Another small retail business has closed its doors in my neighbourhood. And as I stand looking into the retail graveyard of a nearly empty store through smudge-marked glass, it got me thinking about why this shop failed.
First, to look at the overall scenario, it’s not immediately evident why it would not be a great success. You have:
- An up-and-coming area, with recently completed modern apartments, and people moving into the area
- A modern corner space with its well-positioned retail windows
So why would a new small grocery shop fail, and why couldn’t the owner see that it was meant to?
Problem Number 1 – Competition and Loyalty
The only competition was a very small (8sqm) grocery stall, stocking the bare essentials. The nearest larger more famous branded supermarket was at least a few blocks away. This meant great opportunity to meet the nearest residents needs.
But one problem they didn’t account for was loyalty. Even though the tiny mini-market was small, it stocked the prime things that locals wanted and since they had been established for so long, they were friends with everybody. And they had a lot of loyalty. Even though their prices were not very good, people didn’t care, and continued to buy from their “friends”.
Problem Number 2 – Products
The shop was beautifully renovated, but the space was used very poorly. And they didn’t stock a lot of key items. Or most of their products were available from the mini-mart a few doors down. They didn’t have any unique, special or high-demand products that weren’t already available.
Clearly the owner didn’t take time to do any research on the kind of products that local residents want to buy from a shop like that.
Problem Number 3 – Appearance and Image
The shop was made up to look gourmet and upmarket, but their products did not meet the image. The inside was painted with a dark green, and the shelving and counters was polished wood. But when you entered the shop, nothing was special or gourmet. It was a confusing message.
The shop had no Abnormal (Unique) Selling Point. Or maybe they had the Wrong Selling Point. Pretending to be gourmet, when their products did not match their image, can put off customers straight away.
In Summary
If the owner had done some basic market research, they might have made some better decisions that might have made the shop a success.
The area really needs a delicatessen (deli) offering a nice range of meats and cheeses. I am sure a nice bright deli would’ve been a hit. But sadly some business owners get an idea in their mind and nothing can show them otherwise, until that sad day that they realise they cannot keep going, with no cash flow, and they have to suck up their losses, and close their doors.
Marketing is SO important, and market research forms a part of this.
Feel free to share your thoughts?
How was their advertising? I have a similar problem in my small city. We are run by a local economy but many people open their stores and don’t advertising, forgetting to either budget for it or just don’t think it is necessary. I see store open and close but never really know what they sell or why I should go inside. I think a lot more store would do better if they just advertised a little.
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Twitter: fionamceachran
October 28, 2010 at 7:25 pm | Permalink
@Ashlie, Hi Ashlie, Would you be shocked if I told you their advertising didn’t extend beyond the signs in their windows? It seems your area, and my area are very similar when it comes to these local shops.
Clearly they don’t budget for it, or think it’s necessary. I don’t know where they got the idea that just having a window, means people will see it and want to come in.
These shops need to find a way to engage with people, and start building relationships and loyalty. Or tap into something really unique or in demand. Otherwise they will keep opening…. and closing… and it really is sad.
Thanks for sharing your comment.
Twitter: melaniekissell
October 27, 2010 at 10:05 pm | Permalink
A confusing message, lack of marketing research, poor advertising or no advertising, and forgetting that loyalty counts sent this small business down the path to failure. That’s pretty sad because the “location” was ideal for success.
Lots of mom-and-pop shops and small businesses are closing their doors here in the U.S. but not because of the reasons I mentioned above. I’ve seen one business to follow the other close their doors in my neighborhood and the neighborhood where I work. And these are wonderful, family-owned businesses that have been around for a very long time. It breaks my heart and I’ll miss being a loyal patron. People just aren’t shopping as much or spending money like they used to – many are out of work and have lost their homes, etc.
Your post has clearly pointed out three essentials every new business owner must consider to safeguard themselves from going out of business.
Well done!
Melanie
#blogboost
Melanie Kissell´s last [type] ..Blogging for Dollars
Twitter: fionamceachran
October 28, 2010 at 7:33 pm | Permalink
@Melanie Kissell, Yes you are right Melanie. Sometimes I wonder why these people go into business in the first place, or I’d like a little insight into their heads on how they think it will really go once they open their doors.
