Australian Newsagency Blog

A blog on issues affecting Australia's newsagents, media and small business generally.

Small is the competitive advantage of small business retailers

Mark Fletcher
July 25th, 2019 · No Comments

Small is beautiful. Small businesses are the backbone of the nation. Local businesses support the local economy.

We have heard the pitches from politicians, community leaders and small business owners themselves for years. Yet, many small business owners remain focussed on size. It is like big is better, big is what matters.

I have been at a retail conference this week looking at the future of retail and like most retail management conferences, there was no consideration of small, no appreciation that small is good. The whole focus was on what we (retailers) need to do to reach more people, sell more, make more … to get bigger. Size was lauded, it usually is.

I get that big businesses are obsessed with size. They have no choice, especially public companies. It is unfortunate that some suppliers to small businesses and some small business owners themselves get caught up in the chase of size and scale. I think this is a mistake. Getting bigger is not important. Getting better is far more important as that is where we can find value for us and our customers.

In retail especially there is no shame in being small. Indeed, small can be a valuable competitive advantage.

Small businesses can be more personal, more attuned to the local, able to move faster, able to be human.

Whereas big businesses are investing extraordinary amounts to use artificial intelligence to personalise contact and service delivery, small businesses can do this in a human way, a more authentic way.

The challenge is when a big business is trading in direct immediate and local competition to your small business. Their AI leveraging and scale mean that the labour cost per item sold will be considerably less than for the small business.

So, how can a small business that wants to stay small compete in this rapidly changing world? My advice is to be less of a target, look less like the big business competitor, copy them less, package goods so they cannot be price compared, change your shopper engagement so that it is not easily compared to big business … and, be lean, efficient, profit driven and attractive for reasons relevant to today.

At the conference this week one example used to drive growth was loyalty, points based loyalty, tracked through an app. It is very cool, customer friendly and easy to use. It drives sales for sure. If shoppers paused and thought about that company’s obsession with loyalty they would realise it is priced in the price of what they buy. Pushing back on the experience to shoppers who love the brand is difficult.

I think our best approach in small business retail is to know who/what we are and to live it at every opportunity. Be authentically small business and local, embracing every opportunity to demonstrate that. Buy local. Leverage local knowledge. Reward locally. Live locally. And, where possible, push back open big business tactics.

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Category: Small Business

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