NFIB

Compete with Chain Stores by Focusing on High-End Customers
02/ 11/ 2004

by Jeffrey Moses

In order to compete with the massive buying power of chain stores, small businesses should consider focusing on a market segment the chains usually don't concentrate on -- the high-end customer. The chains offer highly discounted merchandise that is often end-priced for customers at or even below cost for smaller stores. In so doing, however, chains rarely offer top-of-the-line merchandise. Also, selection is usually limited, offering affluent customers little choice between brands and models.

A smaller store can offer a selection of more expensive merchandise, including designer lines. When advertised properly, this will attract a set of customers who usually shop the chains only when looking for standard items that are not brand differentiated.

Unless you want to have an exceptionally high-end store that caters only to the wealthy, you'll need to carry more moderately priced merchandise as well. This mix will broaden your customer base and increase overall sales. Customers of moderate means will feel comfortable with your moderately priced items -- and perhaps treat themselves occasionally to a higher-ticket item, as well.

In order to take advantage of a higher price range, and to further differentiate yourself from the chains, your staff needs to go out of its way to provide outstanding customer service. The chains are getting better at this, but their customers still have to walk the aisles to find an employee who can help.

Your staff can work closely with customers, even one-on-one, making suggestions, providing solutions to their specific needs and even stocking items that customers suggest. Excellence in these areas will keep customers coming back, no matter their economic level.

When providing a mix of high-end and modestly priced merchandise, your techniques of advertising must be selected carefully. If your ads portray your store as a luxury boutique, you'll attract only a certain type of customer. Your ads need to show the price ranges you offer. One effective way to accomplish this is to list some of the widely known brands you carry, ranging from the most expensive to the more moderately priced. Customers will recognize the names and respond to their favorites.

Also, including pictures of your merchandise in ads can demonstrate price ranges you carry. When you picture items of varying prices, customers will know exactly what to expect.

Successfully introducing higher-priced lines is a commitment that may not yield immediate results. Advertising takes time to bring in the crowds, so you'll need to have the financial resources to stock an adequate selection of merchandise to warrant good word-of-mouth among your target customer base. Financing is a common problem with many small businesses. If you need to go upscale by adding new merchandise little by little (this has worked for many retailers), focus on adding one or two brand names, offering a broad selection of models among those. You can mention these specific brands in your marketing, attracting customers familiar with them.

Work with manufacturers or distributors to get the best terms, including return privileges, delayed payments (up to 180 days), and even consignment. Select the brands that offer you financial advantages, without compromising the quality desired by your target customer base.

Small Business Sound Off
Does this story hit home?  Share your story with us