It can feel like an honor for a large, national chain to consider your small business a competitor, but seeing a big-box store or a major retailer move into the neighborhood may also create some challenges. A large company will have access to significant capital for marketing, and your budget for advertising might pale in comparison.
However, all is not lost. Read on to discover how small local businesses can compete with multi-billion dollar companies and national retailers.
Case Studies in the Economic Impact of Big Chains
The influence of national chains on local economies has been a popular topic for discussion among the nation’s small retailers. One interesting publication featured a national survey that measured the impact of independent businesses compared to chain competitors.
Called the Indie Impact Study Series, the 2012 edition of the survey measured categories like profits, wages, procurement of goods, and charitable giving. One fascinating statistic to come out of the study was the concept of “recirculation of revenue.” This concept is a measure of how much of the company’s revenue was fed back directly into the local economy.
The survey found national chains fed only 13.6% of their revenue back into the local economy while local retailers sent 52% of their revenue back into circulation in the local community. These numbers came from measuring spending of local businesses versus major retailers that included Office Max, Home Depot, Barnes & Noble, and Target.
The recirculation of revenue was even higher when national restaurant chains were compared to independent, local eateries.
According to writers of the report:
“In every case, the findings have been unequivocal: independents bring substantial benefits to their local economies when compared to their chain competitors.”
In conclusion, these statistics are an essential point to be made within a small business’s marketing arsenal. If you’re competing against a major retailer, you may lure local shoppers who want to support a business that will help the local economy rather than sending profits off to some corporate executives or stockholders.
How to Compete with Major Retailers
Even though your business might offer your local community the most benefits, that’s not going to be enough to lure everyone away from giant businesses that offer low prices that you might not be able to meet or sustain.
“Your first reaction might be to lower prices in order to compete with the big stores. But that's like bringing a knife to a gunfight. There's no way you'll ever compete on price.”
However, you do have options to fight against the invasion of a big box store. One of the first steps you’ll want to take is using the same media and advertising methods used by the big companies. Connecting with social media is the way that big companies like McDonald’s, PepsiCo, and the Home Depot share information with their customers.
Your tiny business can accomplish the same thing with social media. It’s inexpensive, versatile, and puts you on a level playing field with your bigger competitors. You’ll want to remember these tips when you craft your social media campaign:
- Create locally focused blogs: Local readers will appreciate locally-focused information on your company’s blog.
- Always stay positive: Your customers want to see something positive in their Twitter or Facebook feed. Don’t focus on your competitor’s negative aspects.
- Remain active and consistent: Create a familiar presence for your local readers and update your blogs, Facebook pages, and Twitter feeds regularly.
Stand Out from the Crowd
Major retailers like Lowes and Home Depot have marketing and publicity teams that craft a unique persona for the company. Even if you didn’t see “Lowes” or “Home Depot” written on a sign, you’d probably still recognize their company colors and the fonts those companies use to create their signs and logos.
Your customers should be able to say the same thing about your company’s signage and graphics. Working with a graphic designer and creating personalized boxes, custom printed bags, and signs that are unique to your business helps your business stand out against similar businesses.
In this same vein, you might also want to consider boosting the specialized appeal of your business’s products or services. It’s fine to tell your customers that you have all the same products and services of your bigger competitors, but you may actually benefit from going in a different direction.
According to Marketing for Success:
“When you are clear about whom your products and services really help, you’ll attract more clients and you can charge more because of your specialization.”
If your bistro serves all the same fancy coffee drinks as Starbucks, you might lure customers away from Starbucks if you can compete on price with them. However, enhancing your business’s caffeinated offerings could help you gain customers that wouldn’t have considered Starbucks in the first place.
Work With Not Against Your Competitors
One interesting tactic was recently discussed in an article published by The Huffington Post. Although the arrival of a huge competitor can seem like it might create some serious competition, there are some interesting upsides.
In examining the failure of many independent booksellers in New York City’s former book district, the arrival of a group of Barnes & Noble chain stores had an interesting effect on the once deserted book industry in the city.
“For quite a while, the Strand was literally surrounded by three Barnes & Noble superstores, and we witnessed an increase in foot traffic and sales after each B&N store opened…the B&N stores helped attract more book lovers to the area.”
Although the initial arrival of a large store could take away business from small retailers, it’s also possible that a local community of related sellers (like the booksellers in New York City) could develop over time.
Are You a Small Business Looking to Compete?
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