Right now, if you go on your smartphone or computer, you can buy just about anything you want from a big-box store. What’s more, you can even get it the next-or even the same-day. For the most part, small businesses can’t compete with that kind of turnaround time. Where they can compete, however, is by delivering a superior customer experience. How can small, local businesses compete with the big chains? The answer may not be what you think.
Does Location Matter?
More than 90% of Americans live within 10 miles of a Walmart. As for the e-commerce market, Amazon garners the lion’s share with a whopping plurality of just under 50%. Put simply, the big-box stores know what they’re doing. Their convenient geographic placement throughout the country, combined with their customer-friendly online shopping experience, sets the benchmark for all other businesses throughout the country.
Where they fall short, however, is in their lack of a personalized customer experience. When you go to Target or Walmart, for example, how often do you have a meaningful interaction with a staff member? Does anyone there even know your name?
Interestingly enough, according to a 2017 Segment report, 71% of customers felt some sort of frustration with a shopping experience they deemed impersonal. At the same time, 80% of customers who self-identified as “frequent shoppers” proclaimed they would only purchase from a brand that provided a personalized experience.
Believe it or not, in spite of big retailers’ attempts to take over, a 2019 Dimensional Research survey discovered 91% of respondents preferred small businesses when convenient, and a further 74% seek out opportunities to purchase from small businesses, even when it’s not convenient. What’s behind this fervent support for small businesses?
What’s Behind Small Business Appeal?
According to a 2021 survey from Intuit, the main reason customers prefer to give their hard-earned money to small businesses is simply to keep money local. Just under half of the participants surveyed stated they wanted to support their local communities. An additional 28% stated they buy local for better service.
Price continues to be the most important purchasing factor, but a 2020 Edelman report found the second most important purchasing factor is trust. Brand trust was rated more highly than brand performance, reputation, and even how a brand treats others.
With that said, small businesses have a unique opportunity to earn the trust of their customers, far more than that of chain stores. In light of the country’s political and social climate last year, a number of businesses publicly supported some of the most contentious issues, while others stayed silent. That same Edelman report found 60% of survey participants would support a brand based on its response to these issues. The way brands respond to issues determines whether or not customers trust them. However, that response has to be genuine, long-lasting, and backed up by action.
For fear of retribution, the big box stores are less likely to take meaningful stances on big issues. Survey participants wanted brands to play a larger role in educating and advocating for equality. They also wanted brands to create change and back up their words with actions. Change happens one community at a time, so small businesses can play an instrumental part in directing and facilitating change.
What’s Next For Small Businesses?
Unfortunately, the events of 2020 changed the way we do business. A OnePoll survey found 68% of participants personally knew a business owner for whom the pandemic fallout necessitated the closure of their small business. Many participants could name more than one small business in their community that closed.
It’s not all doom and gloom, however. Over two-thirds of participants stated that since the beginning of the pandemic they purchased from small businesses more frequently. Nearly half of participants believed locally-made products are higher quality than big-box store products. A further 70% stated their communities would be forever changed with the loss of small businesses. Many participants even swore off purchasing from big-box stores altogether.
The pandemic has given small businesses a new, valuable way to appeal to their customers. People have seen the possible future of a world without the mom-and-pop shops they hold so dearly. Those same mom-and-pop shops should continue to provide the stellar customer experience, top-quality products, and competitive pricing that makes them invaluable to their communities.
All in all, there’s more than a grassroots effort behind the movement to support local businesses. While hundreds of thousands of small businesses closed in 2020, millions of new businesses opened in 2020 and 2021.
With the country opening back up, restrictions lifting, and the economy improving, the future is bright for small businesses. Provided they market effectively, and continue to provide unique value to their communities, small businesses can expect a strong recovery.