David versus Goliath: Why Havent Big Box Retailers Chased All the Small Guys Out of Town?

Author

Shep Hyken, Contributor

March 12, 2015

A David and Goliath business story: Imagine you lived in a community, owned a retail business, and Wal-Mart announced its intention to build a new store nearby.

In some communities the issue becomes contentious. Groups of local businesses spend time lobbying local officials to keep the retailer out of town. One of the arguments they make is that this big store will cause smaller businesses to go out of business.

Let me suggest that the ultimate fate of those threatened small businesses may lie less in Wal-Mart’s plans than in their own approach and commitment to establishing customer loyalty.

In the end, competition is good. It can raise the bar in quality, pricing strategies and more. It not only benefits the consumer, it can also, with the right mindset and strategy, benefit the business.

And by the way, even though the examples in this article are focused on retail and small business against big business, it really doesn’t matter what type of business you are in – or how big or small your competition is. Every business has some form of competition. It’s how you choose to compete that can make or break your business.

Consider a similar situation. For the last several decades, two major home improvement big box stores, Lowe’s and Home Depot have built their chain from coast to coast and beyond. Yet smaller, locally owned Ace Hardware stores have been able to thrive despite the invasion of these competitors onto their home turf. This is the classic business version of the David versus Goliath story.

I studied Ace Hardware and actually featured them as a role model in my last book, Amaze Every Customer Every Time, for the reasons mentioned above. They have extreme competition from these big box stores. In some cases, the big box stores are ten times Ace’s size and outspend them in advertising dollars by 30 to 1.

Yet, somehow, Ace Hardware retailers have managed to carve out a business that not only survives, but thrives in the shadows of these big box uber-competitors. After all, a hammer is a hammer no matter where it’s purchased. Yet Ace has successfully communicated why their customers should and need to do business with them. While they are not always the lowest prices in town, their merchandise is still competitively priced; and because of the value that Ace delivers through an amazing level of helpful customer service, their customers want to do business with Ace.

You get your business to this position by going further than merely focusing on customer satisfaction. You need to focus on customer loyalty. Let me illustrate this with an example.

A customer once ordered an electric fence through Ace Hardware’s online portal. After his fence was delivered he received several follow-up calls from his neighborhood store. Installing items like this can be somewhat technical in nature so talking to a person – especially a local expert – can be very valuable and appreciated.

There are three lessons to learn from this example:

  1. First, the follow-up care the customer received illustrates how this buyer benefits from having Ace Hardware on his team.
  1. Second, the electric fence could have been ordered from a variety of online retailers. That easy online availability threatens to turn the product into a commodity, which can transform the electric fence market into a mud wrestling pit of low prices.
  1. Further, this example shows a way to strike a balance between offering the convenience of making an online purchase and maintaining a personal connection with the follow-up. This is proving to be a huge challenge for businesses today.

There seems to be a trend that is pushing businesses to cut down on customer interactions. If you can’t find a way to inject something unique, and possibly personal, into the purchase process, you’ll be eliminated by the guy who has a slightly better online website or another business who has slightly lower prices. The result is that you end up selling a commodity.

By investing in sincere and helpful levels of service, Ace Hardware is preventing its merchandise from sliding into the commodity abyss. They encourage their customers to take advantage of their expertise.

Everyone in your organization needs to be constantly asking themselves, “What am I doing right now to make sure that the next time the customer needs whatever it is that I sell, they will choose me and not my competitor?”

The answer to this question is going to be somewhat different for every business because customers come in all shapes, sizes and needs. That puts the need to understand your customers and their expectations among your highest priorities.

There are a number of ways to compete, and entire books have been written on this topic. Here are three simple examples that are easy to understand:

  1. Be easy to do business with: Amazon makes buying so easy, its customers can relax. You know that with a few clicks of your mouse and an Amazon Prime Account, your package will be sitting at your doorway in just two days. It’s so easy.
  1. Create confidence: Micro Center sells computers and accessories. They compete with Apple (although they also sell the Mac computer), other big box electronic stores as well as intense online competitors. If you’re buying a new computer and decide to visit the local Micro Center, you’ll be impressed with their salespeople, who provide an expertise that gives you comfort and confidence that you’re buying the right computer.
  1. Educate the customer: If you have a leaky faucet and go to your local Ace Hardware store, they won’t just sell you what you need to fix the faucet, they will teach you how to fix it. Hence, their helpful tagline that tells their customers that when you need help, “Ace is the place. The helpful hardware place.”

With these examples in mind, explore the reasons why your customers should select you over your competition. Focus on making those attributes of your business the standards against which all others are measured. Then you’ll be separating yourself from your competition and moving from basic customer satisfaction to coveted customer loyalty.

Shep Hyken is a customer service and experience expert and New York Times bestselling author. Find more information at www.Hyken.com.

This article was written by Shep Hyken from Forbes and was legally licensed through the NewsCred publisher network.

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