Small shops can survive against megastores …

Some years ago a colleague of mine from the University of Urbino and I ran an interesting research project about the expected future for small shops.

As a curious consumer, I totally support what that research revealed. In essence, small shops have to evolve in a managerial way. They cannot end up being just a small version of a supermarket or department store.

Not only do they differ in how much space they can use to sell their products, but, in more general terms, they can use a completely different toolkit when dealing with their customers.

Indeed, small shops have to decide their location, their product range (focal issue) and their pricing strategy so as to be perceived by customers as a better choice, not just a fallback compared to bigger retailers.

If we look at aspects such as the wideness of the product range or promotions, small shops cannot actually compete with bigger retailers.

So, how can small retailers compete against larger ones?

First, they can gain value from their close relationship with customers.

It can be quite distressing when you feel like a mere “number” as you go from section to section in a supermarket, isn’t it? You feel like you are in a sort of “assembly line”…

Sure, megastores provide you with a vast number of amenities and services, such as flexibility in terms of opening and closing times, car park areas and so on.

However, is all that enough?

Second, product range (and, as a related aspect, pricing). If a small shop proposes the same product that a big retailer does, it is a foregone conclusion that it will fail. In fact, a bigger retailer can usually rely on better conditions in terms of prices due to its stronger influence over suppliers.

So, for example, I expect my favorite cheese and charcuterie vendor to propose a selection of genuine and top-quality local products, along with a few famous brands (that cannot be missing in his or her product range).

These artisanal products are often marvelous ones, but they are also unknown to the vast majority of consumers. In Italy we have innumerable items like these. They are produced  by small companies which tend to be as skillful at making the product as they are  ineffective at promoting themselves.

When this speciality foods vendor behaves this way, he or she plays his or her original role of “counselor” for the customers, so that they can not only eat well (better) but also enjoy uncommon specialties.

All told, prices do not necessarily have to be the lowest, even if they should be reasonable. This way, consumers will no longer focus on brand loyalty, because they will put their attention more on store loyalty.

In order for this to happen, merchants need specific skills, above all in terms of scouting for suppliers and communication.

In fact, without the “support” of well-known brands, consumers need to be guided towards the “right choice”. They need to be persuaded and reassured.

We can now offer some considerations on local markets. Nowadays, they tend to offer only cheap products. However, they could regain a crucial role in contemporary urban retailing systems.

Moreover, there are also many local indoor markets, as in the case of Cagliari (Sardinia). They may also represent tourist attractions.

This is strictly connected to the theme of Town Center Management, that we already discussed.

So, what is next for small retailers?

What’s sure is that they will have to act proactively, by making brave choices.

Fulvio for Experyentya