Writen by Vernon Stent
If you are you running a small local independent store, you have no doubt experienced what the big regional/national chains can do to your business. They buy much lower than you do and also sell lower. Occasionally they will sell at a lower price than you can buy from your wholesaler. It is not uncommon to see private label goods from big chains being openly sold in small outlets. This article is not going to bleat about how unfair the situation is. It's not unfair. The big guys are using their muscle to attract customers and make a profit and that is what they are supposed to do. Stay positive. Forget your disadvantages and start to think about your advantages. One big advantage you have over the big chains is that you are a truly local business. You have local customers for sure, but do you stock local products?
The big chains have often toyed with selling products that are made in the locality. Some even have a small sales area dedicated to local products. They have never mastered the art of doing this and probably never will. This is mainly because their head office resource simply couldn't stretch to closing deals with individual suppliers on behalf of individual stores. As often is the case, the head office contingent is reluctant to allow individual outlets carry out their own buying negotiations. Just as local buying may be advantageous to the independent, the big chains see the opposite argument. Their great power lies in their ability to offer high volume to their suppliers in return for low prices and other advantages. By fragmenting volume lines into smaller deals, they will kill the goose that lays the golden egg. This is where you come in. Your independent local store will never have significant buying power so you do not need to play that game. You can play a quite different game that will leave the big guys standing on the sidelines looking on.
What I am suggesting is not easy. If it were easy then it wouldn't be fun, would it?! Just about every local store will have a production facility somewhere up the road. First rule: forget the production facility up the road. Why? Because, if it is a big employer in your town, then the chances are that the products they sell can be obtained from local sources other than a shop. If this (very) local production facility is a jam factory, for example, then the chances are that most people in town will have obtained as much jam as they need because they work at the factory or have friends or family that work there. I am suggesting you go a little further down the road. Four or five miles radius from your store and beyond is more like it.
Once you have identified the producers that are in your area, contact them and just put the idea to them that they can have another outlet for their goods. Transport costs would be negligible and they would have a great place to try out new products and ideas. Sometimes goods are produced that, for whatever reason, are not wanted by large customers. You may consider selling these goods. I am not suggesting selling sub-standard goods. In fact, this would not be a good idea. Often products do not meet a large customer's specification but are actually fine. They just do not happen to be the right shape, or color or are unwanted for some other innocuous reason. It is very common for producers to over-produce. Sometimes it is more efficient for them to finish off a production batch, leaving some goods over. In these situations you will be probably be able to negotiate some good deals. If a producer wants to test a product's selling potential you may be able to negotiate a sale-or-return deal.
Many producers have a shop attached to their premises where these kinds of products are sold. Many others, however, do not. You would be either adding a new outlet for them or would possible replace their current outlet, depending on their situation. It costs nothing to ask. Ok, then it does cost. It costs you a lot of time, and your time is precious. The time this takes, however, is your investment in the company. Like any investment, it may yield disappointing returns. On the other hand, turning your store into a showcase of local products may bring some or all of the following results:
i) Bring your store the attention of the staff and management of the producers whose goods you are selling. You may win some new customers ii) Give you the opportunity to merchandise products that other stores do not routinely sell iii) In many cases you would probably be able to offer bargains that other stores could not match iv) You would be able to demonstrate your environmental credentials by featuring products that have not travelled far distances v) Although many products you try out will not take off, it is inevitable that one or two will stick. You could then become a valuable outlet to your supplier and may become a niche retailer for certain products
Some of you may like the idea selling a whole range of local products. Other may be less enthusiastic. If you are a food shop and you have found a great source of fresh carrots that are better than those you were buying previously from wholesale and you can achieve the same or better margins, then surely this, on its own, would have been well worth while. If you sell kids' toys and a local person happens to make their own glove puppets then you just may have found yourself a niche market to operate in. Who else would be selling the same puppets? Answer: nobody.
Competition from large companies is surely never a bad thing. You can always be more nimble and faster moving than they can be. You can adapt to change and try out new ideas. Better still you can be the instigator of change instead of the reactor to it. Selling local products is your secret weapon that the big boys will never be able to match. Wouldn't it be fun if a Wal-Mart executive walked in your store and said "where did you get the glove puppets..."
More articles on this subject will follow - watch this space.
Vernon Stent is the content writer for AboutRetail.net. Learn all about modern retailing and retail history |
0 comments:
Post a Comment