Four reasons why your small business might lose out to corporate giants

0
111

Being able to clearly see what your consumers are criticising, and praising about your business is essential for deciding where you should invest to improve and grow. However, considering independent companies can’t always stretch their finances in all directions, how do you decide which strategy will increase customer satisfaction and therefore guarantee the highest return on investment (ROI)?

Alternative finance provider, Liberis, recently carried out a consumer survey to investigate the independent vs big brand shopping experience. Those surveyed were asked: “Why do you shop at larger stores or businesses?” and their responses provided useful insights into the ways smaller businesses can recognise their limitations and counteract them.

Having analysed these results, Liberis have come up with four reasons why your smaller company might be losing out to multichain stores and how you can help change the public’s perceptions about small business.

Nearly half of respondents think you’re too expensive

Price was cited as the highest influencer for why consumers opt to shop in larger stores, with 47% of those surveyed believing smaller businesses are more expensive. This can be problematic for small businesses to thwart, as multichain stores are often cheaper because they buy in bulk and even offer loss leading on items to entice consumers into their shops.

Both men and women are more likely to believe a larger chain store has better price points – some variety is shown over the age groups, but on a whole this opinion stood out as the general consensus. Within the 47%, the two age groups who prioritised price most highly were 35-44 and 65+ – what can your businesses do about this?

Focus your marketing budget on building a ‘value’ advertising campaign. Highlight the advantages of shopping small, such as the added customer experience, the ability to feel connected to your community, the opportunity to support a local business, and the higher value of buying a more exclusive product or service.

Two in five people choose convenience over shopping small

Of those polled, 40% stated the added convenience of shopping in large chain stores is what drew them away from independent retailers, as they make it possible to shop for additional items whilst completing your weekly shop – that’s a figure too large to ignore.

The survey showed that convenience was recognised as the highest valued benefit of shopping at larger businesses by 25-34 and 45-54 year olds. Typically, people within these age groups are some of the most time-pressed within daily life.

Despite this, 51% of those polled said there is a noticeable difference between the quality of customer service offered in small businesses compared to larger stores, with one respondent explaining “small stores seem more genuine and go out their way to help you” and another revealing “at smaller stores, the service is more personal”.

Strive to position your business as an experience for consumers with an unparalleled choice in products, service and skills. Marks and Spencer used this technique efficiently through its ‘This is not just food, this is M&S food’ campaign.

Naturally, independent businesses aren’t guaranteed to have enough funding for a TV advertising campaign. However, utilising social media channels and offline advertising to remind customers of what sets you apart from larger retailers is a useful, cost-effective tactic.

A quarter of those polled value location above all else

For 25% of respondents, location is also an incremental component for influencing where they spend their money. As consumers are becoming more impatient, they will inevitably choose a shop with a location that allows for a quick and easy shopping experience. If a customer feels the travelling distance is too far, they will likely choose to shop closer to home, which could result in independent retailers being shunned. With location labelled as a priority, regardless of age or gender, it becomes difficult to see where changes can be implemented to alleviate this point.

Instead of trying to compete with the local option, compete in terms of the ‘best option’. You might not always be the closest choice, but you can always be the best choice, whether that’s through offering a better service, added extras or having the best range for a particular product.

Smaller stores don’t have the best or biggest offerings

41% of respondents claimed it is simply a case of variety that persuades them to revisit bigger stores; making it the second largest influencer. With regards to age, the 18-24 and 55-64 categories in particular valued the seemingly greater product selection as an essential advantage for using bigger businesses. This is another case of mistaken identity for independent providers, as you inherently tend to specialise in one product or service. However, this needn’t be a detracting point to your business.

Focusing your efforts on one area of expertise is often what separates smaller businesses from larger brands. Providing the best and newest products might appear as a large, long-term investment, but failing to meet demands for timely, popular items could result in a slow turn over; jeopardising your business’ ability to jump on a new trend when needed. Consider using a small business loan calculator to identify whether you could stretch your budget to introduce new products or extra service offerings and boost revenue. A calculator will allow you to see quickly exactly how much you can afford to invest in that business opportunity.

It’s worth highlighting that choosing to shop independently isn’t an unpopular choice, for almost 50% of those polled said they shop small to support independent establishments; indicating this plays an important role in purchase decisions. According to the survey, consumers are more inclined to shop small at certain types of stores, convenience or grocers shops rank number one at 58%,  with clothing, jewellery, books, music and gift retailers ranking as the second most utilised businesses at 45%; closely followed by cafes, bars, pubs and eateries at 44%. Overall, this suggests consumers are more likely to spend their disposable income at smaller, leisure focused establishments or retailers with perceived handmade or artisan products for uniqueness.