Competing in a world dominated by the big box stores

Here we are in late December, the pinnacle of the retailing year, and every retail entrepreneur we talk to bemoans the same problem: “How do I compete against these big guys, particularly at this time of year?”

I can see their point. The parking lots at the big box stores have been packed from dawn to dusk. One after another, customers exit the stores laden with gifts for friends and family. The lines inside have been long and the clerks tired. Shelves have emptied, with shoppers worried about availability of the year’s most popular items. How can a small business compete?

Small retailers typically struggle to keep up with the big chain stores for a couple of reasons. The first is that their operations need overhauling anyway. Perhaps they don’t have a very good selection or their prices are just too high. Perhaps they offer poor service, but because they haven’t always had major competition, they were able to do business that way.

The second reason they struggle is that they haven’t changed anything, even in the face of giant competition. Remember the definition of insanity:

doing the same thing you’ve always done but expecting a different result. Those retailers who think they can continue doing business the way they’ve always done it in spite of seismic shifts in the marketplace are, quite possibly, a little crazy.

If you want to succeed in a big box world, you need to determine what you do well, and do that better than anyone else. You can’t compete on what Target and Wal-Mart do best. You can only compete on what you do best. But you can compete. Here’s how:

Find your area of specialization. This will allow you to communicate a clear message that will differentiate you from the big guys. What could you offer that makes a visit to your store different? What processes and features do you offer to make buying at your store hassle-free and painless? For instance, I saw a local retailer’s television commercial recently, and the spot included the statement, “We offer what the big box stores can’t — personal service, high-quality at every price point and follow-up after the sale.” That says it all!

Develop a local and regional brand based on that differentiation. Offer a stronger value proposition than your competitors.

Clearly define your value proposition. This will vary by retailer, but it might include things like a different and better product mix. But along with that product mix can come your company’s true ability to solve problems for the customer by using your specific expertise.

Showcase your product knowledge. In many cases, the young clerks in the big box stores are watching the clock and picking up their checks, but your staff can be stars with customers by asking good questions in order to help them make a more informed decision. Because you specialize, your staff can offer in-depth knowledge of your products, something that is often lacking in the big department stores.

Build a network. I know, who has time? But you can’t afford not to. Your market must know you exist and be familiar with your company and its reputation. Develop your elevator pitch, attend networking events and participate in community and civic groups and send your staff to similar events as well.

Partner with some non-direct competitors in marketing and promotion. Cross promote for one another. Look for ways to achieve efficiencies in ordering and operations.

Reach out to your customers. Develop a regular mechanism for communicating with your customer base. It could be through e-mail or snail mail, but on a consistent and routine basis, send something to remind your customers that you’re there. Offer a special sale or feature early hours for frequent shoppers only. Send a postcard highlighting a new line of merchandise. It needn’t be that expensive, but it should be done systematically.

Above all, don’t be afraid to change what you’ve been doing. The marketplace in which you compete changes every day. Learn to adapt, and focus on being flexible in response to those changes. That’s one of the benefits to being small. You can turn your ship much faster than the big guys can!