As we come out of the chaos of the Black Friday weekend, small retailers may be left wondering how they can compete against big box competitors in these final weeks before Christmas. Big Box retailers often have the ability to win on price. They can negotiate for better costs and manufactures’ sales incentives, cover the losses of of key products sold under cost, and have exclusive products with their own price points.
It is important for small business owners to compete, but not by trying to engage in a price war. As a small business owner you should be able to clearly and specifically explain what gives your business a competitive advantage.
The following three steps will help.
- Inventory the strengths and weaknesses of your competitors.
Their strengths will be a source of inspiration if you can keep customers happy by doing the same things, or a source of important information if you can’t. Their weaknesses, specifically the ones that annoy their customers, will help to show where there is opportunity. Will customers pay you more if you can solve the problem?
- Define your ‘Unique Selling Proposition’ for yourself and your customers.
Use your understanding of your competitors’ weaknesses to decide what you can do better, then create a specific statement that demonstrates this advantage.
- Do you have specialized knowledge or qualification that they do not?
- Do you do house calls or give specific advice?
- Do you provide a design service or manufacture to meet special requests?
- Can you deliver products and services faster?
- Are your materials or processes measurably better?
It is important to be specific and not rely on overly general statements. Don’t just say you offer “better customer service,” be prepared to provide an example or reason to prove it.
- Chart your position amongst your competitors regarding quality and price.
In almost every market there is a place for all three of:
- standard (perceived) quality, standard price businesses,
- high (perceived) quality, high price businesses, and
- low (perceived) quality, low price
For example, people are willing to spend more money on premium brand cars because they perceive the quality as being higher than more standard priced cars. Maserati is not expected to compete on price with Ford, and doing so could be damaging to both brands. Test to see if the Unique Selling Proposition that you described above will help you to explain why you are a higher quality business that can justify either a slightly or exceptionally higher price.
Once you have decided why people should buy from your small retail business, you should concisely deliver a message that describes this advantage. Attempting to sell the same products and services in the same way will be frustrating if you are being compared to your competitors on price alone. Remembering to tell them why you are better and worth more can help to define your unique place in the market.