I thoroughly enjoy the rise of the Walmart-style businesses in the world. Low-cost leaders have all but destroyed those location-based businesses that live in the past, hate change and failed to evolve. (You know… the stores that usually emit a mysterious scent of mothballs) And while I do feel for the employees of these failed businesses who lost their jobs, the owners and managers are to blame.
With the rise of these super companies we have become accustomed to sub-standard customer service and the slue of other complaints I constantly ramble on about… Where are you now Circuit City? Lucky for us, the lack of niche, value-added storefronts has created a hole in the market. And savvy business owners can jump in and rapidly take market share from the big guys. In general, though, most businesses are failing to innovate and are falling back on only low-priced claims.
To illustrate this growing trend of competing on price, simply open your local newspaper. Special sales, coupons and price cuts galore! “Mom and pops” are not buying in mass enough quantities to afford these cost cuts. So where does the cash flow balancing act come from? The essentials, that’s where. Important expenses such as training and retaining employees as well as constant storefront innovations are going by the wayside. These stores feel their price slashing is necessary to compete… not so! Over the years I have worked with numerous brick and mortars on their rebranding efforts. And I have found a common theme for storefront success. Here’s how to eliminate low cost considerations:
Create a Destination
By creating an experience for the shopper, a destination of sorts, any business will find its customer base expand greatly – usually from word-of-mouth. Cabelas is a great example of perfectly implementing this strategy. There is so much extra stuff to do and see at Cabelas than a regular big-box outdoor supply store. From huge fish tanks and animal displays to carnival-style hunting games. Even corrals for “parking” your horse (if equine is your preferred method of travel), the store is a sight to be seen.
While this strategy works for a fairly big chain like Cabelas, it will also work for any average sized store as well. An inviting atmosphere with fun entertainment will bring in the masses. And the masses will most likely overlook the slightly higher prices.
Ditch the Extreme Low-End Products
By eliminating commonly available low-end products, the everyday penny-pinching shoppers will start disappearing. These exhausting customers do more harm than good. By sticking to better products, your customer base will be of a higher quality and your staff’s headaches will disappear. With less cumbersome customers, storewide morale will raise as well. And keeping your employees extremely happy is key to great customer service.
No-Charge Value Added Offerings
Customers who appreciate the value of subtle no-charge additions to their shopping experience are also usually higher quality customers. Which means fewer complaints, less hassles and better word-of-mouth marketing. Some simple ideas of no-charge additions that come to mind:
- Gourmet coffee in a boutique
- Shoe cleaning at a shoe store
- Tune-ups for bikes purchased at a bike store
- Level 1 technical support at a computer store
When you offer extreme value you should not lower your prices, instead keep the full retail price for your products. Nothing less. Who cares if Walmart has the product for 10% less? If you are adding value along with the rest of the strategies on this list, you shouldn’t need to worry about the price difference. Your quality and value-added services will take care of the higher prices.
Train Your Employees… Train Them Some More… and More and More… and… You Guessed It… Some More!!!
Expertise of your product offering is essential. Ask a Wal-Mart employee about the stitching of a dress shirt and see what they say. Then head to Nordstrom and repeat the question. Point taken? Great!
Add-Ons, Up-Selling and Continued Services
Any business owner will know this one but it is worth mentioning. The best customer is a current customer. Going in for product A may result in the sale of Product B & C much more easily than trying to sell B & C by themselves. For instance, if you sell TV’s – which even at full retail has little profit – be sure to add-on. While obvious additions such as cables, DVD players and what not boost the profit, do not forget the warranty, installation services, subscriptions and other products the customer may be intending to buy. But would normally look for elsewhere. In my experience, the main reason a consumer skips the purchase of things such as a satellite TV subscription is the salesperson’s failure to mention their availability. Or more importantly the benefits of buying them from your store.
This one may vary in application and effectiveness as it depends on the actual purchase and your ongoing relationship with the customer. At any rate, a follow up in some manner is huge. And for some reason, no one does this easy customer relationship task. For example, after two months send a personalized letter asking how they like the product. This will do wonders for your word of mouth reputation and brand recognition.
With the incompetent stigma created by years of the big guys slashing prices and competing on price, I now feel I can help start almost any business in any relevant geographical area. And be extremely profitable! Don’t get me wrong, I am not trying to brag, I am convinced anyone can do it. With that said, I strongly believe low cost leaders have made niche businesses more profitable and sometimes much easier to start since a significant group of consumers have had it with these cost cutting shenanigans.
In other words, thank you low-cost leaders! Keep up the sub-standard work! Your bad habits are making properly created niche brick and mortar businesses rock!