It is critical that when economic times are tough, small businesses are able to be flexible enough to adapt to contracting markets and changing consumer desires.
The struggle is real for small businesses in declining industries. Over the past several years, there's been a negative shift in sales growth for many traditional trades: department stores, bookstores and newspaper publishers, to name a few.
It can be tempting to solely blame e-commerce competition for the decrease in popularity of traditional brick-and-mortar institutions. While that certainly is a factor, there are other issues affecting struggling industries that have also contributed to their decline.
Among some of the specific reasons for their regression are
- Dependence on trends and consumer spending: For many businesses selling discretionary products, consumer spending drives sales. If their products are not seen as necessary, consumers may abstain or shop for less expensive alternatives during tough economic periods. Trends and fads also drive demand for discretionary items and can even give a business a reputation for being dated. This is a common challenge for department stores.
- Inability to realize economies of scale: Flat pricing of goods makes maintaining margins difficult for retailers, as they lack the volume to realize economies of scale. For example, maximum prices for books are determined by publishers (in the traditional model), so bookstores must rely on increased volume or decreased discounts to sustain profitability. Fierce competition from Amazon, whose prices can be determined by individual sellers of books, has made growth increasingly unstable.
- Rapid technological innovation: Demand for certain products can be driven by technological innovation. To survive in a highly competitive market, companies must constantly develop new products and features. For example, demand for print advertising decreased substantially with the advent of Facebook ads and Google Ads. Newspaper publishers lost a significant source of revenue and have struggled to make a dent in the online advertising space.
- The rise of automation. The usability improvements and cost savings that companies can achieve by automating certain tasks have resulted in declining demand for many human-provided services. Companies and individuals that provide these services, such as travel agencies, language translators, accountants, secretaries, job recruiters, customer service reps, postal workers, and even farmers are suffering as demand shifts toward faster, more seamless service.
In these tough times, some brands have perished and others have risen to meet the challenge. The ones that survived paid thoughtful attention to the marketplace, maintained flexibility and implemented creative solutions to stay relevant in the face of changing demand.
In times that call for increased flexibility, being small does have its advantages. Lower costs can allow small businesses to fill voids left by larger competitors who have cut back or left the market. Smaller companies tend to be more agile, able to adjust more quickly to market conditions and implement new ideas with less friction. Most importantly, you know your customers better than anyone. It is much more likely that the owner of a small business is personally and routinely in touch with his customers compared to the owner of a huge corporation and his or her interactions with their customers.
That being said, adjusting to changing times, both digitally and otherwise, requires creativity. Combine the opportunities listed below with the advantages of being small to increase your relevance and stand out in the marketplace in 2019.
Offer an experience.
While many huge bookstore chains have faced big declines, small independent bookstores are making a comeback, experiencing year-over-year growth since 2015. Why? Because they can provide an experience that Amazon cannot. The smell of a new (or old) book, a unique selection of titles that you can browse and discover on your own, a coffee shop with local blends you’ve never tried before.
Small businesses, especially retail businesses, can often provide a personal kind of experience that you won’t find online or in a chain. Capitalize on what makes you unique and make it a focal point to create a memorable experience for your customers.
Meet customers where they are.
Even though Nordstrom is a large company, it started out as a small family-owned business, and it considers its customers part of that family. It was one of the first movers into the discount department store trade with its Rack unit, and the company developed its online business aggressively early on. Now, customers can purchase their merchandise while browsing Instagram or Pinterest. Barnes & Noble has been able to compete with Amazon by offering the same-day delivery that customers demand. What do your customers value in a shopping experience? Find out how to market your small business, and invest your resources accordingly.
Empower your employees.
Small local newspapers have not seen the decline in readership that some national giants have. One reason for this could be that their employees often live in the communities they serve. Their staff often has access to unique details and information about local, county, and state matters that national papers wouldn’t have. Small papers also often have limited staffing resources, so they hire more carefully to avoid the costly process of bringing on someone new.
Hiring quality employees and empowering them to reach your customers without asking permission results in added value to the consumer in the form of enhanced service and personalized content.
Provide superior customer service.
Have you ever called a company to ask for help, only to be stuck on the phone for hours with an automated system that can't understand you? Not fun. Good automation saves time and resources while easing the consumer journey; automation that frustrates the customer tends to be counterproductive.
Delivering excellent customer service can really strengthen customer loyalty and increase your chances of receiving a referral. Prioritizing the customer experience is a great way to demonstrate your company's value to your customers, differentiate your business from the competition, and lure new customers away from firms offering a less pleasant, less personal experience.
Of course, all these strategies require the right marketing to really be an asset to your company, and many small businesses get pushed out of the market by larger companies with huge marketing budgets. But if you take small steps and focus your efforts in the right place, you can make a lot of headway with a relatively small investment.
As mentioned above, an advantage of being small is that you may have a more personal relationship with your customers. Talk to them about their consumer journey. Find out how they heard about your business and what they like about it. This can help you determine whether you should focus your marketing efforts on social media or on in-person networking and what sort of incentives (such as discounts or convenience) might be attractive to your target audience.
Smart strategies for differentiation can help a small business counteract declining growth. As competition intensifies, creating strong differentiators and advertising them effectively can help you stay in the fight. The strategies above can help you not only retain existing customers but attract new ones who value atmosphere, service, experience and personalization.
Every business is different, which means there's an opportunity to highlight your distinctive qualities and truly resonate with consumers on a personal level. Whether it's your location, your employees, your customers, or your customer service that make you stand out, it's advantageous to refine and emphasize your best qualities, personalize the experience for your customers and fight declining growth with authenticity.