James Tenser

BrainTrust Query: Be Small, Think Big and Get Ready

December 18, 2009

FROM RETAILWIRE:
We truly are entering the golden age of small business. And while the editor-in-chief of Wired magazine says "It might not feel that way to a lot of small businesses," there are enough clear signs to suggest that the landscape is dramatically changing. Are the advantages in being small now outweighing the disadvantages?      [more...]

Anderson's quote about sums this discussion up for me:
"The transaction costs are actually higher inside the walls of a big company than they are outside."

This is the paradox of the chain retailer--what's gained in headquarters "synergies" and buying clout when chains grow large is often offset by increased operational complexity, loss of local market responsiveness, and general bloat.

Compounding this challenge, the career motivations of top retail talent tend to be HQ-focused, because that's where the big salaries, prestige and big city lifestyles are. This is a lament of corporate recruiters at chains like JC Penney and Target--every retail-bound college graduate wants to be a buyer or marketing trainee; nobody wants to run the stores in Davenport or Muskogee.

While big chains struggle to make effective localization a reality, independent retailers are finding some big-time techniques are becoming more accessible, affordable and practical to use. First it was QuickBooks, cable TV ads, then inexpensive Web hosting, email marketing, online coupons, and now social media and even local loyalty card programs. Buying groups can help some with cost of goods (although nobody will hope to match Walmart's absolute clout). The absence of headquarters overhead, corporate travel and nattering public shareholders is also a favorable offset for the little guy.

It's definitely tough to be a small retailer these days. You have to be a multi-talented genius to succeed, and the hours are looooonnngg. But local retailers are inherently more focused on local shoppers than their chain competitors, and they don't waste time and resources sending reports back to headquarters in another state.