A Tale of Two Retailers

This is the fifth in our series based on Challenges of the
Future: The Rebirth of Small Independent Retail in America
, a 64 page white paper by Jack Stanyon, underwritten by the George H. Baum
Community Charitable Trust, the Illinois Retail Merchants Association, and the
National Retail Federation Foundation.  Today’s topic is Competition.

Here’s a story of two retailers. I’ll call them A and B. What they sell really isn’t important to the
story except that they both sell roughly the same kind of merchandise. They are truly specialty stores in that
neither one sells anything that anyone really needs. If you were going to buy something in either
store, it would be because the item caught your eye, or because someone sold it to
you.

Dealer A and B are both located in a busy tourist area with
lots of specialty shops and restaurants. It’s the kind of place you might go spend a Saturday afternoon which is
exactly what my wife and I did this past weekend. The two stores are no more than a block
apart.

Store A was busy. There were at least four people working
there. There was music playing and the
atmosphere was very conducive to buying something, which I did. I’ve been in this particular store many times. It’s always busy and I don’t recall ever
leaving there empty-handed.

Store B was a different story. When we walked in, there were no customers in
the store. The only person working
there, who appeared to be the owner, was talking on the phone.  She was talking (quite loudly) to someone
about how bad business is. She blamed
gas prices, interest rates, the President, the stock market, chain stores, Al-Kaida,
the bird flu, global warming, you name it. Listening to her side of the conversation, and it was impossible not to
in the otherwise quiet store, you would think that we’re on the brink of
another Great Depression.

While we were there several other people came into the
store, looked around, and left. In that
entire time, she continued her doom and gloom conversation, never once acknowledging
any of her potential customers. When we
left she was again alone in the store, continuing her conversation.

I would be willing to bet that at some point she told her
phone friend that several people had just come into the store and left withoug buying
anything, proving her point that the economy is in a mess.

I could go on about what store A did
right and what store B did wrong, but you already know that. It all comes down to making your store an
inviting, customer friendly place to shop. Store A is far from perfect. In
all the times I’ve been there, no one has ever asked for my email address. No one has ever tried to up sell me or to
suggest additional merchandise. But, it’s
a pleasant place to shop. The people are
friendly. The atmosphere makes it hard
not to buy something. Store A is good
with the potential to be great.

I feel sorry for the owner of store B. Remember, neither of these stores sells
anything necessary. But, if store B were
selling bread and milk, most people would still stay away. The atmosphere wasn’t inviting. Anyone who overheard and believed what the
owner was saying would be just as likely to run home and bury their money in
the back yard as they would be to buy something.  For the owner to not even say "hello" as people entered the store is inexcusable.   Store B reminded me of the
auto parts store in an earlier post (Waiting for Things to Get Better).

When we consider our competition in the retail business, we’re
likely to think first about the big box stores. They’re the ones with the big ad budgets and the huge buying power.  We seem to see their ads every time we pick up
the newspaper or turn on the TV. It’s natural to think about them when sales
aren’t what we think they should be.

But, face it, there are a lot of consumers who just aren’t
our customers. They’re only concerned
with price and we’ll probably never have a chance at their business.  They keep the Marts and the Depots in
business.

Our target customer, the one who makes buying decisions
based on value rather than price, is going to buy from us, or from someone like
us. Our competition for that business is
the store down the street, or across town, who’s also an independent retailer. That competitor has the same problems that we
do. He or she is trying to tell the same
value story that we are.

If we’re going to consistently win the business, it’s
critical that we provide our customers with a pleasant, fun place to shop.  The difference between an independent retailer and Wally World is obvious.  The difference between two independents may be more subtle. 

Qustion, "What are you doing to make your store customer friendly?"

Advertisements

If Things Are So Bad, Who’s Buying All Those Flat Screen TVs?

According to Forbes.com, whining about the economy is one of our oldest pastimes.  In "The American Standard of Whining" reporter Virginia Postrel points out that things aren’t nearly as bad as some would have us believe.  More proof of the old saying, "Figures lie and liars figure."

