For local retailers to compete with national e-commerce and retail brands, they need to consider using some of the same strategies that have made large brands competitive. In the digital age, access to and properly utilizing consumer data is the key to knowing who, what, where and why when it comes to selling products. Being a local retailer is an underutilized advantage that retailers can more effectively use to their advantage. Being part of a community means having an impact on that community and relating to people in your community. The challenge is not that you are small or geographically restricted; it is that until now small businesses could not leverage the tools that are used daily at large retailers. Understanding what it takes to leverage new tools and channels can help local merchants properly plan and commit to channel strategies that can not only work, but be properly evaluated as well.
Brick & Mortar Retail Trends.
Local Brick & Mortar retail businesses are not going anywhere despite the threat from nationwide brands and online giants. As the cost and convenience of household necessities seem to be improving, shoppers are still looking for great shopping experiences in-store. Positioning your retail store as a seller of necessities might put your store in an overly competitive situation, but offering unique or niche products and services can differentiate your business and fill the needs of a growing number of consumers that want to take the time to get something locally. Brick & mortar retail trends that are driving customer acquisition and retention are focused on both reaching more customers, improving their experience and giving them the opportunity to make a purchase where it suits them.
Getting found became easier through services like Yelp, Google, Trip Advisor, Facebook, etc., but very quickly became more competitive. 84% of shoppers say that they trusted online business reviews as much as a personal recommendation from friends or family. So how do you get found by consumers that are already inundated by information? Get into their pocket and get their permission to communicate with them directly when they are in the right place at the right time. Consumers are protective of their email address but will share it with brands that they are interested in. Having permission to update and promote products via email has become the best way to inform customers of buying opportunities once again. Mobile apps enable retailers to communicate directly with customers. Although it is a powerful way to drive traffic to your store, it is a fine line and steps should be taken to provide only information that your customers actually want. Over-promoting or communicating in a way that was never agreed upon by your customers will ensure that your app is deleted and you lose that communication channel.
Invest in experiences. Don’t just think about your location or logo. Think about all of your customers’ senses and how you can communicate your values using all 5 senses. Looking professional and drawing customers in are two different things. Understanding what works takes time and investment. Consider ways to use smells, taste and sounds as well as visual and touch. Retailers are doing this by creating unique displays, installing interactive screens, thinking about 4-dimensional experiences and engaging customers using other devices whenever possible.
Hire hosts not clerks. Having a knowledgeable and approachable host can make sure that customers come back. This means investing in training your team and recruiting people that are passionate about what you are doing. Have you ever walked into an REI and met somebody in a department that did not actively participate in the activities within that department? Patagonia employs professional athletes and they do not incentivize them with big salaries. They incentivize them by giving them the flexibility and tools to go out and do the things that they love in the outdoors. Think about ways to attract people that want to share experiences and provide thought leadership around your product.
Allow your customers to shop through the channels that they prefer. Even though you have a local retail location, it is important that customers can access your information and even make purchases through their preferred channel. This is where many local retailers are lacking. Assuming that customers will come find you or that word of mouth is enough promotion to run a successful business. Go out and get your customers wherever they might be through multiple online and offline channels.
What is Omnichannel?
Omni-channel is giving your customers the ability to communicate with you and make a purchase through multiple channels both online and offline. Some definitions of omnichannel are focused on just communicating or distributing content through multiple channels. For a complete omnichannel retail experience, it is necessary to not only be active and communicate with customers wherever they are; you also need to enable them to make a purchase. This does not mean that you need to be on every online and offline channel possible. It simply means that you need to understand where your customers are and make sure that you are there when they are ready to make a purchase. Small retailers might not have the resources to utilize a variety of channels. That is why they should focus on important channels where they can make the proper time and capital investment.
The easiest way to know where your customers are active is to simply ask them. Each channel has benefits and challenges, as well as varying levels of functionality. Here are the challenges and opportunities presented by some of the key online and offline channels. I am going to stay away from online marketplaces like Amazon, Etsy, eBay, etc., as they require a completely different strategy and are not conducive to community-focused strategies.
