NFIB

Competing With the Big Guys
12/ 27/ 2002

It's painful for an existing small business when a new, larger company in the same industry moves into the area and becomes direct competition. Similarly, many people contemplating starting a small business are reluctant to compete with the large retailers. Strategies must be created and put into use to overcome the lower prices and greater selection that large retailers provide. In today's article, Jeffrey Moses offers proven tips for leveling the playing field and strengthening your company for the long run.

1. Strengthen the loyalty of existing customers.

Reward customers by offering discounts for frequent purchases. Offer free services or products after a certain number of purchases. Hold special "loyal customer only" sales that offer true, meaningful discounts of 20 percent or more.

The effectiveness of discounts for frequent purchases cannot be overstated. Many times, customers will continue to buy from a store that offers discounts, even when the big chain store down the street has lower prices overall. This tactic is especially strong when combined with the following strategy.

2. Use "loss leaders."

By pricing and advertising some items at cost or even below, you can get customers into the store. (The theory is, of course, that once in the store, a customer is likely to purchase additional items.) When selecting items to use as loss leaders, choose popular, well-known products and brands. That will make the offer all the more attractive to customers.

3. Carry extensive items in one or two product areas.

The large retailers have a little of everything. You, however, can have a little of most things and everything of one or two types of products. This will establish your store as the place to go when buying those items.

4. Offer an educational environment.

Customers value learning more about their interests. You can help customers become experts by setting up an in-house learning center. Hold classes in the evenings or on weekends. Make information available on your Web site.

Perhaps the most important aspect of this strategy is to have your staff available to answer questions. The large chain stores are improving their customer service, but their staff usually doesn't have time to instruct customers in the fine points of using the products being purchased. If your employees can provide this, your customers will have an extra incentive to continue doing business with you.

5. Never let a customer wander around your store trying to find something.

Your customers should be greeted when they come in, and asked frequently if they're finding everything. Employees are hard to find in the big chains. (Many large retailers instruct their check-out staff to ask, "Did you find everything?" That does little good when you're at the front of the store making your final purchases!)

6. Make it easy for customers to make returns.

That's one department in which the large retailers shine: they make returns easy. To match them, you'll have to do the same.

7. Give your store character.

Most chain stores have the same impersonal feeling in every city, whereas you have control over the look and feel of your store. Consult with a designer to make your store a charming shopping experience. People love an inviting atmosphere and will come back when they feel comfortable.

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