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[15 comments]

Big advice from a small retailer

May 8, 2014

At the recent eTail West conference, Dave Ratner gave a terrific presentation on how small retailers can win against big chains — real world examples from somebody who worked his way up from the bottom.

First, a little background: Mr. Ratner is the owner of Dave's Soda & Pet City, a seven-store chain based in Agawam, Massachusetts. Ninety-eight percent of the business is pet and two percent is soda. (You can watch the video below or read the transcript to find out why.) Starting in 1975, Mr. Ratner has built a customer-first business, and here are a few tips he offers other retailers:

  • When there is a problem, make it no problem. Make returns easy, solve customer problems in a nanosecond, and enable your employees to say, "What can we do to make it right?"
  • Connect with your customers — it's all about storytelling.
  • It's not about transactions. Develop emotional ties with your customers. Dave's gives gift cards to pet shelters who refer customers, for example, and publicizes it.
  • It's not about metrics — it's about being nice. At Dave's, if you aren't nice, you can't work there. Dave writes personal thank you notes on many occasions.
  • Do best what your competition does worst. Dave's focuses on having minimal out of stocks because its biggest competitor, Petco, has plenty of those.
  • Personalize everything you do. Dave's has its own brand of dog food, and on the back of the can is a message from Mr. Ratner: "Thanks for trusting me with the health of the creature you love more than anything in the world."
  • Be an expert resource for your customers.
  • Make sure all employees are working as a team. It's like a car with eight cylinders. If they are all good, everything is fine, but just one being down causes a big problem, and too much attention gets paid to that cylinder.

Bottom line: Treat your customers right — and it's never the customer's fault. Mr. Ratner told a story about a six-year-old's turtle dying and an associate telling the child it was his fault. The associate was told he could work the overnight shift, but was not to have any further contact with customers — because it is not the customer's fault, even if it is.

Discussion Questions:

Do independents and small chains have an inherent advantage when it comes to personalizing customer service? How can retailers scale this upbeat attitude?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which of these customer service tactics do you feel is most important?

Comments:

No, I don't think they have an inherent advantage - but those that are thriving may have figured this out. Large chains have figured a lot of this out too - I'm thinking Trader Joe's, for example, who has wonderful customer service. And don't forget Nordstrom's on the non-food side - legendary for their service.

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Dr. Stephen Needel, Managing Partner, Advanced Simulations

It's easier to instill Mr. Ratner's tips in a small staff than in a large corporation. Small retailers need to embrace their size and flaunt their points of difference. The two easiest attributes to build a business are passion and core story. The bigger a retailer gets, the harder it is to instill these qualities in employees.

Management needs to lead the way. If they have the passion and instill the core story, employees will carry it forward. Nordstrom is the best example.

This is not rocket science. It takes dedication and followthrough. I wish we had Dave's Soda & Pet City in Los Angeles.

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Max Goldberg, President, Max Goldberg & Associates

They absolutely do. In fact when it comes to competing against low-priced giants, specialty shops should ignore the specials and focus on the personals.

LoyaltyOne recently authored a report, "Four Ways to Win for Independent Retailers." The study reports that 89 percent of those surveyed said personal recognition is the top area in which independent merchants outperform their competitors. That outweighs the leading competitive features of large chains (one-stop shopping, at 83 percent) and e-retailers (a mobile-friendly e-store, 68 percent).

Further, specialty retailers capture more than three times consumer spending than do online retailers. Twenty-seven percent of the Canadian shopper's dollar is spent with specialty stores, compared with 8 percent at e-retailers.

View the full report (including four ways that independent retailers can win) here.

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Bryan Pearson, President and CEO, LoyaltyOne

Dave's passion for business is wonderful as anyone who has heard him knows. The fact is he cares about what people think about him and his business - obsessively. Dave is the brand.

I will say an independent who has been doing it as long as he - almost 40 years - has many advantages over a younger retailer. The key for any retailer is always the people - not the algorithm. Not the app that can geo-spam the customer's smartphone. The people. Always.

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Bob Phibbs, President/CEO, The Retail Doctor

WOW! Someone who practices a little common sense. No big secrets here. All he does is practice what all of us know is good business sense.

Most large chains will never get it for three reasons: 

  1. They don't hire right
  2. They don't trust their employees to do what is right.
  3. In most cases, there is no penalty for doing something wrong or worse, not doing anything at all.

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Mel Kleiman, President, Humetrics

Dave has provided the modern day version of Sam Walton's book, Made in America. From my perspective, he captures step #8 in my customer delight book, namely, "Understand That People Do Make a Difference." I use the acronym, FIRE. Fire them up. FIRE stands for Find them, Involve them, Reward them and Empower them.

This acronym works for retailers of any scale, particularly the involvement (culture, training, etc.) and empowerment dimensions.