I wonder if they have this dislusion that just because they have a shop, people will want to buy from them? Hmmmm…
I’m not sure if it’s the economy, or people are not shopping like they used to. But historically, and always, businesses have to find ways to adapt to current circumstances and climates. Business is always changing and evolving and so must they.
Efficient and effective marketing is so vital to their existence, yet I bet few regularly update their marketing plan.
Thank you for sharing your experience. It seems so similar, no matter where one is in the world at the moment
Twitter: extremejohn
October 28, 2010 at 5:56 am | Permalink
Excellent posts and one of the largest reasons that small businesses that are failing get purchased by larger companies. The larger companies see that adding some general marketing increases revenue, it’s an easy win. I am involved in an acquisition right now where we will close the deal hopefully by December 1st and expand to our 7th location, our first move… advertise.
Extreme John´s last [type] ..R.I.P MacBook Pro Hard Drive I Miss You.
Twitter: fionamceachran
October 28, 2010 at 7:36 pm | Permalink
@Extreme John, Hi John, Thanks for your comment. Yes, I can see how larger companies can really take advantage of these businesses that really do not understand marketing, or even really try to.
I don’t even think that much marketing spend is required. Just some research, and some attempts to tap into building relationships with their clients. And yes – advertising is a great start.
Congratulations on your new acquistion. I would love to hear more about it! And I hope the 1st of December is a happy day for you.
RT @abnormalmarket: Small Business Retail Marketing Failure http://www.abnormalmarketing.com/2010/10… #blogboost
There are so many critical things a business owner must do these days…and the tips you mentioned above are just plain ‘required’.
I agree with the poster that also noted wonderful mom/pop places are closing too. Unless you’rea REALLY tied to the neighborhood or provide a memorable shopping experience, I can’t see how one can truly survive these days.
Barbara Ling, Virtual Coach´s last [type] ..Hootsuite Does NOT Want My Money A Lesson In Customer Loyalty
Twitter: RetailRichez
November 4, 2010 at 4:56 pm | Permalink
I am impressed by the commentary I’ve seen here. In adding to the dialogue, I believe you can’t go into retailing without some serious thought as to why customers are going to shop your store instead of the competition. Another term often used, is to have a “unique selling proposition.” In fact, what is the point of going into business just to open up another “me-too” mediocre store? I honestly believe that to survive and excel today, a retailer should be very strong in at least 1-2 of the following areas.
1. Provide over-the-top customer service to appeal to customers who are willing to pay for excellent service.
2. Be a more upscale shop by offering strictly high quality-merchandise or offering premier b quality product of your own. Here I believe you’re working to appeal to status and image conscious customers with your merchandise as well as your atmosphere and employees.
3.Be totally dominant in your assortment of merchandise as a truly specialized retailer with an unbeatable selection and have employees who are knowledgeable in your specific market area, such as at Bed Bath and Beyond or Radio Shack.
4.Provide a unique environment to sell your own manufactured product where there is little to no competition for your specific merchandise. A gourmet cheesecake store that bakes all of its own product is another example.
5.Be totally convenience oriented with ease of purchase, easy to find, and easy to get in and out of, to make life easier and less time-consuming for customers, such as at Walgreens or McDonalds.
6.Provide more of an entertainment or educational experience that is totally unique when compared to the competition. Provide an experience in which the barrier to enter your arena of competition or service is high and hard to duplicate, such as Build-A-Bear.
I say, find something at which you can be the best, whether it is having the best warranties, best selection, best store hours, best delivery policy, etc.Otherwise, why bother at all?
Twitter: RoadTripSavings
November 22, 2010 at 4:50 pm | Permalink
I am glad I found this article. What good it a “Hidden Gem” without the traffic? My purpose of starting my business is to help promote the mom&pops and bring traffic to their doors. Using the O2O(online2offline) model. Telling business owners, I can help bring traffic to your business, but I cannot offer them your customer service and/or quality. Those ingredients stand the test of time and are proven each day the doors remain open. Thanks for the opportunity to share.
Twitter: signsdotcom
July 26, 2012 at 5:37 am | Permalink
We deal a lot with local retail clients and there always seems to be a disconnect between products and marketing. Either they put all their emphasis on one or the other but rarely both in a cohesive strategy. We always consult clients to design their stores, windows, signage so that it accurately conveys what product or service they sell. I completely agree that customers’ expectations have a huge part to play in the longevity of a business. Great article. Thanks for sharing.