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Small Retailers Have Big Advantages Over Chain Stores: Opinion

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As a third-generation retailer and chairman of Memphis-based Amro Music Stores, I believe there is still plenty of room in the market for small retailers with energy and enthusiasm.

But it takes great focus and effort to retain customers, or lure them away from bigger chains.

Here are four truths of retailing that any small business owner can use to compete against the onslaught of big box stores and chains.

1. Coming in second isn’t a consolation, it’s a catastrophe. Our challenge as retailers isn’t just offering products customers want — it’s doing it better than all of our competitors. Customers never choose the second-best value for their money.

The criteria customers evaluate aren’t just product quality and price. They include store location, convenience, hours, sales help, displays, policies and many more mundane but critical details. Each customer weighs each criterion a little differently (creating niches for perceptive retailers to exploit), but in the end only one store gets the sale — the one judged best overall. Success in retail doesn’t mean doing it well; it means doing it best.

2. A company is known by the people it keeps. Among the components that make up a retail store — real estate, products, policies, décor, systems, marketing, displays — none is as critical or defining as its people. A store is only as good as its employees.

Good salespeople sell two to three times as much as the average salesperson, often without talking to any more customers. A dedicated employee doesn’t just get his work done—he finds ways to do it faster and better. And that makes careful hiring and sufficient wages among the smartest values in retailing.

3. Training is retailing’s easiest competitive advantage. The public has a powerful image of retailing as frustratingly short on knowledgeable employees. And that creates a ready opportunity for energetic retailers—training our people thoroughly on products, salesmanship, systems, methods, customer interaction, display, merchandising and every other detail that matters in the operation of our stores.

It’s also important that employers recognize that over time, employees can forget steps or leave out those they don’t understand the need for. Only after mistakes come to light do we recall that the method we once had in place was designed to avoid exactly the problems that have arisen.

So not only do employees need good training, they need refresher courses. If time permits, training can be one-on-one or in groups. But some of the most efficient training is through sales, product and operations manuals. They can be given to employees immediately when they’re hired; new hires welcome the opportunity for a head start. Certifications are both encouragement and assurance that the material is learned.

4. Good managers don’t have to create motivation — they just have to be careful not to kill it. New employees bring motivation on their first day of work; they’re eager to learn, contribute and become valuable team members. A manager doesn’t create that motivation; it comes from within the employee.

The manager’s role is simply allowing them to contribute. We explain the objectives, assure they get the necessary training and tools, provide ongoing information and feedback, and recognize and respect their efforts and contributions.

That, combined with careful hiring, builds a powerful team that customers recognize, appreciate and want to do business with.

Chip Averwater is the owner of Amro Music Stores, and the author of “Retail Truths: The Unconventional Wisdom of Retailing.”

Email us at SmallBiz@cnbc.com
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