February 7, 2013

When Small Business Fails to Grow – Part 3

Used FurnitureSo here’s the final word on what I think happened to this great little business. We’ve already established that the business owner was capable and knowledgeable, adept in most areas of running his store. The business was capitalizing on multiple marketing pillars and was taking advantage of many of its marketing assets such as owner expertise, location, publicity, unique product, and community relationships.

If so much was going right, what went wrong?

As I mentioned in Part 1, the owner felt that he was squeezed out because he could not compete with “the big boys”, notably Ikea.

Yes, the business could have had a more compelling USP (Unique Selling Proposition) but it was not far off. Most of the messaging about the store in some way captured how this shop was different from its competitors. It had a distinct advantage over competitors like impersonal big box furniture stores. When working with any small business client, our first step is to ensure they have a solid USP in place, because that is the foundation upon which all other aspects of the business can be built.

What we need to watch out for, however, are “anti-USPs” — characteristics of the business or factors that go against the unique selling proposition. In other words, where there is a mismatch between the business’ message and the idea in the mind of the customer.

Take a close look at this photo of the shop’s merchandise that I was able to find online. There are some really nifty items there — pieces that would appeal to the shop’s target demographic of upscale patrons. I particularly like the cabinet under the seated Buddha. But there’s a drawback, and I noted this in my Part 2 post: the shop was categorized as a “used furniture” store. Indeed, and you can see it to an extent in this photo, many of these pieces are scratched, dented, nicked, the surfaces marred, and with an overall look of “worn”.

Immediately we have 2 problems of cognitive dissonance or conflicting ideas in the minds of potential customers: 1) that these exotic, unique items from the other side of the world are second hand (even though they are), and 2) the mismatch between the perceived quality of the goods and their prices.

Are you going to pay $800 or more for a sideboard that looks like it came out of someone’s garage, even if it’s a garage in Thailand? Prices had to be high because of import costs and costs of the owner’s buying trips where he went in person to Asia to select the merchandise.

Simply put, you can’t sell “used furniture” for the same prices you’d be able to command for new items, no matter how exotic. Of course, the argument is that antiques — which are old and used — sell for premium prices. In that case you are leveraging the cachet or history of the item and buyers certainly want the antique to look as good as possible, even though its surfaces may be worn.

Here’s what I would have recommended to this business to instantly improve sales and cash flow:

  1. Promote a USP of “Exotic, unique international furnishings, where every piece has a story”. The business owner not only sold Tibetan singing bowls, he could tell you their history and how they were used in the culture. This USP appeals to the upscale clientele in that neighborhood who can afford higher prices and who want items with character, not the impersonal Ikea-style pieces.
  2. Display the pieces and treat them as if they came out of the palace of a potentate. Need to stack tables on top of each other to save space? Put a pad under the legs to protect the surface underneath. These details that show care in handling contribute to the impression of value a customer gets in the store.
  3. Apply a liberal dose of elbow grease and furniture polish. Make every item in that store gleam. Clean off all dust, eliminate scratches, clean the intricately carved woodwork with a Q-tip if you have to, but make it beautiful. Forget that notion of “used furniture”. That is not part of your USP. (See how having a solid USP can affect everything else?) If necessary, bring in a furniture restorer to fix any real damage. The cost of minor restoration would easily be offset by the sale price of the item.
  4. Reduce costs — rather than expensive buying trips for the owner, find an agent who can locate merchandise for you. In these days of cell phone cameras and video, you can see the pieces before you give the okay to buy. Yes, it’s a bit of a challenge to find a trusted agent, but again that would be offset by the cost reduction. And investigate any local sources for such furniture. Can you find comparable items at reasonable cost that have already been imported? It is very possible, in these days of global trade, that furnishings like this are already being brought into the country somewhere. If they can be acquired wholesale, with someone else having borne the costs and hassle of importation, that could save the business money.
  5. Mine the customer database. People who bought these furniture items were delighted with their purchases and often told friends or posted about them on Facebook. Provide an incentive to such customers to make referrals — if your friend buys something we’ll give you a reward. Invite satisfied customers to come back when new items arrive. Keep reminding customers to do business with you.

Above all, ensure that the USP drives all marketing activities of the business. Change the mindset within the store from “used furniture” to “exotic, one-of-a-kind” furniture and print up cards that contain the cultural context or story for each piece.

Afraid of Ikea? Confront them head on: “Add character to your home with a carefully-chosen, unique furniture piece to complement your decor.” The furniture in Ikea all have names, but no stories. 🙂

Remember, this store is the opposite of Ikea. It should not be competing with Ikea at all, but succeeding in that gap where Ikea-type stores fail to satisfy a customer’s need for something more personal and distinctive.

The loss of this business is a loss to the community, the economy, and of course to the owner and his family and friends. It should not have happened.

Comments (2)

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September 30th, 2014 at 3:21 pm    


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