Independent retailers can OWN the Future

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Independent retailers can OWN the Future

By John Stanley Independent retailers have often found it difficult over the last decade . Global retailer have gained market share and as a result many small business have gone by the wayside. But, we need only to look at the retail mix more closely to see that the small business is still thriving. If one looks at the USA as an example, 90% of businesses in that country still employ less than 20 people and over 95% of retailers are one store operators and 90% of retailers a have a turnover of less than $2.5 million I have been promoting that this is the era of neighbour to neighbour marketing at conferences and it is pleasing to discover a new report “Challenges of the Future, The rebirth of small independent retail in America” written by Jack Stanyon for the Illinois Retail Merchants Association and the NRF Foundation in America. This report analyses the trends and the challenges facing the independent retailer and the findings apply to any retail sector and to most countries around the worlds. Jack starts by looking at the trends in the market place and identifies 7 major trends that retailers need to be aware of: 1 – Personalisation With the increase in technology customers are looking for personal service. They would prefer to go to a local business and find someone from their community who they can trust. The large retailers realise this is a major issue in the market place and have developed marketing campaigns to try and address this issue. The local independent owns the personalization issue and this is a market advantage that needs to be exploited. 2 – The value equation A small retail business can never compete on price and those that do are doomed to fail. Large business can buy in bulk from overseas and get the product to the shelf at a far cheaper rate than most independent retailers. As a result the independent retailer has to promote the value they can offer the customer or provide reasons why a particular product is more expensive than from a global retailer. The customer is happy to pay for a product if they can justify in their own mind what the extra value means to them, often a more expensive product can turn out to be cheaper in the long run. 3 – Increased competition The biggest challenge for most retailers is the amount of competition. In one six mile street in the suburbs of Chicago I found over fourteen places to purchase a hammer last year. I’m sure this year some more retailers have emerged and are selling hammers on the same street. Plus, the competition is not only coming from physical shops ,the virtual shop is also selling what you sell and that competition is also about to increase. 4 – Changing demographics Some retailers are finding they are having to down age their image to sell to younger generations, while at the same time as the Baby Boomers are getting older, there is an expanding market of consumers who will be requiring products presented in a different way. To be successful in today’s retail world you really must understand the demographic mix of your market place and address the needs of a consumer base that is changing rapidly 5 – Community activism Communities are becoming more aware of their environment and as a result are prepared to be more proactive within the community. I can see that in my own shire. The old practice in the shire was to tell the residents what was planned and then wait for a reaction, all that has changed and residents are now involved in the whole planning process. We are asked to participate in the decision making process, rather than be told what decisions were made on our behalf. Local retailers who get involved with the community are seen as advocates within the community and are more likely to get the consumers business. 6 – Health care crisis This may be the one trend that will not directly affect all retailers, but as the western worlds baby boomers get older ,the system will be unable to support them ,the result is a looming health care crisis 7 – Changing consumer attitude and behaviour You and I as consumers are constantly changing. We are starting to question where products are manufactured and the carbon footprint involved in the manufacture and delivery of that product. As a result we are going to question retailers a lot more about the origins of products. Not only do we want to deal with local retailers, we will want our products to be made locally as well when it is feasible. The fresh food industry is already seeing this trend and this will follow through to a whole range of products 8 – Urban sprawl Whatever you think of urban sprawl, it does mean that consumers will prefer to shop more locally. Many consumers questioned the philosophy of a Starbucks Coffee store on every corner, but in cities like Singapore and Los Angeles it is happening and it is working. I recently worked with a client in Los Angeles who had a three hour drive each way to work. When they get home i will guarantee they will want to shop as locally as they can. Now for the Retail Challenges According to the Jack Stanyon report there are six challenges we need to be aware of: 1 – Changing effectiveness of marketing In the old days putting an advert in the local newspaper was all that was needed to establish foot traffic into your store. That has all changed as different generations receive their messages through different media. A retailer now needs to have a BLOG friendly web page, be able to text or SMS consumers via their mobile phone, have email newsletters and also rely on some of the more traditional advertising means. In the future traditional advertising will become less affective while the plethora of ways of getting your message across using new technology will increase. Today’s retailer who is technology savvy will grow their market 2 – Difficulty in product sourcing Big business has relied on the Far East as its factory over recent years. This has caused a number of serious issues, including job loss in the home country, extended Carbon footprints and safety concerns in retail sectors such as the toy sector. China and satellite countries will continue to be the worlds factory, but small retail will need to rethink its sourcing strategy and buy more locally and promote the fact that it sources product locally. This is a huge opportunity and retailers need to rediscover their local manufacturing backyard. 3 – The speed of technological change As I type this article I am already out of touch with technological change and I will be unable to keep up to speed with the rate of change. One of the biggest challenges for any retailer in today’s market place is simply keeping up with change and not losing the motivation to try and keep up when change is so rapid. 4 – Needing to deliver higher levels of customer service As technology takes over our lives we are becoming more demanding when it comes to face to face customer service. We are frustrated with answer phones, junk emails and queues in stores. We are now demanding old fashioned customer service where the sales person knows us by name and understands our needs and wants. If ever there was an opportunity for small retail it is in developing higher standards of customer service 5 – Transparency of price and product information The customer now has a computer in their home and can check out the price and the information they need for their own living room prior to coming to your store. Trying to have an edge using price and product information is getting more and more difficult. As a retailer in the future this will not be a point of difference. 6 – Limitation in management skills Great retailers are around but they are more difficult to find. As a result many small retailers will be held back because they cannot find the management skills they require. In house training will become more important for businesses in the future. In summary these were the findings of the Challenges of the Future Report. Now is a time to plan with the future of retailing in mind. There is only one guarantee, it will change dramatically. John Stanley is an internationally recognised conference speaker and retail consultant with over 25 years experience in 18 countries. He has authored several successful marketing and retail books including the best seller Just About Everything a Retail Manager Needs to Know. John’s retail experience covers hands-on retailing in supermarkets, hardware stores, garden centres, farmers markets and drug stores. For more information John Stanley and his services visit his website www.johnstanley.cc