Independent retailers must not compete on price. The real strength of successful small independent retailers revolves around specialization, differentiation and finding profitable, defendable and sustainable niches. That bit of wisdom comes from "Let´s Talk Business," a monthly newsletter of the Center for Community and Economic Development of the University of Wisconsin-Extension. The newsletter drew its conclusions from a white paper, "Challenges of the Future: The Rebirth of Small Independent Retail in America," by Jack Stanyon.
"Success for many retail segments," the January 2006 issue concludes, "derives from the decision to move beyond just the selling of product to creating customer experiences, moving from a transaction orientation to establishing on-going relationships."
This decision, according to the newsletter, shifts the focus from what moves product to what moves people.
Ah-ha! The people factor. No matter how far technology advances, the old people factor just keeps popping up.
A trend toward personalization bodes well for small independents, the newsletter goes on to say, if they can leverage their inherent advantages of flexibility and customer intimacy to create a more personalized experience for their customers.
"While technology permits sophisticated data-base marketing and promotions, small independents are still the best poised to get to know their customers individually as they often are a personal part of their lives," notes the university newsletter. "Knowledge of customers´ birthdays, favorite colors, time of day they like to shop and other information is not just pleasantry any more."
In fact, personal knowledge of customers can be an essential driver of sales, according to the research. "While big companies employ slogans like "reach out and touch someone,´ it is more likely the small independent retailer who can actually shake their hand."
Coming up next week in Retail Strategies, researchers from Vanderbilt University weigh in on Internet retailing.