There are many ways that you can distinguish your store to bring in shoppers. The simplest, and the most dangerous, is low prices.
Low prices are easy because everyone understands them and they are easy to implement. The problem is that if you base your company’s appeal solely on price, you don’t instill loyalty in your customers. Instead you instill a bargain mentality where customers are only as loyal to you as your prices are lower than the other options.
With so many places to buy products at discount, trying to be a low price leader when you aren’t also a volume and market share leader is a good way to find yourself cash strapped and eventually bankrupt.
This isn’t just a problem for small Catholic stores. Take the recent demise of Ultimate Electronics. The chain always billed itself as a low price leader in its ads. In fact, I can’t remember anything else about the ads except that Mark Wattles, the president, seemed like a really nice guy. There may be more involved since Wattles was also dealing with the demise of the Hollywood Video chain because of his failure to adapt to the changing video rental landscape.
What I took away from the closing was that I really couldn’t think of a reason to shop at the stores based on their ads. You see, ten years ago when you said you had the lowest prices there weren’t many places to go to verify that. Now you can go to Craig’s List, Amazon, Ebay, Overstock and other sites that probably have lower prices than your store.
These companies are able to offer huge discounts because they have one thing that you aren’t likely to ever have: vast volume. When you are like Walmart and can tell a company that you want to buy their entire production for the next two years, you suddenly have a huge bargaining hammer with which to increase your profit margins.
Your success depends on distinguishing your store on other factors. Here are a couple of ideas.
- Customer service – Is your staff friendly, well dressed and willing to go the extra mile for customers? One of the biggest turn-offs for me is to deal with a clerk who seems to be wishing I would leave so he could get back to not working.
- Knowledge – Your customers should come to believe that your store is not just a place to buy stuff but a resource where they can come to get questions answered. If you offer classes that can improve your image even more.
If your customer loyalty depends on beating Amazon’s prices you need to make a radical business shift because you aren’t ever going to win without sacrificing the long-term health of your company.