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If you run a small, independent store, chances are that you are competing with some large business behemoths in your area, who enjoy a large percentage of your client base. While a small business does many things to differentiate themselves, pricing is one area where they are usually not able to beat big business.
Based on our own experience and in conversations with small business owners in Australia, we bring you a very actionable list of things you can do:
Sell your best-selling item at cost
If your best selling item is selling at a fraction of the retail price, it will have a much larger impact on your sales event than if you just put on some ordinary items for sale. Once a customer walks in, they won’t just be buying that one item you’ve put on sale. You’ll end up selling a lot more inventory. This is what Coles is doing, when they put a bag of onions for sale at $1.
Sell local merchandise
Big business needs volume, and this isn’t possible in cases where the cost of the local produce/ manufacturing is too high. So they’d stock imported stuff. You can compete by simply stocking locally produced or manufactured items. As Australians we love to support local farming & manufacturing, and this step would let people buy Australian.
Be Hermione Granger’s beaded handbag
Yes, you might not recognise Hermione if you’ve never watched or read Harry Potter (for which we feel some sympathy for you). She is a central character in the epic fantasy series, and her beaded handbag is famous for holding anything and everything under the sun, mostly things that are usually not available anywhere else.
Be the beaded handbag of your area. Try and anticipate what people might need (winter is coming? Mother’s day is coming?) and also keep a register of things people asked for but you didn’t stock. Once your inventory is wide enough to cover most of people’s requests, you’ll develop a trust in people that anything not available elsewhere, might have a chance of being found in your store.
Watch the pricing strategies of your competitors
Businesses (including big business) adopt several below the belt tactics when it coming to pricing. Months ahead of a sales event, they might start jacking up the prices of everything in their store. By the time the sales event begins, that “65% off” is actually just the usual price, because the tag price in the preceding months were raised by the same percentage.
Sometimes big businesses identify a popular product, and price it lower than everyone else. However, they increase the prices of associated items or accessories in such a way that its not obvious.
While we’re not saying that you should adopt these pricing methods, its good to understand your competitors and how they operate.
Make it personal
For small businesses have a trump card: the photo of the business owner smiling at you. Business business simply doesn’t have this capability. You’d never see the face of the CEO featured on a Woolies or Coles advertisement (unless it was Steve Jobs). As a small business owner, use yourself as your biggest asset. Let people know why you are doing what you do, how you are differentiating and how you’re bringing value. A personal connection with your customers can trump everything else.
Share your successes (and your failures)
Big businesses don’t usually do this, and small business owners can differentiate themselves by sharing what’s going on in their business. Did you make too many cakes this Valentine’s day? Did you re-arrange your restaurant setting and it translated into increased revenue? People love to know entrepreneurial stories, and you’ll have a boat load of them if you run a small business. Use this to your own advantage.
Try new things, every day
A huge advantage of being small is that you are nimble. Big businesses have corporate structures and plenty of ‘reputation weight’ to slow them down. That means you can try new things almost every day. Try a new flavour, and learn from customer feedback. Sell a small amount of a new product and see what customer reaction is. Big businesses do this, but they take their time. This is where you can take the lead and have a huge advantage of a smaller, faster feedback loop.