While major retailers reveled in record-breaking online sales and November spending sprees, smaller stores were often left out of the holiday buzz, inspiring the creation of Small Business Saturday. Rather than trying to compete with their bigger counterparts, small businesses should focus on unique, value-added, personal service and take advantage of technology by paying attention to when people are searching for something on Twitter and Google. See the following article from The Street for more on this.
By all accounts, consumers are full of the holiday spirit — if by “holiday spirit” we mean the desire to buy, buy, buy. Unfortunately, this year’s increased holiday spending seemed to be confined to the big retailers.
Retail sales in November were significantly higher than at the same time last year, and during Thanksgiving weekend in particular, consumer spending increased by $4 billion. Moreover, online sales hit record levels.
A recent report from comScore, though, found that online sales for the biggest 25 retail sites increased by an astounding 20% year over year during the month of November while staying largely stagnant for small- and midsize retailers.
“It’s a tough situation right now for many small businesses,” says Brad Wilson, a retail trends expert and founder of BradsDeals.com.
By and large, Wilson says, major retailers have been increasingly aggressive with sales and promotions this year to expand their business. Big chains such as Wal-Mart offered free shipping and price match guarantees during the peak of the shopping season, while others, including Kmart and Best Buy, extended Cyber Monday deals into a weeklong bonanza.
“In 2008 and 2009, the great deals offered by the major retailers basically came from desperation. Retailers were scared they had too much inventory and not enough consumer demand,” Wilson says. “But this year, the bigger retailers have mostly regained their health and are mainly discounting their items as a means to grow their business.”
While this may be great for consumers searching for bargains, it presents a potential obstacle for smaller stores who can’t offer such deep discounts and whose yearly profits may depend largely on healthy holiday sales.
“It’s really challenging,” says Rhonda Abrams, a small-business columnist for USA Today and president of the Planning Shop, a publishing company with resources for business owners. “Take free shipping as an example. It’s become something that shoppers are looking for and being offered constantly by big retailers, but small businesses just don’t have the profit margins to do that.”
Largely in response to the difficulties small businesses have faced this year, companies such as Facebook and American Express partnered to encourage people to shop locally by promoting Small Business Saturday, a shopping holiday during Thanksgiving weekend to raise awareness of America’s small businesses.
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“Small Business Saturday was created in response to small-business owners’ most pressing need: more demand for their products and services,” the companies said in a press release.
Tens of thousands of small businesses signed up for the event, and more than 1 million people “liked” Small Business Saturday on Facebook, which undoubtedly raised consumer awareness for shopping at local stores. But when you consider that Target alone has more than 3 million fans on Facebook, it’s clear small businesses still have their holiday work cut out for them.
For small-business owners looking to boost their holiday sales (read: all of them), the trick, according to experts, is to focus less on competing with bigger companies and instead on figuring out ways to set their business apart. A good place to start is to call attention to unique products or a better customer experience.
“This year has really crystallized the need for small stores to have value-add services that bigger stores don’t have,” Wilson says.
Here are some experts’ advice on how small businesses can boost holiday sales:
Connect with customers
Big retailers may be able to attract consumers en masse with advertising blasts, but small businesses have the unique ability to appeal to customers on a one-to-one basis.
“The small independent retailer can get to know customers over the years, build an ongoing relationship and call up customers and appeal to them on a personal basis. There’s an ability to be competitive by doing that,” says Daniel Butler, vice president of retail operations at the National Retail Federation. “Larger retailers struggle because they can’t connect with customers in the same fashion.”
To build that connection with customers, it’s essential that small businesses offer top-notch customer service, which can differentiate them from other bigger companies.
“Good customer service can keep consumers loyal even through economic hardships. It can also be a competitive advantage during the bustling holiday season when larger retailers have an influx of shoppers,” says Rosa Sabater, senior vice president of American Express OPEN, a community for business owners. “Use this time to personalize the shopping experience for each customer. Train or retrain your employees on how to be attentive and communicate with shoppers. Also, try to follow up with customers after their shopping experience to gauge satisfaction.”
Offer bundled packages
While small stores may never be able to offer prices as low as Wal-Mart, there are other promotions they may be able to offer that some bigger retailers can’t. According to Sabater, one trick is to bundle products and services. For example, if you are selling electronics, offer customers free repairs for a certain amount of time. This way, shoppers feel they are getting more for their money.
Tap into Twitter
By now, most small businesses hopefully know that they can use social networks such as Facebook and Twitter to promote their brands and build relationships with customers. But that’s not all these sites can be used for.
Bridget Weston, founder of Roadmap Marketing and a blogger for SCORE, a small business training program, says businesses can use sites such as Twitter and Google to find out what products consumers are looking for and reach out to them directly.
“You can set up Twitter search alerts and Google search alerts to notify you when someone is searching for a particular gift,” Weston said. “Then you can respond to that person with your products and services.”
Hold special events
One great way to show customers some appreciation and attract new customers as well is to hold special events at your store.
“Hold special events that highlight one of your products,” says Butler, who used to run several retail stores. “I used to do cooking demonstrations to attract customers.”
Promote services as products
For small businesses focusing more on selling services than retail items, the best way to get more customers during the holiday season is to bill your services as giftable items.
“Whether you sell haircuts or legal consulting, make sure you let people know that they can give those services as a holiday gift,” said Abrams, the small-business expert. After all, any business can sell gift certificates for their services.
Capture email contacts
Finally, make sure you try to get the email address of any customer who comes into your store.
“One of the most important things to do is find a way to capture email addresses so you can circle back to new customers,” Weston says. “Then follow up by emailing them promotions, but mostly by offering them tips, recipes and other items that they might actually find useful.”
This way, the relationship with that customer will continue long after the holiday season is over, and they can be brought back with future deals and promotions.
This article has been republished from The Street. You can also view this article at The Street, a site covering financial news, commentary, analysis, ratings, and business and investment content.