Solutions and Resolutions

Q: Storeowners in our area recently campaigned against Wal-Mart coming to town, but we lost the battle. Now small retailers are afraid that we won't be able to compete with the great grey giant on the outskirts of town. What can independents do to survive this new challenge?

A: The arrival of Wal-Mart into your market, especially if you haven't had this type of competition before, no doubt feels very threatening. And to be truthful, many locally owned stores have been put out of business by big box discounters. The books that say you can easily survive by concentrating on good service and developing a market niche often oversimplify the situation, or assume that you have enough capital on-hand to make the changes necessary to compete. However, it's also not true that every local business is done in by the arrival of a big store. Here are a few steps you can take to deal with this new challenge:

• Don't roll over and play dead!
• Get to know your competition.
• Analyze your strengths and weaknesses in comparison.
• Remodel your store.
• Extend your hours.
• Conduct more staff training.
• Offer additional services.
• Team up with other retailers and your community.
• Be a trendsetter.
• Diversify; go more upscale.
• Ask your vendors and reps for help.
• Get free publicity by discussing the situation in the press.
• Promote your business.
• Cultivate your current customers.

Keep in mind that retailers all over the country — even those located right next door to a retail giant — have learned to survive and thrive in the shadow of their oversized neighbors. Independent retailers help define our communities. It's worth doing all you can to make sure that your town does not lose its local character just because a national chain has arrived on the retail scene.

Q: I don't know if it was the economy, competition or other factors, but 2006 was not a very good year for our Christmas and collectibles store. We have to do better in 2007, or we're not going to make it. Can you give us some advice to help improve our store's situation?

A: January is a good time to examine how you're doing, and make plans for the New Year. The high-profit holiday season is over; inventory has been tallied; financial figures for the should be available. This is the time to analyze the past and set goals for the future.

Get together with employees one morning in January over bagels and coffee, and solicit input about the holiday season and the year in general. Be liberal with praise for the staff's performance as a whole, as well as the contribution of individual employees. Take notes on their ideas, and consider all suggestions respectfully — that will help you make the most of the meeting.

If your store is not doing well, you may need more than just a one-hour brainstorming session; you might want to close the shop for a couple of hours during a slow time of day. The loss of sales will be made up for by improvements in the business. If you can afford it, you can even consider bringing in a professional facilitator. This will free you up to participate in the meeting.

Don't panic your employees by stating flat out that the business is struggling. They need to feel that their jobs and their futures are secure. However, there's no harm in telling them that the store is going through a challenging time, and that you need their help to improve sales and cut expenses. By allowing the staff to help set goals for the coming year, they'll "buy in" to helping you reach those goals.

You already know that something has to change. Therefore, you probably need to do a SWOT analysis. SWOT analyzes what your business does well and where you could make changes to improve the situation. SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

This is also useful for stores that aren't experiencing a crisis. Retailers need to make improvements constantly in order to keep growing; many languish because they fail to adapt as the world around them changes.

Write the four words on large sheets of paper and invite your staff to help you come up with as many responses as possible for each. You may find that there are opportunities for your store that you hadn't thought of, or changes in shopping patterns that present new threats. You may also have internal weaknesses, such as too much (or too little) inventory, that you need to address.

If you wrote a business plan before opening, it might be helpful to compare your current SWOT with the assumptions you made in the beginning. Create a new strategic plan stating short-term and long-term goals for your shop, and how you plan to achieve them.

Another source for input is your customer base. Consider conducting a brief survey to find out what they like and don't like about your merchandise selection; find out whether your advertising is working by asking how they heard about your store; offer customers the opportunity to make suggestions of new services or goods they'd like you to offer.

In addition to involving your staff and your customers, talk to other business owners and advisors for advice. As you face a challenge to your retailing career, you don't want to be isolated. Get as many people on your team as you can, so that they can all help you succeed.