Here in Northwest Arkansas, the heart of the retail industry, where Walmart is an all-dominating force in the market and Dillard’s is still viable as a “real” department store, we still have many smaller retailers. Although we have some tremendous local successes such as Riffraff, Walker Brothers, Fayettechill, Phat Tire Bicycles and Sam’s Furniture, many of our local retailers are struggling to survive and make a profit — and were so even before the advent of COVID-19.
It’s conventional wisdom that Walmart and Amazon are killing all other retailers. But I will respectfully disagree. The retailers are killing themselves. Here’s why I say that:
- Many retailers do absolutely no marketing and/or advertising. This is probably the number one problem with small retailers. They expect “word of mouth” to drive their business. But that takes way too long to work for most of them, and they go belly-up waiting. Most aren’t even using free social media resources effectively.
- Many retailers have poor locations and/or little or no signage, or the signage is too small or poorly designed. It’s amazing how some of these businesses are located in strip malls, behind strip malls or have absolutely no signage you can see or read as you drive by. It’s no wonder they get so little walk-in traffic, and when you poll their target customers, so few are aware of their existence.
- Many retailers act as if they don’t know who their target customers are. Their merchandise is all mixed up. They are trying to sell product to sorority girls and their mothers, therefore blowing it on both counts. Store design, logo, merchandise selection, employees and even music played all have to match target market.
- Many retailers are selling the same stuff everyone else is. This is a huge problem. That just allows customers to price-shop them, and the lowest-price seller wins. That kills margins. They need unique merchandise that only they have.
- Many retailers are over-relying on discounting. Again, this practice kills margins. And once your customer base gets used to it, many wait to buy anything for the sale they know will occur.
- Many retailers hire the lowest paid employees they can hire and give them no incentives. Minimum wage workers results in young people with no experience or who are talking to each other or on their phones at work, or older people who are angry at their station in life serving customers. That’s not the way to have the best customer service.
- Many retailers fail to provide their people with any training whatsoever. You see it when you ask questions. The workers have not been trained and don’t know how to greet customers, how to deal with complaints, or how to upsell — all essential skills.
- Many retailers have disconnected owners who have lost interest in their business. The owners have given up. They keep the business going but are burned out on it and don’t give it the attention it needs to be viable.
- Many retailers still have no on-line business at all. This seems crazy to me. With all of the shoppers who prefer to buy online for convenience (and now safety), everyone should have a website that sells product. Many others could be supplementing sales through Amazon, eBay and other channels.
These are just some of the problems, and I could elaborate on each of them but am out of space. But you tell me if I am right or wrong about why so many are suffering.
Mark Zweig is the founder of two Fayetteville-based Inc. 500/5000 companies. He is also executive-in-residence teaching entrepreneurship in the Sam M. Walton College of Business at the University of Arkansas. The opinions expressed are those of the author.