By Bill Bittner, President, BWH Consulting
Last Monday at NRF was “Independents Day.” One of this year’s speakers (again) was the owner of Dave’s Soda and Pet City, Dave Ratner. Mr. Ratner has demonstrated how aggressive utilization of online channels has made it possible for his business to not only survive, but flourish, even through the down times of the recession. The internet has enabled him to engage with both customers and employees in a variety of ways that motivate them to support the business. As a result, Dave has actually expanded his brick and mortar business into additional store locations.
This got me to thinking about the whole idea of independents in this “Online World.” Chain stores excel by exploiting the economies of scale. By leveraging the expertise of category managers who are able to research the detailed characteristics of a category and apply their findings across many locations, chains were able make better assortment decisions. By offering economies of scale to producers, chains could get preferential cost and promotional discounts. But the whole effort now — to localize with “neighborhood stores” where assortments are targeted to local demographics — kind of defeats some of these chain advantages.
When you start to think about the effort chains invest in aligning employee incentives with the goals of the business, you can see further advantage for the independents. Who is more devoted to the business than the employee who reports directly to the owner? What chain store manager has more incentive to correct an employee misfit than the business owner who is directly impacted? What chain employee is more concerned about preserving and expanding their customer base than the independent employee who clearly understands the customers in their store are the source of their paycheck?
All this got me to thinking about a renaissance for independent retailers. All the pundits say that for brick and mortar stores to survive they will have to differentiate themselves by other means besides price. Independent retailers have the motivation; now online channels give them the tools they need to differentiate themselves. Yes, price sensitive consumers will look for better prices online, but with targeted promotions I believe independents can reach even those consumers and pick up on the impulse buys.
Article Posted on Retailwire
