Big boxes are looking to smaller stores. The natural extension of this trend is to even smaller stores, like the ones in your small town. Photo by Becky McCray.
“Everything gigantic in American [retail] is about to get smaller or die.”
That’s the dramatic claim by contrarian economist James Kunstler,writing about the big retail sector in Business Insider. He says big retail is on the brink of scale implosion.
Kunstler points to the same trends that are affecting small towns: online shopping, global delivery, higher fuel costs plus a few other factors including tighter corporate credit.
And that’s potentially a big bonus for small town retailers that have been hit hard by customers driving to the big box competitors in the big city.
In Texas, big box stores are already getting smaller, documented by the Fort Worth Star Telegram (PDF).
Charles Wetzel is CEO of the Fort Worth-based Buxton Group which advises big retailers on site selection. He noted that the new big boxes opening in DFW are taking less square footage, only a fraction of the former mega sizes.
He said, “Quite honestly, a lot of retailers have come back to the customer service days where the customer feels loved. If you can win on service, even if a product is online, people will come. They enjoy the entertainment factor of shopping in the store.”
And it’s not just Texas. Sheri Bridges, director of Wake Forest University’s retail marketing center, explained the national trend. She said, “Small is a big idea nowadays. There is definitely a trend to a smaller footprint.”
“Best Buy calls it ‘community-oriented retail,’” she said.
If the trend is toward smaller, community-oriented retail, who do you think is in the better competitive position, big boxes or stores in your small town?
Update: I’ve added more about the consumer changes driving this trend in a new article, Customers are switching to small retailers.
If you’re working on a shop local campaign to support your local small retail stores, you might benefit from the $9 guide to shop local campaigns in small towns.
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Becky started Small Biz Survival in 2006 to share rural business and community building stories and ideas with other small town business people. She and her husband have a small cattle ranch and are lifelong entrepreneurs. Becky is an international speaker on small business and rural topics.
There is a big positive in small town stores. That positive is customer service and customer awareness. What do I mean by customer awareness? Like the old TV show, “Everybody knows you name.”
You as a small town shop owner have a built in advantage over big box and on line shopping. You KNOW you customers and they know you. You can provide a service on a personal level that they can’t. I can’t speak for everyone, but I would expect the majority of folks would rather spend an extra few percentage points and deal with a friend than stand in a line at a big box. The same goes for waiting for the UPS truck to arrive with your bargain.
If a shop owner make it a point to know his or her customers and goes out of his/her way to keep the relationship personal, they will go a long way in attracting people away from the computer or the large parking lot.
On the other side of the coin, you don’t have a price advantage. You never will. Don’t establish personal relationship with the people who walk in your door, and you can not succeed.
Customer relations is the only real edge you have.
Excellent points, Rick. I appreciate your perspective as someone who has chosen to live and do business in a small town.
It is an interesting trend, but in perspective, shaving 10% off a 200,000 square foot big box still leaves an awfully big store. Meanwhile, new formats like neighborhood markets and express stores in smaller markets threaten to take more market share away from local businesses. Observant local retailers will note that the chains are cutting the number of SKUs they carry to focus on higher volume products. Maybe some people will not care that the big box that once carried six brands of laundry detergent now only stocks four, but others will. This is an opportunity for local retail, and the brands that were cut will be happy to work with local merchants.
Thanks for talking about those new smaller formats. That is, I think, exactly the trend that Bridges and Whetsel are pointing to. Small town retailers have a big chance to be more responsive and appreciative of customers than those new smaller boxes can be.
Good point, Michael, regarding the cut brands likely to want to work with small retailers. Any suggestions on how to find out who those wholesalers are? I think it would be great if small retailers could find wholesalers willing to work with them on pricing.
Here in Rochester (NY) we have Wegmans (grocery store started in Rochester, but now also in MA, MD, NJ, PA, and VA), and the company is probably the “king of grocery” in the region. However, a new “local, neighborhood grocery store” called Hart’s opened up downtown Rochester with a focus on bringing in locally produced food like meats, cheeses, grains, veggies, and so on. (hartslocalgrocers[dot]com) They also carry national name brands too: Peter Pan, Heinz, etc. It’s the brainchild of an urban economic planner who moved to Rochester to open such a store.
And I like the idea of a neighborhood grocery. Hart’s isn’t walking distance from me, but I since I live in the city, I can drive and be there in about five minutes. It IS a littler pricier than Wegmans, but the beef they are now carrying is from a local farmer that I know and have purchased from directly. So while I might do the bulk of my name brand shopping at the bigger chain (Wegmans), I will also gladly shop at Hart’s because they carry something special that I really like. And, I’ve been introduced to other local and regional farms for other products through them.
I grew up in a small town, and I do miss the stores and shops that knew me by name, knew my brothers, my parents… and although I don’t foresee having the same experience here, there are still little niches that can be filled by small business owners who want to create space where the customer feels like more than just a customer. SBOs with heart can really thrive when they find the right place to open their doors.
Thanks for sharing this post, Becky! :-)
Thank you, Tracy. That is an interesting market developing there in Rochester. Appreciate you sharing.