Advice for Retailers

Survive as an Independent Store When a Supermarket Opens on Your Street

Written by Jay Shapiro for Gaebler Ventures

The independent store who has had the monopoly on custom will undoubtedly suffer if a supermarket opens in their catchment area. Can they attempt to compete on price or do they need to offer something different?

Consumers may be delighted when a new supermarket opens in their neighborhood but independent stores won't be.

The big boys have better buying power, higher advertising budgets and they can offer goods at lower prices than privately owned shops can. But need this sort of competition be the nail in the coffin for the small independent? Not if they get clever and work smart.

One of the common mistakes independent stores make when trying to compete with larger chains is that of trying to compete directly. The big store sells a popular brand of washing detergent at a discount, so the independent decides to do so, even if that means the product is a loss leader. The problem is that this is still too small a gesture.

What the supermarket offers consumers is good value and convenience. The small independent is unlikely to be able to offer the same value, but they can provide convenience, if not to the level that the supermarket does.

The answer is to specialize. The supermarket is too big a concern to offer a truly personal service to the neighborhood. The independent store, however, has history, it's been there longer and it knows its customers by name and on sight. That's a key point for the independent shop owner to bear in mind when faced with the prospect of being usurped by a large chain.

The supermarket won't know how Mr Smith likes his coffee, but the small store owner should make it his or her business to know. And hey, the small store owner can take that one step further: Picture the scene:

Mr Smith enters the small independent store:

Store Owner: "Good morning Mr Smith, will you have your usual coffee today? With a little drop of cream? I have your favorite mug right here. You take a seat."

The coffee may be 50¢ more expensive in the small store but Mr Smith is likely to think it worth it. At the supermarket coffee shop Mr Smith may be served by unfamiliar faces. Even if the staff is made up of local people they won't be allowed to tailor their services, they'll be governed by corporate policies put in place to ensure that a particular standard of service is maintained in all branches of the store. The supermarket may be churning out more coffee on a daily basis, but is it as good? Nothing tastes so well as personal service.

Rather than look at what the supermarket is doing, look at what it is not. Bigger doesn't always mean better and the independent store owner might have that as a mantra when trying to keep a good business running in the face of a large threat.

The bigger stores rarely order in single items at customers requests. If it's not heir shelves, they don't stock it. If you own a small store and want to retain customer loyalty offer this sort of service and any others that can help you tailor your business to individual needs. Be an active part of the community, not just a piece of its landscape.

Jay Shapiro is a freelance writer based in the UK. Jay has a particular interest in the emotive aspects of the entrepreneur's character. "Alongside the nuts and bolts of business, the character of the person is often the ingredient responsible for success."

Share this article

Additional Resources for Entrepreneurs

Lists of Venture Capital and Private Equity Firms

Franchise Opportunities

Contributors

Business Glossary