It’s not just Best Buy that’s suffering from the sharp increase in online sales. Many small and independent retailers fear online competition, as recent projections show online sales will continue to grow at a double-digit pace. After all, how can a retailer that has to maintain a physical storefront compete on price with a company like Amazon that relies on a web site and distribution centers?
For many small, independent retailers, lowering prices to compete with those on Amazon.com and other online-only retailers feels like a race to the bottom. Once you start discounting or continually putting items on “sale,” customers start to expect it. Retailers need to maintain a certain profit margin in order to make sure the business stays financially healthy—they can’t always afford to drop their prices 20 percent or 30 percent.
While independent local retailers do need to be aware of online pricing of their products, there are better ways they can compete with Amazon and other online-based competitors:
Offer killer customer service—and hire the right people. Consider why a successful company like Apple invests so heavily in its bricks-and-mortar Apple Stores when it easily could sell its popular iPads, iPhones and other gadgets online. Apple focuses on hiring fun, happy people and emphasizes exceptional customer service. Customers know that when they go to an Apple Store they’ll likely walk away pleased.
“The soul of Apple is its people, how they are hired, trained, motivated and taught to communicate with customers to create magical experiences,” Carmine Gallo, author of The Apple Experience: Secrets to Building Insanely Great Customer Loyalty, told Business Insider. Who wouldn’t want to check out Apple’s Genius Bar?
Create a memorable and exceptional in-store experience. Strive to offer your customers a special experience—something they can’t get anywhere else. Break free of the conventional wisdom of what a physical retailer should be and find ways to make the shopping experience more memorable and valuable to your customers. Seattle jeans retailer, Hointer, is doing just that. Hointer combines innovative mobile and point-of-sale technology to provide shoppers with an experience similar to the ease of shopping online.
Add value to your customers’ lives. Though online retailers are getting better at creating a more-rewarding shopping experience, there are still limitations to what they can do. Figure out what you can give your customers that online stores can’t—or typically don’t. Maybe it’s free gift wrapping, maybe it’s exclusive products or offering classes. Make your customers understand why it’s worth paying slightly higher prices to buy from you.
Don’t ignore technology. Even brick-and-mortar retailers need to stay abreast of the latest trends in retail—and that includes technologies that shoppers are using. Make sure your online reviews are fabulous by monitoring them and encouraging happy customers to leave them. Acknowledge that at least some of your customers are comparing prices online. Use social media to engage your customers. Many brick-and-mortar retailers are learning they can also grow their revenues by also building an online sales channel.