As we discussed in an earlier post, "Hunting for Treasure", today’s consumer is shopping smarter for staple items and using the savings to buy higher end durable goods. 

Event Marketing

From Mike Santoro’s Nailing Customers, here’s a post, Eight Truths to Running a Good Customer Event, on Nike’s recent Run Hit Remix, held in Chicago.  While you’re not likely to run an event on the scale of the Nike event (more than 10,000 participants), Mike’s ideas are certainly worth considering for an event of any size. 

1.  Know your demographic.  Make sure your event attracts your customers and prospects.  Don’t waste your money on people who aren’t going to buy from you.

2.  Make it spectacular.  You may not have Nike-type money to spend on promotions, but a typical, run-of-the-mill event really isn’t worth your time or the expense.  Think outside the box.  What can you do to make an event bigger and better than anything your competitors are doing?

3.  Promote it well.  Notice that Nike’s best promotion was word of mouth.

4.  Invite prospects too.  Don’t just contact current customers.  You want your event to generate new customers.

5.  Collect information to build your mailing list.  Whatever type of event you run, make sure it includes a mechanism to get participants names and email addresses.

6.  Offer a taste to leave them wanting more.  Include hands-on demos, or samples of your products, anything to let them experience your products.

7.  Bring in partners for support. This is one that’s often overlooked.  Who else would like a chance to talk to your customers?  Invite them in.  Have them help you promote the event. They get exposure to your customers and you get exposure to theirs.  It’s a win/win.

8.  Show off your product.  Give your customers and prospects every possible opportunity to see (and buy) your products.

I would add a number 9.  Make sure the local media is aware of your event, especially if you’re spending ad money with them.  An article on your event, preferably with pictures, is great advertising, and it’s free.

What Do You Think?

First, thanks to all of you who have taken the time to take our on-line survey.  Your opinions are important to us and we want to give you information that will help you run a profitable business.  If you haven’t take the survey, please consider it.  We’re always happy to hear from you.  The survey only takes a couple of minutes to complete.

I thought it would be interesting to let you know how the results are going.  We asked you to rate a variety of topics on a scale from zero to ten, depending on your interest.  The number one topic so far is "Sales Tools" with an average ranking of 8.7.  A close second is "Advertising and Marketing" with an average of 8.7. 

Other top choices in order are: "Public Relations and Word of Mouth", "Setting Prices", Human Resources/Training and Motivation", "Customer Loyalty Programs", "Long-Term Business Value", "Store Design", "Hiring and Training Top Employees", and "Process Improvement/Quality Management".

We asked your level of interest in expanding on the blog concept.  Nearly 70% of you said you’re seriously interested in an industry-specific dealer blog.  87% of you expressed at least some interest in industry-specific blogs for our consumers.

All of the respondents have at least some interest in "business tools", with 82.6% seriously interested.  We will continue to track your responses as they come in.  I’ve posted your results on my bulletin board and will refer to them often as I select material for inclusion in Mine Your Own Business.  Thank you again for your responses, and if you haven’t responded yet, today would be a great day to do it.

WhizBang! Tips

For our non-sewing readers, Baby Lock Tech is our annual educational event for our authorized Baby Lock Sewing Machine dealers.  This year’s edition was held this week here in St. Louis.  It’s one of the premier dealer events in the sewing industry.

One of this year’s presenters was Bob Negen, owner of WhizBang Training and an expert on successful independent retailing.  He put on an excellent program with some solid advice on  how to improve retail sales.

One of the things Bob’s company does is to put out a weekly email "Tip of the Week".  One recent tip was provocatively titled "Sleep in Your Customer’s Bed".  He tells the story of Tom LaTour, CEO of Kimpton Hotels and Restaurants.  LaTour makes it a point to spend at least 38 nights every year sleeping in his hotels.  That’s how he knows if his customers are having the type of experience that he wants them to have.

Bob goes on to point out some of the things that you might do to "sleep in your customer’s bed" like buying something from your own store or using the customers’ rest room.  It’s very easy to become so familiar with your store that you look right past the things that really annoy your customers.

