Cash in on your Niche
How can independent retailers compete with the big-box giants today? One phrase sums it up- Product is King. Selling products that are unique in nature, offering your customers a fair value for the prices you charge, and by managing the inventory of these products so as to avoid costly end of season markdowns will do just the trick.
Every retailer today knows the value of a dollar. The old phrase, cash is king has never been truer than with the independent retailer community today. Paying attention to daily and weekly sales to assure that there's money in the bank to meet payroll and other expenses, or on building a cash balance during the busy season to get you through the slower times is just as critical as finding the perfect piece to sell.
Obviously, there are many factors that determine whether a small retailer is meeting, or exceeding, its cash requirements and building cash balances on an ongoing basis. But for most, the cash profile of the business can be traced directly back to a series of fundamental decisions on how the store is positioned in the marketplace.
Independent retailers have the ability to maximize sales by responding quickly to customer needs, while offering one on one customer service. Big-box retailers on the other hand (known as category killers for their ability to single handedly drive down prices and create a “commodity” price mentality on almost every item they sell) are less fluid in nature- short of their capability to lower their prices on a dime. Big Boxer’s understand that for these many items, the vast majority of shoppers today are highly price sensitive.
This is where the independent retailer can step in. They must find products to carry in their stores that are not “commodity” but are “quality” and thus resistant to the pricing deflation that is occurring against the big box retailers. There is a growing segment of the consumer market that is indeed looking for unique niche products of high quality sold by a salesperson that is deeply knowledgeable about how that product works.
The lesson here? Independent retailers should avoid competing on the basis of price, because there will always be a competitor with larger, deeper pockets who will be able to undercut you. Competing on the basis of product quality, product knowledge, and customer service enables a small retailer to present to their customers a compelling value proposition and maintain critical price integrity.