- Local Market: Weekend markets or farmers’ markets are a great way to get in front of your local community. Every market is different and will not work for every retailer. It is a way to go where your customers are instead of waiting for your customers to come to you. Offline markets allow you to engage and get to know your customers in a more casual environment and build great relationships. The challenge is the time investment, displaying at a market is usually seasonal or yearly.
- Pop-up Shop: Pop-ups are great for trying out a new location or a new idea. They require a large time and capital investment but will allow you to try new things without making long-term commitments. Leveraging local knowledge, networks and marketing will directly benefit your local pop-up shop and create buzz for potential customers.
- Events / Conferences: Exhibiting at an industry or product-focused event is a way to expose your business to the local community without committing too much time or resources to any given channel. Events can be either free or paid and will require a limited amount of prep time. Try meetup.com or do some simple Google searches for relevant results events.
- Website: It is a given that every store should have a website, but many retailers are not selling their products online. Platforms like Shopify, Bigcommerce & Woocommerce allow you to build a plug and play e-commerce website with all of the bells and whistles with minimal effort. The good thing about these platforms is that they have all of the functionality that you want. The downside is that they may not have the design template that meets your vision. It also requires additional capital and time investments for shipping and additional customization of the customer experience.
- Mobile App: Building a mobile app can make sure that you are truly connected with your customers. Apps are great because most e-commerce platforms come with mobile websites but do not create mobile apps. Working with companies that offer rewards, marketplaces or payments via mobile might be the better fit for getting into customers’ mobile devices.
- Facebook: Facebook is usually a must-have for retailers. Not only is it required that you have a Facebook page to effectively advertise using the platform, they offer merchant accounts, checkout, and payments from within Facebook. Facebook is powerful because of the ability to build a community as well as market directly to targeted communities within the platform.
- Instagram: Instagram is traditionally associated with visual communication with online communities. Until recently the business functionality has been limited to advertising and analytics. Instagram recently launched online payments. You can now click on products within the image feed which takes you through the buying process. Instagram is arguably the best way to build a community that is engaged enough to communicate with you. It is now a great channel to sell directly to that community.
- Twitter: Twitter is still mainly a communication channel to engage with interested customers. It is the most direct way to interact with individuals that are not on your email list. You can position advertisements but there is no ability to sell products on Twitter at this time.
- Pinterest: Pinterest started as a visual way to share and store ideas. The platform is similar to Instagram in that everything is posted based on its visual impact. Unlike most other platforms, it has a very powerful search functionality. Pinterest also enables sellers to sell products via the mobile app. This is a great way to position your products using great images which can lead to a sale. The challenge is that creating great images is an art in itself. Simply posting pictures of your product will not lead to conversions.
- YouTube: YouTube is the second most active search engine behind Google Search. Having a YouTube channel with active content is a must for being found by and connecting with customers. Despite the enormous amount of content already on YouTube, there is always an opportunity to present your offering and values from your perspective. YouTube does not have the ability to sell products on the platforms, but you can very easily link videos to products on your website through the business functionality.
- Messenger Apps: Messenger apps like Facebook and Whatsapp facilitate both customer communication and payment. The bad news is that there are many different apps out there. The good news is that most consumers have chosen the app or apps they are using and will likely stick with them for the foreseeable future.
How Other Retailers Are Eating Your Lunch
It is no secret that the big box chains and online giants like Amazon are taking the lion’s share of consumer dollars. These companies have the resources and the data to accurately target, engage and draw customers both on and offline. So what are these retailers doing that you aren’t?
- Getting the data: Companies like Starbucks and Home Depot have large populations from which to generate customer demographic and behavior data. Using loyalty programs through their apps/credit cards and having more influence with payment companies allows them to aggregate data that a small retailer would never have access to.
