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How small retailers can succeed in today’s competitive market

Independent retailers have an opportunity to succeed, but the path to success is not what it used to be

Kyle Murray is a professor of marketing and the director of the School of Retailing at the University of Alberta

Oct 28, 2016

by Kyle B. Murray

Illustration Marc Nipp

When I ask retail CEOs what differentiates their stores from the competition, they inevitably talk about customer service and the in-store experience. Yet, when I speak to consumers about their shopping experiences, I commonly hear about disinterested employees, out-of-stock products, awkward return processes, restocking fees, messy shelves and a general struggle to find the products that they want.

Clearly, there is a gap between what retailers would like to offer to every customer every day and what they are actually able to provide. That is probably not surprising. If you are Walmart or Starbucks or Zara, you have tens of thousands of employees working in thousands of stores, serving millions of customers, all around the world. Canadian retail giants from Loblaws to Indigo Books to Canadian Tire face a similar problem of scale and scope. The advantage of being big can easily become a liability. Ensuring that every employee in each of those stores is passionate about customer service and the products they sell may be an impossible task. At the same time, corporate giants are under constant pressure to grow their revenue and increase their profitability, which is not always consistent with a good customer experience.

As a result, small independent retailers have a tremendous opportunity to succeed in today’s marketplace. The path to success, however, is not what it used to be. Small companies will struggle to compete based on store locations, selection of national brands and product pricing. The big guys have many stores and tremendous power in the supply chain to negotiate and push down prices.

Instead, small retailers have an advantage in their ability to deliver personal service, curate unique proprietary products and, increasingly, custom build products. A few successful small retailers have been following this approach for years. For more than 40 years, Calgary’s Owl’s Nest Books, for example, has built its business and reputation on personalized reading recommendations. The employees at Owl’s Nest are passionate about what they do and genuinely interested in their products and their customers.

More recently, we have seen Albertan entrepreneurs – like Rocky Mountain Soap Company and Lux Beauty Boutique – leverage small product selections and exceptional service to crack the ultra-competitive cosmetics market. Others have contributed to the growth and expansion of new markets, such as Carbon Environmental Boutique in Edmonton and Reworks in Calgary. I have been especially impressed with small retailers that are taking a chance and bringing their own unique tastes to market. The Uncommons in Calgary is known for sourcing innovative products directly from designers. In Edmonton, The Prints and The Paper recently opened on 124 Street and brings a carefully selected assortment of products that wouldn’t look out of place in the trendiest shops in New York or London.

These small companies, and many others, are leading the evolution of independent retail in Alberta. They are not trying to undercut Walmart’s prices, offer Zara’s product selection or be more convenient than Starbucks. Instead, they are passionately serving a segment of customers that they understand with a level of service and a carefully selected assortment of products that larger chains cannot match.

While that evolution continues, other small businesses are leveraging technology to revolutionize traditional retail markets. Edmonton’s Poppy Barley has been celebrated for their custom-made footwear with an international reputation for innovation and quality. Less well known, but potentially more revolutionary, is Suits by Curtis Eliot, also based in Edmonton. This fast-growing company is an exciting combination of old-world tailoring and modern tech company that designs and fits suits to its individual customer’s tastes and style. The service is one-on-one, the product is custom built and the quality

is world class. They don’t have the flashy locations many of their competitors pay top dollar to maintain, nor do they tie up capital in inventory that may or may not sell. Instead, they focus on a personalized customer experience and a sophisticated supply chain that connects raw materials to the craftspeople that build the final product.

As large retailers struggle to evolve their own businesses to give customers a reason to come into the store rather than buying online, many small retailers are leading the way with truly exceptional shopping experiences. Ultimately, customers will vote with their wallets, but this approach to small retail presents a substantial challenge to big retailers.

It is not, however, a guarantee of success. Starting a small business and keeping it afloat is as tough as it has ever been. Yet, because consumers are becoming more diverse and more demanding, new opportunities are opening up to meet their needs with superior service and a unique selection of products. In many ways, there has never been a more exciting and promising time to open your own store.

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