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Swimming with Sharks

Specialty stores can profit from mass retailers

By Richard Gottlieb -- Gifts and Dec, 1/1/2007 12:00:00 AM

Over the course of the year I attend a number of trade shows, and when I do, I like to educate myself by talking to the exhibitors. As a result, I spoke recently with the president of a toy manufacturing company that did a lot of business with specialty toy and gift stores. I innocently asked her, "Do you sell to the mass?"

She gave me stricken look and then, as if by magic, seemed to grow taller right before my eyes. She squeezed each and every inch out of each and every joint, each and every tendon, each and every muscle and each and every bone in her body. Quivering in an aroused state of indignation, she retorted, "No, we absolutely do not sell to the mass market! We would never think of selling to the mass market! We are loyal to the specialty market!"

Well, of course I exaggerate. She really didn't grow tall like Alice in Wonderland, but she sure was up in arms. Her loyalty to her specialty market customers was certainly admirable, but I wondered, Was it wise? Was she helping her own company and her customers by not selling to the mass market?

Well, here is a contrarian thought: Maybe, just maybe, manufacturers could help themselves and their specialty customers by actually selling to the mass market. Maybe specialty retailers could help their business by feeding off of their biggest competition, rather than fighting against them.

When you think about it, big mass merchants are a lot like sharks that eat everything in their path. There are, however, some very smart fish—pilot fish—that swim with the sharks and eat what they miss. Maybe specialty retailers can emulate those smart fish and eat, rather than get eaten? By cooperating with the big boys rather than competing, they might actually build their customer base around items that mass retailers would consider too niche to be worth their effort.

This would work particularly well with products that come in varying levels of complexity, quality and price. Why? It's because mass market retailers are interested only in a low opening price point and possibly two or three additional SKUs. They want to sell a lot of just a few items. They are therefore not in business to satisfy the enthusiast consumer who wants to drill down deep into a particular pastime or indulge themselves with a little well-earned luxury. That enthusiast customer is the domain of the specialty retailer.

By using the mass merchant to make a company's basic products visible to legions of shoppers, the manufacturer builds brand recognition and potentially new enthusiasts who will only be able to find the advanced products they want at specialty retailers.

And manufacturers could do even more. They could cross-sell pieces with the products being sold in the mass market that identify more advanced versions, or include a Web site address with a store locator that includes local specialty retailers that stock the more big-ticket items in a product line. A downloadable coupon that carries the name of the specialty retailer in the consumer's zip code—as well as a map of how to get there—could be the icing on the cake.

Making it happen

But specialty retailers don't have to wait for the manufacturers to take action to begin feeding off of their bigger rivals. Here are some additional ways that smart, pilot fish retailers can take advantage of the big, mass market sharks:

Swallow hard and offer, for a price, to assemble the product the consumer just bought up the street from the big box competitor. Hire some high school kids to do the work and ask them not to rush so the customer has to spend additional time looking around the store. You may even want to offer to assemble the product for free if the customer spends a specific amount of dollars. And to further amplify your message, how about slapping on a sticker that says, "Put together by the elves at …"?
Use a time delay strategy when running ads for better versions of the products that are being promoted by your big competitors. Don't run them at the same time, but wait a month or two. This strategy recognizes the time element involved in a consumer's love affair with a new hobby or pasttime. They use the new, entry level products for a time and then want to move up. By giving them a couple of months with the product, you may hit them when they are ready to move to a more advanced version.
Visit your mass market competitors and become friendly with the folks at the service desk as well as the employees in the toy department. Let them all know that if they get a request for an item they don't carry, they can send the customer to your specialty store. How does that help the mass merchandiser? By making the consumer happy without sending them to a large mass market competitor. That way they win—and you, the specialty retailer, wins as well.

Pilot fish and sharks benefit each other...maybe specialty and mass retailers can, too.

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Swimming With Sharks

Jan 1, 2007

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