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.
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?