presents:
Small business promotion with retail speaker Tom Shay
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Leveling the playing field

Competing with the Mass Merchants

Imagine the game in which the batter takes a swing at a pitch and drives a hit over the shortstop's head and between the center and left fielders.  He rounds first, heads for second, and dives into second base as the shortstop receives the throw from the outfielder.  The umpire, with a good look at the play, quickly raises his hand, extends three fingers and shouts, "third down".

Wait a minute! Are we not playing baseball here?  What is the umpire saying?  We can all agree that this is not the game that we all knew, for apparently there are a new set of rules. Just like retailing in the outdoor power equipment business, the rules have been changed.  Sometimes, it appears there are no rules anymore in the retail world.  Considering the intense competition, along with margins having eroded in the past 15 years, you might question your motives for being a part of the industry.

"The competition is just too great", is a statement frequently spoken by business owners.  "I can't compete because they buy better than I do", is another similar statement.  And many of the comments of this nature are true. The mass merchants can do many things that the independent cannot do. When the Walton family build the first of their new style store, and when the Kressge company decided to create their first K-Mart, they surely did so because they felt there was an opportunity.  The same is true for the folks at Home Depot, and all of the mass merchants that are a part of many communities.

Not to paint a gloomy picture, there is plenty of room for a retailer not only to survive, but to thrive in the extremely competitive market today and into the next generation.  There is an opportunity for the independent retailer that the mass merchants cannot take advantage of.  This opportunity is not a secret; it is just a detail that the majority of independent retailers do not utilize. "Nobody else does it.  Why should we?" That is the secret.  Doing things that nobody else does. What if every person that walked into your store was met by someone that greeted them by name and shook their hand?

There is one mass merchant known for having a retired or handicapped person sitting at the front door waiting to greet a customer.  But what are your chances of finding a knowledgeable person on their sales floor? Does every person in your business that comes into contact with the customer know the basics of the equipment that you are selling?  If not, then what advantage do you have over the mass merchant?

In small business as a whole, we as retailers have listened too much to the advertising of the mass merchants.  They continue to promote price, and they have to because it is the main advantage that they have. Yet, according to a study of 20,000 shoppers conducted by Dr. Richard Feinberg of Purdue University, price is not one of the main concerns of shoppers.  It can become the main concern when both the mass merchant and the independent retailer fail to pay attention to the top five important issues. 

Those five issues are:

1.  Have in stock what the customer wants
2.  Value the customer's time
3.  Sell value
4.  Have excellent visual merchandising
5.  Have professional help

The first customer requirement is that you have what they are looking for.  When we examine a business, we rank inventory according to how fast it will sell. The “A” items sell the most frequently, and the “E” items sell much slower. Too many businesses give as much time and effort to the “E” items as they do the “A” items. This is where you have an inventory imbalance.

The second concern of your customers is that you value their time.  This may be your need to have enough sales people available at peak hours, or that you are stocking related items. As far as the customer is concerned, if he has to go to the mass merchant to get an accessory, he might as well look at all their merchandise.

The third concern of your customer can be shown in a simple equation. Everything that everybody buys and sells utilizes this equation.  It is: QUALITY plus SERVICE plus INFORMATION plus PRICE equals VALUE. If your item sells for more you have to be able to explain the value in the item.

Having excellent visual merchandising is the fourth concern.  Our customers are telling us there is no appeal of a business that has a dirty floor, dirty windows and lights that are burnt out.

The fifth and final concern is having professional help. Surely, this is one area where the mass merchant should be no competition for you. The customer, no matter how experienced, has questions.  It becomes the responsibility of your salesperson to engage the customer in a conversation so that he or she feels comfortable enough to respond.

Notice that price did not make it into the top five of Dr. Feinberg's list.  But in the absence of these five needs being properly addressed, the customers defaults to price. I think you should take the time and make the effort to invest in the opportunities that you have that the mass merchant does not have.  You need to; it is third down.  Remember?

Tom Shay, CSP is a fourth generation small business owner providing proven management and business building ideas through his Profits Plus Seminars, Profits Plus Solutions coaching, books authored, and articles written. Tom can be reached at 727-464-2182 or through his web site: www.profitsplus.org


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