This past Thursday I had the opportunity to address the Chamber of Commerce of Three Forks, Montana. Three Forks is a town of 1203 people and is almost exactly centered between Butte and Bozeman. There were 21 people there and if that doesn't sound like a lot it's almost 2% of the population. If I was in L.A. or New York it would translate into 80,000 people. So it was a very respectable crowd. See you must think in small town terms.
After my talk, during the question and answer session, someone asked for my suggestions about how to compete with Wal-Mart® and other large retailers that are attracting business from small towns like Three Forks to Butte and Bozeman. So, I thought maybe it was time to explore this issue here on the web site.
What Are Your Customers Perceptions of Major RetailersWhy do people buy gas, pack up the family and drive 40 or 50 miles away from their own home town merchants to buy from major retailers? The answer to that, in my opinion, is threefold.
1. There is a perception that the discount retailers' pricing across the board are significantly cheaper than the same products purchased locally.
2. There is a perception that the large retailer will have a larger selection than the local retailer of any one product.
3. The customer feels that they can shop more efficiently by making all their purchases in one place. Thus saving both time and money.
Are the above perceptions true? Most small town retailers will tell you they are not. Most major manufacturers set pricing that even discounters cannot sell below. In addition, they often buy closeouts or discontinued items that they can sell at lower prices which are often of inferior quality.
The "Service" Mis-ConceptionThe overwhelming answer by most industry "experts" is to increase customer service and satisfaction. I disagree. If it takes a Wal-Mart® to get you to improve your customer service then you didn't have much of a business to begin with. What kind of service were you giving before? Shouldn't your service already be at it's highest just to compete against your other local retailers?
Plus, what kind of service are you competing against? Major retailers are renowned for their lack of customer service. You receive a greeting when you enter Wal-Mart® but in most cases that's the last employee contact you will have until you check-out. Customers don't shop discount stores because of the service or lack of it. They shop because of the perceptions above and none of the three have anything to do with service.
They do however have to do with convenience. Most of us will overlook horrendous service for the convenience of shopping quickly, nearby or cheaply.
So take your service to another level if it makes you feel better but don't look for hoards of customers to turn up --- turned off by discount store service.
The Loyalty FactorThe very strength of a small town is its people. I know what you're saying..."Are these the same people you were just talking about who leave to shop elsewhere?" No these are the local business people who can work together for their own common good. Without a strong local business center most small towns die.
If you asked most residents if they support their local community most will say, "Yes." A support your local merchant program can make a difference in small communities. It's not the total answer but it can be the start of a stronger local economy.
Build On The Success Of OthersOne of the success principles that I mention over and over again on this site is to find someone who is doing what you want to do and do what they do. In other words if there are businesses or communities that are successfully competing with discount retailers find out what they are doing and try it in your own business or community.
How do you find that information? Almost any business or industry you can name has an association of some kind. The purpose of these associations is to help industries become more successful. Contact them about any information concerning discounters. Call the successful people and ask for direction. Most will be happy to help you.
What Are You Missing?Review your marketing plan and re-evaluate your target market. Is there a niche or group that you've missed? Are their customers out there that you are not marketing to? Can the products or services you provide be adapted to another market or group of markets? (See: Target Marketing: Who They Are, How To Find Them)
Do A Better Job Of What You DoYour main job is to run your business as efficiently as possible. That means keeping waste and expenses to a minimum.
One of the easiest ways to compete with any business is to keep more of each dollar a customers spends in your business. (See: How To Control Expenses And Increase Profitability) also (See: How To Double Your Profits The Easy Way)
See And Be Seen In Your TownIf you have a business that caters to the public...you need to meet that public. Remember my little talk at Three Forks above? 21 people where there. According to many studies each one of us knows around 250 people. That's the average number of people who attend weddings and funerals. That's your sphere of influence.
So if each of those business owners knew 250 people how many people could that group influence? 21 x 250 = 5,250 people. Over five times the population of Three Forks. Now there would be some overlap in that some would know the same people.
Many people are more comfortable buying from people they know. So make sure if there are people meeting somewhere in your community... join them. Not a joiner? Then be poor and out of business.
The Last Word On Competing With DiscountersI'm not here to lead you down the garden path by saying that discount retailers aren't formidable opposition.They are. But, using some of the ideas above coupled with the success principles of other businesses who have been successful against them will keep your business strong and your community viable.
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