Bob puts out a new tip every week and they’re free.  You can subscribe at the WhizBang! web site.  I’ve also put a link to Bob’s web site in the Link’s List in the left hand column of this page.

Have a great weekend!

Competition

This is the fourth in our series based on Challenges of the
Future: The Rebirth of Small Independent Retail in America
, a 64 page white paper by Jack Stanyon, underwritten by the George H. Baum
Community Charitable Trust, the Illinois Retail Merchants Association, and the
National Retail Federation Foundation.

Competition.  We all have it.  Unless, of course, we’re selling something that no one wants.  Then it’s unlikely that we’ll have many competitors.  So, if we’re going to be successful, we must have competition. It’s a law of nature.

As we’ve discussed here before (It’s All About the Prices), competition today is everywhere.  It’s not just the store across town, it’s the big box stores, it’s retailers all over the world selling over the Internet. 

According to Stanyon, as the big stores become bigger, they become more efficient, decreasing their expenses per unit sold, making them even more competitive.  Because of their large size, the only way for them to gain significant market share is to take it from another large competitor.  As Wal*Mart, Target, and K-Mart fight it out, the independent retailer may get caught in the cross-fire.

So, what’s the answer?  I know you’ve heard it before, but you have to find a niche that you can serve in ways that the big boxes, and the on-line retailers can’t. 

Here’s Stanyon again:

"Because of the presence of the Internet and the increasing clout of large national chains, small independents must not compete on price.  To do so is a death wish.  It is not sustainable.  It is not winnable.  And it will likely lead to ruin."

Let me put it another way, You can’t win a price war with a mass merchant!  Ever!  Don’t try! It’s another law of nature.

That doesn’t mean you can’t be competitive.  There’s a difference.  Your customer expects your prices to be a little higher.  But they also expect to get something in return for those slightly higher prices.  They expect attention.  They expect to be pampered.  They expect a shopping "experience."

In another earlier post, "Say Goodbye to the Mass Market", we discussed the fact that today’s customer wants personalized service.  That’s where you come in.  Wal*Mart isn’t going to remember my name.  Home Depot isn’t going to write me a personal note when a new accessory comes in for the big-ticket item I bought last month.  Target isn’t going to have an after-hours party to show me their new fall line-up. 

The same things that create the "economies of scale" that reduce the big guy’s expenses are the things that keep them from delivering personalized service. 

Stanyon:  "The real strengths of successful small independent retail revolve around specialization, differentiation, and finding profitable, defendable, and sustainable niches."

Next time we’ll take a look at building long-term relationships, the real key to success in today’s retail environment.

That’s a LOT of Vacuum Cleaners

St_james_2

In 1998, Tacony Corporation made the decision to move production of our very successful line of upright vacuum cleaners from the Far East to a factory in the United States.  Our senior management believed (and they were right!) that we could produce a better product, faster and at less cost, right here in Missouri.  With many other companies were moving their manufacturing out of this country, it was a bold move.

In the eight years since we built that first vacuum cleaner in St. James, in the heart of the Missouri Ozarks, along historic US Route 66,  our vacuum cleaner business has prospered.  Our vacs are considered to be among the finest in the world.

Yesterday morning, August 22, at 8:15 am, the ONE MILLIONTH VACUUM CLEANER came off the line.  That’s 1,000,000!  Six zeroes and two commas.  A whole lot of vacs.

Assuming the average vacuum cleaner is about 45" tall, one million units, laid end-to-end would reach from St. James, MO to San Antonio, TX, or Colorado Springs, CO.  They could form a line all the way from our factory in St. James to Thunder Bay, Ontario or to the Atlantic Ocean, or well out into the Gulf of Mexico.  No matter how you slice it, it’s a lot of vacs.Stjames_3

All of us at Tacony Corporation are extremely proud of Tacony Manufacturing. 
Our Award Winning, ISO certified manufacturing team produces consistently high quality products.  Their excellent manufacturing processes make it possible to maintain their high quality standards and allow our dealers to compete successfully with any vacuum on the market, regardless of where it’s manufactured.

Congratulations to Jim Fleming and his St. James team on this milestone.