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Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

If we see the advantage for smaller retailers the fact that they have fewer employees to enable, then yes, I suppose you can call that an advantage. However, I believe there is no inherent obstacle to a large retailer performing all of the same customer service tasks as described in the article. Let's not make excuses for any retailer to treat customers poorly. It's all about execution.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Smaller independents may be more nimble than their big chain counterparts, but they do not hold the keys to personalizing the shopping experience...not unlike Dave's, they've simply practiced it more effectively. I remain convinced that attitude and passion are everything to the shopping experience.

Here's a look at the four key Ps of retail:

  • Product - Too easily commoditized. Not a competitive game-changer.
  • Price - This does not provide sustainable competitive footing.
  • Place - Physical location matters, but the overall feeling generated and "culture" means more.
  • Promotion - Word-of-mouth remains the most valuable form of advertising and the value of "WOW" retail interactions trumps circulars or discounts every day.

Hooray for independents who have made this part of their formula for success. And good luck to the bigger chains as they endeavor to replicate personalized customer service.

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Dave Wendland, Vice President, Hamacher Resource Group

The fifth P of marketing is now all about "Personalization."

Smaller retailers have an advantage ... IF they have the passion for their business and their customers. Less foot traffic from loyal repeat customers enables passionate retailers to focus on consumers as individuals. For small retailers, its not about "selling something" ... it's about helping friends.

Large retail chains and big box stores are built on high traffic volume model. It's much harder for them to offer to offer personalization without systems. Nordstrom and Starbucks have proved it is possible for large chains and stores to personalize service IF you hire the right talent, and instill a consumer centric culture.

There is no free pass. Small main street retailers have to step up! The success of Dave Ratner's stores is executing the fundamentals. It's not rocket science ... it's harder than that!

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Dave's demonstrates the essential keys to success for independent retailers; a robust passion for the business and an endless focus on creating positive and compelling customer service. (I'll bet his metrics are pretty solid, as well.)

But independent retailing and corporate retailing have as much in common as cows and billboards. You can see both driving down the highway, but they are fundamentally different.

Corporate retailing simply can't replicate what successful independent retailers do. The business models are fundamentally different. Corporate retailing is built on volume and economies of scale, spread over a large number of geographically dispersed stores. Independent retailing is built on personalized customer experiences; one customer at a time, one transaction at a time, often in a single location.

What successful independent retailers do day in and day out simply doesn't scale. In this case, bigger isn't better, it's just bigger. Smaller is better.

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Ted Hurlbut, Principal, Hurlbut & Associates

Listen to the video at the "How to Beat the Snot Out of the Big Guys eTail East" link up above.

IT IS ALL ABOUT THE PEOPLE!

Sid Raisch, President, Advantage Development System

Not to be critical here - I think Mr. Ratner is to be applauded for not only doing what he likes, but also for (apparently) being successful at it - but the reality is many - most? - small businesses are personal projects first, and businesses second...sometimes a distant second. Concern over little things like performance, long-term planning and even profitability is often absent.

So yes, there's obviously an advantage when the ownership doesn't mind - even encourages - spending $11 to make a $10 customer happy; and decision making is obviously easier when the chain-of-command is only one or two links long. But can you "scale" this? I don't think so.

'notcom'

The practicality of bringing a laboratory for small scale success and or practice into the big production arena is what is always missing from these stories. When you add the burden of part-time, low paid employees to the equation the results of these ideas being a focus and part of the management goal are explosive to many an executive career.

It is always fun to take a little time for aimlessly reflecting on how things might be better or worse, but the real world cannot hope for the improbable when there are so many things to be done today in a large corporation that may have hundreds or thousands of locations speaking many languages over a widening geopolitical area.

'gjarnoldjr'

The answer depends on how you differentiate between independents and small chains. For example, Best Western operates a chain of 4,000 hotels, all of which are independently owned and operated. While the property manager operating one location has a clear advantage in personalizing his/her business, Best Western may not have an easy way to do the same. To generalize, corporate owned chains might have greater resources to implement capable CRM systems, etc.

When thinking about small chains, I do agree they have an inherent advantage, one which can be scaled within reasonable limits. There is plenty of technology around that allows a business to recognize people via their POS and greet people and/or serve their needs for wish lists, etc. Sometimes a customer club can serve this purpose.

Great article and a telling tale for any of us on this string operating a B2B business. We can all put service, personalization and flexibility out front to differentiate from the "big guys."

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Bill Hanifin, Managing Director, Hanifin Loyalty LLC

Independents definitely have an advantage over larger retailer chains for personalizing their product and service offerings; however, personalized offerings are only one part of the sale. I mean, it's great for the independents that have mastered it, but when it comes down to it, low prices and convenience are major factors in the purchasing decision too.

That being said, we all know how difficult it is for big box retailers to scale and manage things that appear to come so easy to an independent - like a personalized approach. They can try, but they will never match the personal customer service of the motivated small retailer. That said, larger retailers have other tools to win over the customer - like potentially lower pricing, greater convenience and larger product selection.

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Alexander Rink, CEO, 360pi

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