How Can a Small Retailer Compete with Online Merchants?

How Can a  Small Retailer Compete with Online Merchants?
January 27 18:52 2016 Print This Article

All brick-and-mortar retailers face a serious threat when competing with e-commerce vendors, because today’s shoppers are never more than a click away from comparing prices.  Online operators typically face lower inventorying and service costs, not to mention the overhead they save by not having to maintain and staff retail outlets, so their prices are generally lower than you can find in a physical store.

This competitive threat is even more perilous for small retailers – “mom and pop” stores that aren’t part of a larger chain. As difficult as it is to compete, however, there are still a few strategies available.

The first thing you should do as a small retailer is ensure that your online presence is respectable. Even without offering all the bells and e-whistles, there are still a few interesting things you can do online that will increase the likelihood that local customers will consider you more.

Take pictures of your staff – nice pictures – and feature them prominently on your website. Show their names, and provide a sentence or two about each of them. Make them human, which will provide a clear contrast to the robotic algorithms and chat windows of an online merchant.

Organize your merchandise, show pictures of items where pictures would be relevant, and consider how best to close a sale – maybe by offering home delivery, or by allowing a customer to reserve a product for pickup at the store.

If you sell items that people might buy on a repetitive basis – such as pet food, or pizza, or prescription drugs – then be sure to allow customers to save their “regular” orders to their own account. And associate each account with an email address, not just to confirm the unique identity of each customer, but to facilitate helpful outbound messaging when appropriate, such as when a drug prescription or an appliance warranty is about to expire. (Note: Do NOT use customers’ email addresses for marketing promotions of any kind, unless the customer has made a clear opt-in choice!)

Not all stores will find it useful to participate very heavily in social media, such as Facebook or Twitter, but if one or two of your younger staff are game to monitor and respond (appropriately) to the chatter, it’s not a bad way to improve your e-visibility.

If you want to appear even more techno-savvy, you might consider doing something like supplementing your customers’ physical shopping in your store with online information, perhaps posting QR codes alongside product information in your store – codes that a customer with a smartphone could scan in order to get immediate access your web site and drill down into more detailed product specifications or read other customers’ reviews right there in the store aisle.

It’s not hard these days to find computer-literate people to put this kind of online presence together, but if you need help I would encourage you to recruit a smart student or two from the local junior college. And once your online presence is up to speed, don’t forget to allocate the time necessary to keep it current!

In addition to beefing up your online presence, however, let me suggest some other strategies designed to clearly differentiate your service from that offered by online merchants.

If you sell more complex products such as electronics, appliances, cars, or maybe building supplies, then be sure to offer services such as installation, maintenance, and repair, as well as complimentary disposal of whatever old products a customer is replacing with the ones bought in your store. An electronics store that delivers and installs computer routers or television home theater systems will always enjoy an advantage over even the most customer-friendly e-retailers. You want your customers to feel that buying a difficult-to-install product from your store can still be a completely frictionless experience.

No matter what you sell, however, you should work hard to improve the customer experience within your store, in order to make the process of shopping itself into something that is more pleasurable, interesting, or exciting for customers. When Target puts a Starbucks in front of the cashiers’ stations, or when a bookstore adds a reading lounge and brings in authors for book signings, they’re trying to create an experience worth coming in for, or at least one that is pleasant and not to be avoided. If you want to attract mothers with kids to your store, why not put a kids’ playroom in the back with two or three iPads equipped with games, for instance?

Your primary goal should be to create a personalized, friendly, and welcoming customer experience. Start by hiring positive, friendly sales people, and train them in how to remember names and faces (yes, you can train for that!). Encourage all your in-store employees to engage shoppers in conversations, rather than just providing information or sales pitches. Show your sales people how to proactively watch out for your customers’ interests – providing each customer with the soundest, most objective advice and help possible, no matter whether the customer buys from you this time or not.

And don’t be afraid to recommend competitors’ products or services whenever this would be the right thing for a customer. The more easily you recommend a competitor, the more trust your customers will have in you. You’ll be putting yourself “above” the commercial fray that characterizes business, and your customer will be more likely to see you as a trusted advisor.

Trustability (that is, proactive trustworthiness) has the potential to change the entire framework of competition, because it engages a customer’s empathy. Train your sales people to use the “principle of reciprocity” –treating the customer the way they themselves would like to be treated if they were the customer. And remember: There’s no such thing as one-way reciprocity. If you proactively watch out for your customers’ interests, your customers will want you to succeed.

Trustability engages people’s natural impulse to show empathy, transcending the commercial domain of monetary metrics and incentives, and tapping into the social domain of friendship and sharing. Rather than simply calculating the dollar value of product features and pricing, when a customer shows empathy toward you they are much more likely to take into account your “feelings,” because your business is showing its human face. And that’s the biggest single advantage any brick-and-mortar store could have over any online vendor, no matter how low its prices.

If all this sounds too airy-fairy to you, then I suggest you take a look at a few retailers who have used these strategies quite successfully already. In Connecticut, Zane’s Cycles, founded by Chris Zane, is a good example. Or look at the family of clothing stores owned and operated by the Mitchell family. Or check out the Sewell Automotive family of car dealerships in Dallas.

Carl Sewell, Chris Zane and Jack Mitchell have all written books based on these and the similar ideas that made their retailing businesses successful. 


Recognized for more than 20 years as one of the world’s leading authorities on customer-focused business strategies, Don Peppers is an acclaimed author and a founding partner of Peppers & Rogers Group, the world’s premier customer-centric management consulting firm. The Times of London has listed Don among their «Top 50 Business Brains,» Accenture has included him in its global list of the «Top 100 Business Intellectuals,» and the U.K.›s Chartered Institute for Marketing put him on its list of the «50 most influential thinkers in marketing and business today.» In 2013, Don Peppers, along with partner, Martha Rogers, were inducted into the Direct Marketing Association Hall of Fame.  And in 2015, Satmetrix listed Don Peppers and Martha Rogers #1 on their list of Top 25 Customer Experience Leaders.

Don has a popular voice in the worldwide media, and as a top 100 “IN-fluencer” for he has more than 260,000 followers for his regular blog posts. 

With co-author Martha Rogers, Ph.D., Peppers has produced 9 international best-sellers, collectively selling well over a million copies in 18 languages. Peppers and Rogers are often credited with having launched the CRM revolution with their very first book, The One to One Future: Building Relationships One Customer at a Time (1993). Inc. Magazine’s managing editor called this book «one of the two or three most important business books ever written,» while Business Week called it the “bible of the new marketing.”  In 2011, the authors released a second, updated edition of their widely used CRM textbook for university use in graduate level courses, Managing Customer Relationships: A Strategic Perspective.

Previously, Peppers was the CEO of Perkins/Butler Direct Marketing, a top-20 direct marketing agency. He holds a B.S. in astronautical engineering from the U.S. Air Force Academy, and a Master’s in public affairs from Princeton University’s Woodrow Wilson School.