Fighting the Big Boxes

Some one pointed me to this video today and I thought I’d share it with you along with a few thoughts. The film isn’t new. It’s been around for a few years. But it’s worth watching if you haven’t seen it before.

Independent America

Independent America

One thing that concerns me a bit is the lumping of big-box stores and franchised fast-food places together. The 3/50 Project which MTS has supported almost since the very beginning does this too. If my neighbor owns the local McDonald’s franchise, I don’t see why I should boycott Big Macs. Granted, some of the restaurant’s revenue goes to McDonald’s corporate, but the bulk of it stays right here. That’s a far cry from he huge share of revenue from the local Wally World that ends up in Bentonville, AR.

The other thing that disturbs me a little is the tendency to bash the big boxes rather than pumping up the local merchants. It reminds me of walking through the woods. If you don’t watch where you’re going and you step on a snake, there’s a good chance the snake will bite you. If it happens, don’t blame the snake. He’s just doing what snakes do. Same for the boxes stores. They’re the most predictable of competitors. They’re going to do what they always do. Don’t play into their hands.

I’ve covered this before, but it bears repeating. Don’t try to compete with the chain stores on price. You can’t win! With their deep pockets they can lose money for a while, just long enough to put you out of business. Avoid going head-to-head. Find your niche and stick to it.

Most important of all, rather than fighting to keep a national chain out of your market, fight to keep your local government from subsidizing the big box with your tax money. There are enough small-town and even big city governments desperate for tax revenue that they’ll do whatever it takes to get the chain to locate within their boundaries. They do this by direct tax breaks and by indirect tax breaks. (We’ll widen the street and put in traffic lights at city expense.) As a taxpayer, scream bloody murder about this nonsense. Using your tax money as an incentive to bring a competitor into your marketplace should be cause to terminate the local government at the next election.

To me, there’s nothing quite as ridiculous as a local government who whines about the deteriorating downtown area while they pump your tax dollars into an infrastructure that encourages people and businesses to move to the outskirts of town.

Finally, adopt the “serenity prayer.”

“Lord, grant me the serenity to accept the things I can’t change, the courage to change the things I can change, and the wisdom to know the difference.”

The Marts and the Depots aren’t going away anytime soon.  Remember that every one of them started out with one store, just like you did.  What can you learn from them?  Study their operations.  Read anything you can find about their operations.  Then, do it better than they do.

They have greeters.  At your store make sure they’re greeted by the owner.

They have a liberal return policy.  If you have a sign that says “no refunds” or something like that, get rid of it!   Offer loaner programs.  Make sure your vendors back you up as well as they do the chains.

They have convenient hours.  Most likely you can’t afford to be open 24/7, but you do have to be there when they need you.

You have a number of advantages over the national chains.  Find out what they are and use them to your advantage.

Retail Business “Killers”

Today I want to point you to an article called “The Top Five ‘Killers’ of Retail Businesses” from the Retail Owners’ Institute.  You have to keep in mind that the ROI is a group focused on the financial aspects of retailing.  Consequently their “Top 5″ don’t include things like marketing, salesmanship, customer service or any number of other things that would appear on my list.  In fact, the article begins with this rather remarkable statement”  Hint: (Declining Sales’ is NOT One of them!)

Again, these guys are in the business of counting retail beans so their list focuses on the financial.  With that disclaimer, here are their “Top 5”:

5.  Out of Control Growth

4.  Out-of-Control Expenses

3.  Failing to Manage Gross Margins

2.  Out-of-Control Inventory

1.  Being Out of Cash

Like I said, from the bean-counter’s perspective there isn’t much to argue with here.  There’s no doubt that if you run out of cash, you’re most likely out of business.  Read the original article to see ROI’s comments on each business killer for some good insights.

It’s a good article but, in my humble opinion, it misses some very important elements of a successful retail business.  Even the most devout bean-counter should be willing to admit that until you bring the beans in through the front door, the rest is just academic.

Small Business Retailing–Setting Store Hours

The idea for this post comes from another private forum I follow and a discussion about when an independent retailer should be open.   By their nature, many indie retailers are one or two man (woman) operations.  That means store hours = working hours.  It’s only natural to want and need some time off so a lot of small retail businesses are open limited evening and weekend hours, the very time when most consumers want to shop.

My first job (back when dinosaurs roamed the earth) was at a local clothing store.  We were open Monday and Friday until 9:00, and Tuesday-Thursday and Saturday until 6:00.  That was the norm.  There were no alternatives.  Everybody closed at 6:00 during the week.  The only exception was between Thanksgiving and Christmas when we were open M-F until 9:00.  Those were the days.

Make no mistake, on-line shopping and big-box stores that never close are spoiling consumers.  They can shop at any hour of the day and night.  They should have enough sense to know that you’re not going to be there for them at 3:00 am, but they do expect you to have store hours that are convenient for them.

It’s easy for me to sit here in my pjs and pontificate about how many hours you should work. So I’m linking to this article by Bob and Susan Negen. That way you can be mad at them instead of me.   Still, you know I can’t resist throwing in my two cents.

I do disagree with Bob and Susan on one point. Unless you’re running a church or a pharmacy, I don’t think anyone should work on Sunday. (Or whatever your Sabath happens to be) Otherwise, if you’re going to compete, you have to set your store hours for your customers’ convenience.  Here in St. Louis one of the last surviving independent appliance retailers refuses to be open on Sunday.  It’s part of his advertising.   “Shop us every day but Sunday.”  He’s outlasted most of his competition.

With a few exceptions, people who can afford your top-of-the-line product work during the day. If they decide to shop for a whatever you sell chances are very good that  they’re not going to take off work. They’re going to shop in the evening after dinner or on Saturday. Unless they’re incredibly loyal to your store, they’re going to go somewhere else if they find that you’re not open when they need you. Worse, when your product comes up in conversation, they’re going to tell their friends not to go to your store because “you’re never open.”  (If you’re not there when they need you, in their minds you’re never open.)

I know how hard retail is. I know you get tired and need some time off. The solution is to hire someone to fill in when you’re not there. How many high-end widgets do you have to sell to pay for one part-time employee for a few hours per week? You have to do your own math and make the call.

Remember, I’m not here to sell you more merchandise. If I were a vendor I’d want you to be open 24/7 so you never miss a sale.  (Which makes you wonder why Chrysler and GM are eliminating dealers, but that’s another story.)   I just want to see you succeed in business and in your personal life. If you have limited store hours and you’re happy with your income, then keep doing what you’re doing. You’ve found the right combination for you. But if you want to increase your income and reduce your hours at the same time, then hiring additional help is the way to go.

The name of the game is customer service. But your most important customers are your spouse and kids (and grandkids). They’re the reason you’re in business in the first place.