It is imperative that when economic times get tough, small businesses are flexible enough to adapt to shrinking markets and shifting consumer preferences.
Small businesses in retreating industries face a real challenge. In recent years, there has been a negative shift in sales growth for many traditional businesses – department stores, bookstores, and newspaper publishing, to name a few.
It’s tempting to blame e-commerce competition alone for the decline in popularity of traditional brick-and-mortar stores. While that is a factor, there are other issues affecting struggling industries that have also contributed to their decline.
Some of the reasons for this regression are:
Dependence on trends and consumer spending: For many companies that sell discretionary (non-essential) products, sales depend on consumer spending. If your products are not considered essential, consumers can abstain or buy less expensive alternatives during tough economic times. Trends and fashions are also behind the demand for discretionary items and can even give a business an old-fashioned appearance. This is a common challenge for department stores.
Inability to implement economies of scale: fixed merchandise prices make it difficult for retailers to maintain sufficient margins, as they do not have the necessary volume to develop economies of scale. For example, maximum prices are set by publishers (in the traditional model), so bookstores must rely on higher volume or lower discounts to maintain profitable growth. Fierce competition from Amazon, whose prices can be set through individual book sellers, has resulted in increasingly unstable growth.
Speed in technological innovation: Demand for certain products can also be driven by technological innovation. To survive in a highly competitive market, companies must constantly develop new items and functionalities. For example, the demand for print advertising dropped substantially with the advent of Facebook and Google Ads. Newspaper publishers have lost an important source of income and have struggled to make a dent in the online advertising space.
Rise of Automation: The usability improvements and cost savings that businesses can achieve by automating certain tasks has led to a decline in demand for many human-provided services. Businesses and individuals that provide these services, such as travel agencies, language translation, accounting, secretarial, employment agencies, customer service, postal services, and even agriculture feel the impact of this process as demand shifts towards a service. faster and more efficient.
In these difficult times, some brands have disappeared and others have emerged willing to meet the challenge. Those who survive pay close attention to the market, are flexible, and implement creative solutions to keep up with changing demand.
In times that demand more flexibility, being small has its advantages. Lower costs can help small companies fill the gaps left by larger competitors that have cut back or exited the market. Smaller companies tend to be more agile, able to adapt more quickly to market conditions and implement new ideas with less negative impact. Most importantly, you know your customers better than anyone. A small business owner is much more likely to be in personal, day-to-day contact with his clients than a large corporation owner.
That said, adapting to changing times, digitally or traditionally, requires creativity. By combining the opportunities explained below with the advantages of being small, you can increase your relevance and stand out in the market.
Offer a unique experience
While many large bookstore chains have faced big drops, small independent bookstores are making a comeback, growing year-over-year since 2015. Why? Because they can provide an experience that Amazon cannot. The smell of a new (or used) book, a unique selection of titles that you can explore and discover on your own, a coffee shop that offers never-before-tested own mixes.
Small businesses, especially retailers, can often provide a type of personal experience not found online or in a chain. Take advantage of what it does to you e unique and make it a key point to create a memorable experience for your customers.
Meet customers where they are
Despite the fact that Nordstrom is a great company, it started as a small family business and considers its customers part of that family. He was an early driver of the discount department store trade with his Rack department, while aggressively developing his online business from the start. Now, your customers can buy your merchandise while browsing Instagram or Pinterest. Barnes & Noble was able to compete with Amazon by offering to deliver its products the same day customers place the order. What do your customers value in a shopping experience? Find out how to sell in your small business and invest your resources accordingly.
Empower your employees
Small local newspapers have not recorded the drop in readership that some large national media have suffered. One reason could be that your employees often live in the same communities in which they work. In this way, your staff often access unique details and information on local, provincial or community issues that national newspapers do not have. Small newspapers also tend to have limited staff resources, so they tend to hire cautiously to avoid the costs of hiring someone new.
Hiring quality employees and training them to access customers without asking for permission is an added value for the consumer as it improves the service and offers personalized content.
Provide better customer service
Have you ever called a company for help, only to feel stuck on the phone for hours with an automated system that doesn’t understand you? It’s not fun. Good automation saves time and resources while facilitating the user experience, but automation that frustrates the customer is often counterproductive.
Providing excellent service can really strengthen customer loyalty and increase the chances of being referred. Prioritizing the customer experience is a great way to demonstrate the value of your company to your customers, differentiate your business from the competition, and attract new customers from companies that offer a less pleasant and less personal experience.
Of course, all of these strategies require proper marketing to truly be an asset to your business; many small businesses are pushed out of the market by larger companies with huge marketing budgets. However, if you take small steps and focus your efforts in the right place, you can go a long way with a relatively small investment.
As mentioned above, an advantage of being small is that it allows you to have a more personal relationship with customers. Talk to them about their consumer experience. Find out how they found out about your business and what they like. This can help determine whether marketing efforts should be directed towards social media or face-to-face contacts and what type of incentives (such as discounts or opportunities) might be attractive to our target audience.
Smart differentiation strategies can help a small business counter declining growth. As competition intensifies, creating strong differentiators and advertising them effectively can help you stay competitive. The above strategies can help not only retain existing customers, but also attract new customers who value atmosphere, service, experience, and personalized attention.
Every company is different, which means that there is an opportunity to highlight your distinctive qualities and catch the attention of consumers. Whether it’s the location, the employees, the type of customers or the service provided, it has its benefits to hone and emphasize your best qualities, personalize your customer experience and fight declining growth with authenticity.