Every retailer today knows the value of a dollar. The old phrase, cash is king has never been truer than with the independent retail community today. Paying attention to sales to assure that there’s money in the bank to meet payroll and other expenses, or building cash reserves during high season to get you through the slow times is an art form that must be mastered in order to succeed in business today.
Obviously, there are many factors that determine whether a small retailer is meeting, or exceeding, its cash needs on a yearly basis. But for most, the cash position of the business is directly linked to a series of fundamental decisions on how the store is positioned in the marketplace.
Independent retailers have the ability to maximize sales by responding quickly to customer needs, while offering one on one customer service. Big-box retailers on the other hand (known as category killers for their ability to single handedly drive down prices and create a “commodity” price mentality on almost every item they sell) are less fluid in nature- short of their capability to lower their prices on a dime. Big Boxer’s understand that for these many items, the vast majority of shoppers today are highly price sensitive.
This is where the independent retailer can step in. They must find products to carry in their stores that are not “commodity” but are “quality” and thus resistant to the pricing deflation that is occurring against the big box retailers. There is a growing segment of the consumer market that is indeed looking for unique niche products of high quality sold by a salesperson that is deeply knowledgeable about how that product works- and for these- they are willing to pay premium prices.
The lesson here? Independent retailers should avoid competing on the basis of price, because there will always be a competitor with larger, deeper pockets who will be able to undercut you. Competing on the basis of product quality, product knowledge, and customer service enables a small retailer to present to their customers a compelling value proposition and maintain critical price integrity.
Lynn Switanowski is the founder of Creative Business Consulting Group, a Boston, MA based Strategic Planning and Retail Consulting firm. CBCG works with businesses to develop creative programs across a variety of business processes that will improve sales and profit margins.
Lynn draws on twenty three years of retail industry experience with Fortune 500 apparel and consumer products companies delivering increased sales and profit margins, helping companies re-engineering traditional business models and creating long term programs to reduce expenses. Her management skills and leadership ability have led to the successful growth of niche businesses and have allowed her to establish the strategic direction for companies launching new brands and revitalizing large-scale mature businesses across many product categories.