search of savings this upcoming holiday season. But, according to a BusinessWeek (BW) article, it doesn't have to be that way if small merchants focus on their strengths and stay out of a price war with larger rivals.
"The independent and the small business person are fighting a much steeper battle for sales in a shrinking market," Eugene Muscat, professor of management at the University of San Francisco, told BW.
Deloitte Services, the National Retail Federation and TNS Retail Forward have all issued holiday sales projections with numbers coming in the 1.5 percent to three percent range.
Frank Badillo, senior economist at TNS, said that small stores are more likely to succeed if they target wealthier consumers. "Upper-income households often perceive of value in very different ways from lower-income shoppers," he said.
Daniel Butler, vice-president for retail operations at the National Retail Federation, said it is key that independents make sure to take care of their best customers. "That is the secret weapon that small independents have against big national chains. If I'm savvy and communicate with my customers well, I can draw loyal customers into my store before they go into the national chains," he told BW.
Prof. Muscat said independents should offer special affinity sales to their best customers to create a deeper bond. "That's a lot smarter than putting a '70% Off' sign in front of your store," he said.
Small merchants should also take advantage of the continued relative strength of online sales versus in-store. According to TNS Retail Forward, online sales will grow nine percent this year.
NRF's Butler said stores should leverage brick and click synergies. "If you have a website and do business online, you want to make sure you're cross-promoting your web site with your in-store traffic and vice versa," he told BW.
Also important, according to experts, is cost control. Independents should be focused on keeping inventory levels lean and staffing to meet shopper traffic patterns.
Discussion Questions: What do you think independent stores need to do to succeed this holiday season?