Size Does Matter. Advantage: "Small Retailer"

Consider this assortment of seemingly random events:

• Stephen Marche, former college professor turned novelist, wrote a great commentary for Esquire  on "How to Quit Amazon and Shop in an Actual Bookstore."   An actual bookstore, he contends, is a place of discovery: "The book in the bookstore that you actually want is the one you don't know exists. Somewhere in there is something that's entirely fresh to you, and will reward your soul by exposure."
• An owner of  four specialty stores laughingly described the Millennial Generation shoppers in her stores: "So, they stand in front of the display, checking online reviews on their phone, and ask, 'How come you only have three different brands to choose from?' When I explain that we have already evaluated all those other brands, and selected the ones that are the best, they look baffled. They don't know what a store is! That's what we do; we edit the selections!"
• Wal-Mart announced that quarterly results overall were flat. However, sales at their small-format Neighborhood Markets grew nearly 6%. 
• Meanwhile, Nordstrom announced that its online sales for the quarter grew 22%, while sales at its flagship and mall-based stores declined 1.2%
• Amazon's announcement of its Local Register mobile credit card reading device - competing with Square and PayPal - emphasizes the availability of its 24/7 customer support via phone and email. 

Here are some of the patterns that we take from these events:

1. Yes, customers continue to behave very differently than ever before. Even as the economy continues a slow-growth recovery, we will not be "getting back to normal." And that means customers will not use bricks-n-mortar stores the same as before.
2. Knowledgeable, accessible, and personalized customer service is increasingly a strong competitive edge.

But, most important, we believe this shows that today's customers are hungry for exactly what specialty retailers can provide.

• Edited selections (the Millennials would call that "curated"). But they must have the rationale for those selections well-explained.
• Knowledgeable customer service and product know-how. (YouTube cannot explain everything!)
• Responsiveness, especially when an incoming phone call is answered by a real person!
• Human scale. Smaller formats with personal service are in.
• "Multi-channel" - You know, both online and real life stores that are coordinated, and let the shopper shop as they choose. 

Size DOES Matter

As an independent retailer, you already have an important competitive edge. And if improvements are needed, you still have the advantage: much easier to make changes with fewer stores. 

So, size DOES matter. Advantage: the "small retailer." As Anita Roddick, Founder of the Body Shop, so famously observed:

"If you think that being small means you can't have an impact, try going to bed with a mosquito!"

Herding Cats: Those Ever-Changing Demands of Retailing

Warren Buffet, the "Oracle of Omaha", is widely considered the most successful investor of the 20th century. But what is his "Achilles heel"? What investments does he self-describe as "failures"? According to Mr. Buffet, it is his investments in the retail industry. 

The problem? The constant change in retailing makes it difficult to achieve economies of scale. 

"Mr. Buffet has said that retail is challenging because shopping habits and sales channels are constantly changing, making it difficult for businesses to build and maintain competitive advantages, or what he calls 'economic moats,'" reported Anupreeta Das in the July 17 Wall Street Journal.

Meanwhile, there is Amazon. At one point, in their postings for retail jobs, Amazon stated their goal was to "Turn the art of retailing into the science of retailing." Oh really?! They, too, believe that retail should be easily reduced to an algorithm.

Retailing defies predictability. There are no straight-line projections. And, not everyone has the stomach for retailing's unpredictability.  

Today, it is common to cite the internet as the major competitive threat to retailing. Indeed, e-commerce has challenged retailing.

But, so did the big box stores. And mail order. And before that, outlet malls. Before that, regional shopping malls. And shopping centers. And before that, department stores. 

Responding to change is not news to seasoned merchants. In fact, it is this dynamism of retailing that attracts so many people into the industry! 

The true merchants thrive on this ever-changing environment. Instead of being dismayed by change, they relish its challenges.

In retailing, being nimble and responsive offers a decided competitive advantage. And with today's technology, any retailer, anywhere, can gain that advantage, and compete far more effectively.