How Can Small Business Compete This Holiday Season?
‘Tis the season for bargain hunting, and with so many reeling from the economic downturn, this is true more than ever now. Shoppers will be lured to big-box stores by low prices that small businesses can’t offer, so how can small retailers compete?
According to an article by John Tozzi in Business Week, experts say small retailers must leverage their biggest advantage over larger chains: personal relationships with customers and the ability to offer superior customer service. Retail experts suggest strengthening relationships, especially with best customers, and encouraging them to spend more by offering affinity discounts. In Tozzi’s article, Eugene Muscat, professor of management at the University of San Francisco, says wise owners “are going to their customer base and mailing their best customers targeted discounts to get them into the store. That’s a lot smarter than putting a ‘70% Off’ sign in front of your store.”
In addition to targeting loyal customers, small businesses can better compete by following other advice from retail experts, as the Business Week article suggests. Experts advise small business owners to pursue upper income shoppers who are less price-sensitive and perceive more value in customer service. Small business owners are also encouraged to keep inventories lean, and to watch staffing levels to control costs. And lastly, they suggest merchants coordinate a web strategy with their brick-and-mortar business.
Market Researcher TNS Retail Forward, predicted online holiday sales will grow 9% over last year, while Forrester Researcher forecasts 12% growth, according to another Business Week Small Biz article last month. Even if these forecasts turnout to be optimistic, small retailers with an online presence are better positioned to drive sales than from empty stores this season. Utilizing internet promotions to attract frugal customers is common these days, and small business owners can look to benefit from this practice. Although discounting reduces margins, sales volume can compensate for this, and small businesses can reach beyond their neighborhoods and even find customers internationally who are attracted by favorable exchange rates here in the US.
