January 22, 2013

When Small Business Fails to Grow – Part 2

Here’s more to the story about the small shop that had to close due to competition from “the big boys”. The shop in question sold exotic and “funky” furniture pieces, accents, and other decorative items. It had a good location in a heritage building on a main street, and an energetic, smart business owner who had experience in marketing in the fashion business. They were making good use of Facebook to post photos and other information about their products. They had received a number of excellent reviews via social media and had received some local publicity. They were listed in most of the local directories of shops and businesses. The business owner was committed to environmentally-responsible (sustainable) wood items, and he recognized the value of running the business “on the cheap”, without unnecessary expenditures. This is a great foundation for a thriving small business.

In fact, this business DID have a unique selling proposition. It carried one-of-a-kind, exotic, unique, different, and unusual furnishing items. Its location positioned it to cater to an upscale customer who had money to spend. While the business may have had to pay a fair bit to import these items, the customers wouldn’t have minded the necessary markup due to the uniqueness of the products. Also, there were ways the business could have lowered costs on those pieces. The neighborhood in which the store was located had undergone an urban revival, raising the demographic to people who had disposable income and who were looking for lifestyle enhancements. This business was utilizing the marketing pillars of Strategic Alliances by partnering with complementary businesses, and Community Relations by supporting community events.

With all these assets, why did this business fail? Simply because not enough potential customers knew about it and the value it offered. Its Unique Selling Proposition was not integrated sufficiently into its marketing materials. Its shop description was: “ offers solid wood furniture and home accessories.” While that is a technically correct description, it fails to capture the interesting character of the shop. That description does not differentiate this wonderful shop from its boring competitors. Hence, opportunity lost. It was categorized in directories as a “thrift store” or “used furniture store”, which further devalued its products. Again, technically correct but not the kind of thing that interests the right kind of customer. Antiques are “used” and “secondhand” but valued quite differently. This shop should have been described as carrying “collectibles” or “vintage” items.

The business owner said he couldn’t compete with Ikea. What he didn’t realize was that he didn’t NEED to compete with Ikea! His shop was essentially the opposite of Ikea (mass market, inexpensive, impersonal furniture). He offered unique items and a very personal buying experience. If he was targeting customers looking for inexpensive (used) furniture, he was going after the wrong customers. His target market consisted of qualified buyers who could afford to pay more and who wanted something different.

Some marketing hooks he could have promoted:

  • East meets West (products from Thailand, Asia, Africa, India, South America)
  • Every piece has a story (focusing on the anthropological or cultural origin of the pieces, about which the owner was very knowledgeable)
  • Personalize your living space, add character to your decor
  • One of a kind decorative items (a bookshelf made out of old camel carts and a dining table made out of a 150-year old door)

This business owner could have made good use of content marketing, for very little cost. He should have had a blog that highlighted his product lines. With all the local publications, he could have had news releases and feature stories published about the shop and his products. The business owner’s own story is fascinating to read.

Was this shop capturing customer information every time someone came into the store so that they could build a relationship with their customers? Someone who buys a unique piece of furniture is more likely to respond to attempts to establish a relationship than the impersonal big box stores.

While this small business was doing many things right, some of those things were in the wrong order. With my clients I emphasize the Core Four, which provide a solid foundation, established inexpensively, upon which to build the remaining 4 pillars where expenditures are greater.

This store should not have had to close. Retail, and other small businesses, have changed in the 21st century. It is not sufficient to offer better service, quality or price and rely upon customer satisfaction. Small businesses must differentiate themselves from their competitors, communicate their unique value, and establish buying relationships that lead to customer loyalty. That is the way to thrive in spite of any competition from big enterprises.

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Comments (1)

Diego1992

May 29th, 2017 at 2:30 am    


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