Problem Solver: How can my small business compete with the big operators?
Published 28/07/2016 | 02:30
Q: I am a small business and finding it difficult to compete with some of the big international players. Can you give me any advice?
A: While Superquinn had 22 shops, it was also a small operator when compared to some of the big international retailers who operate in the food sector. We were always concerned that consumers might believe we were uncompetitive because of our size.
Very often, our small scale worked to our advantage. Our suppliers often had small quantities of promotional items left over, or items where the branding and packaging was about to change that they needed to shift.
They couldn't go to our bigger competitors as they didn't have enough volume to satisfy them, however our small scale made us perfect. We always made sure that the supply industry knew that we were receptive to products like this.
We also tried to box clever. I recall on one occasion when one of the international retailers had slashed their prices to much fanfare and media coverage. I was asked to do an interview for the main news as all the other retailers had declined. I took up the offer, which I insisted be done in the fruit and veg department in our Blackrock store.
Before doing the interview, I rang some of our key fruit and veg suppliers and asked them would they support us with some exceptional deals and we made sure that in the area I did the interview there were some phenomenal value on display behind me. We got eight minutes on the national news that evening and our sales jumped by 15pc that week. We simply couldn't have bought that type of advertising.
I recall one of our retailers on the retail therapy TV programme having a strong reputation with suppliers for being able to sell large quantities of end-of-line stock even though he had a small shop. One famous story involved one of the well-known brands ringing him in a panic and offering him a truck-load of Easter eggs for 22 cent each.
The next day the truck arrived and he lined the pallets of eggs up outside of the shop on the pavement, put a till outside the front door and sold every last one of them within eight hours, and made a nice profit. My message is that being small does not mean you are uncompetitive. You just need to box clever.
Q: I am spending a fortune on marketing trying to attract new customers. It's beginning to affect the profitability of the business and I am not sure what I'm doing wrong. Any thoughts?
A: Seeking new customers is always a costly business. You pay heavy fees for advertising and possibly have other marketing sources that also cost money like bulk texts, digital media boots and more formal advertising programmes.
I always talk about the "Bath Tub Principle". Picture a bath tub which is full with water, the water represents the customers and unfortunately the bath has leaks. These leaks represent your customers being eroded by the competitors. The automatic reaction of most businesses is to "turn on the tap" and to spend lots more money attracting new customers who have never been within their business before to substitute for those that have "leaked".
What enough businesses don't do is focus on their existing customer base and see what they can retain them in a greater way and prevent the leakage in the first instance. That might involve great customer service, a fantastic retail experience and a strong focus on customer loyalty.
The reality is that it will always be easier and more cost efficient to work with your customer base rather than looking for ones who have never shopped with you before. It would be over simplistic of me to say you didn't need to advertise, however it would be worth focusing on your existing customer base and explore how good a job you're doing preventing these from leaving you, or shopping with you less frequently.
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