- Using the data: Large retailers are able to segment and target niche groups of customers based on a variety of factors like demographics, personas, and geography. They use long tail marketing techniques to communicate with and draw very specific types of individuals with unique products and offerings.
- Aligning values: They have built brands using value systems that their customers relate to. Their message is consistent and they have the ability to deliver a clear message through various channels.
- Prioritizing customer happiness: They make sure that their customers are happy. It is the same reason why brands like West Elm, Amazon, Zappos, etc. accept returns with almost no questions asked. They make it as easy as possible for customers to receive the products they want no matter what.
- Ubiquity: Large brands have already mastered omnichannel. They are everywhere online and have prominent retail locations that are easy to find. Every online and offline decision is data-driven.
What can small local retailers do to compete when these goliaths with massive budgets and enormous brand goodwill?
- Double down on local: Large brands are less likely to have a presence at the local festival or market. They are not contributing to local charities getting involved in local neighborhood events. They are not at local meet-ups and are not active in the local community.
- Get your own data: Digital rewards programs can deliver data that you would not otherwise get access to. Work with payment companies and POS systems that provide as much usable data as possible about your customers. Getting data dumps is not going to help unless you are a data scientist or can afford an analyst. Ask all of your vendors what kind of data they can provide and what they are going to do to help you use it.
- Learn how to target from the big guys: There are many educational resources that can help you better understand online advertising and how to better connect with niche customer segments. Lynda.com or App Sumo provides great online courses.
- Build and manage consistent value system: Being a local business allows you to have a clear understanding of your local community. Build those values into your brand and messaging. Leveraging your local values in every interaction that you have with customers will help you differentiate and create a place where customers want to go.
- Make your customers happier: The customer is not always right, but that does not mean that you shouldn’t try your best to make them feel like they matter if they are wrong. If a customer has taken the time to make a purchase at your store or online, make sure that they get what they want and are not just satisfied, but happy as well. This takes an enormous amount of time and focus but is a great investment which you can also track.
- Choose your channels strategically: You do not need to be everywhere; you need to be in all of the right places. This is where knowing your local community comes in. If you can better evaluate your investment in offline channels then that is great. If you want to focus on specific online channels then that is great too. Just make sure that the next channel that you choose can be properly evaluated so that you can evaluate if it’s worth it.
Choosing Your Next Channel
Every new strategy should begin with a plan to generate revenue, which usually comes along with metrics for success. Whether it be an online or offline channel strategy, you need to understand what the impact will be on your business if it goes well or not. Each new channel requires a significant capital and/or time commitment, which is why evaluating the channel is so important both during and after executing the strategy. Taking a half-hearted approach to any new channel will almost certainly deliver mediocre results which will make your new investment a loss. Posting a few pictures here and there will not prompt an effective response just as showing up with a cardboard box and a pile of product will not help you sell anything either.
Your business is unique; approaching new strategies with generic metrics will likely not deliver what your business needs, but can be a good start to understanding the path to take. Here are some things to consider when evaluating a new strategy:
- The number of customers: How many customers do you expect? Is there data supporting the size of the channel?
- Conversion rate: What percentage of customers will make a purchase?
- Items per person: How many units of what do you expect to sell?
- Gross Margin: How much are you making per product sold?
- Average revenue per customer: Total revenue divided by the number of customers. Once you have this, you can dive deeper into the products and volume of purchases.
- Cost per customer: How much did it cost to acquire the customers? Consider all content, collateral, advertising, and labor.
Evaluating a new channel whether it is online or offline takes time and resources to be done properly. Building a plan with the right metrics can be the difference between the successful execution of a new channel strategy and the complete loss. Trying to manage a new channel on top of all of the day-to-day demands of running a brick and mortar store can seem overwhelming. That is why it is important to work with companies and software solutions that are easy to use and act as a partner. Any new channel requires inventory, communication, and payment solutions. Creating the right content for communication is best done in-house but can be done externally with the right partnership. Your message and value proposition is part of your core business and should not be taken lightly.
About seedpay: Helping Merchants Build Their Business
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