Monday, March 9, 2020

Is Bigger Better?

If you were a retailer what would “big” mean to you? Would it mean that you are able to move into a store that is twice as big as your current one, because business was going well? Would it mean that that your name and reputation are known nationwide? Or would it mean what a lot of people immediately think of, that you have opened multiple stores because your business is so successful?

For most people when we hear about a “big” retailer, we immediately think of the later. But as we often see bigger is not always bigger. With the amount of retailers that have closed in recent times, downsized or gone into administration, it really is a case of the bigger they are the harder they fall.

 If we look back at the past couple of years and the brands that have closed there seems to be a pattern that these were all stores that had undergone large expansions over the years. In their quest to grow and find more customers it seemed that they lost things along the way. Some had too many similar retailers to compete with, some of them opened too close to their existing stores. For others economic factors took their toll. While some retailers did not understand the cultural differences of the new markets they were expanding into.

I have watched some interesting and inspirational interviews with smaller one-off retailers who have created wonderful successful stores. By being a smaller independent store they have learnt the power of personal individual service, they know where their customers are coming from, if they are responding to advertising promotions and their ages and the mix of demographics. This is because the owners and management are speaking with them and asking questions to help tailor the right product mix.

Reed Gift Fairs have an interesting YouTube series with their ambassador Tara Dennis visiting gift and homewares retailers and discussing their stores. I love looking at how they display their stock, hearing how they select it and about their customers and seeing what they’ve grown their businesses into with a few years of hard work. 

Very often the fact that they are a one-off store creates that destination factor. If it’s a good store, people don’t mind travelling- within reason. The journey becomes part of the hunter/ gatherer process.

However, the flip side in the quest to grow and conquer is the risk of loss of personal service standards, decrease in product knowledge with the staff, workers for whom it’s “just a job”, stock flow management issues and increased overheads to name a few negatives. Very often businesses are gauged in monetary value but take away key people or compromise your standards and ethics and suddenly a business can become worthless.

Success and achievement are common aspirations of human nature. For some the desire to grow bigger is well worth the work, for other businesses remaining as a one-off destination may be the solution. Dreaming with stars in your eyes is wonderful. Less exciting can be when you need to face reality and ask yourself “what is the cost and what could be lost in the quest to grow?”

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