Is your small business currently struggling against a big player brand that is trying push you out of the market? Although it may seem tempting to just cut your losses and close up shop, small businesses can still hold their ground against these bigger stores simply by changing their tactics and offering services that their competitors often neglect. In episode #107, Elizabeth Larkin and Gene Marks offer strategies that will enable your business to thrive in spite of a larger competitor.
1:25—Today’s Topic: How Do I Sustain My Small Business When a Big Player is Crowding the Market?
4:02—Business owners who use a brick-and-mortar storefront should consider relocating so that they are not in direct competition with such a strong competitor.
5:57—As a small business owner, you also need to explore alternative sources of revenue that you might have otherwise ignored, such as an online shopping component.
6:09—Other ways to distinguish your business from your competitors’ include improving upon one of their existing services or offering a service that they don’t.
7:29—Training your staff to provide exceptional customer service staff will give you an advantage over your larger competitors.
12:40—Focus on the customers who appreciate your business and continue to nurture the relationship between them and your brand.
15:21—Gene discusses how economists can predict recessions simply by observing the everyday behavioral and spending patterns of the general population.
Submit Your Question
Elizabeth: Welcome back to the Small Biz Ahead Podcast. This is Elizabeth Larkin, I’m the managing editor of smallbizahead.com, which is a website that is completely focused on helping you run your business better.
Gene: Yeah, and I do a lot of writing on Small Biz Ahead.
Elizabeth: You do, and this is Gene Marks.
Elizabeth: A small business owner, a small business consultant.
Elizabeth: A small business expert.
Gene: Yup, yup.
Elizabeth: And he also writes a lot about small businesses and works with them every day.
Gene: On Small Biz Ahead, except we’re not talking about small biz today are we? Aren’t we talking about big biz?
Elizabeth: We’re talking about big business crowding out your small business, that is what our question is about today.
Gene: I hate that, so it’s like Walmart opening down the road from me.
Gene: Or some big chain store or something like that.
Gene: What do I do?
Gene: Okay, alright I got it.
Elizabeth: That and more, and we’ll talk more about that after we hear from our sponsor.
This podcast is brought to you by The Hartford. When the unexpected strikes, The Hartford strikes back for over 1 million small business customers with property, liability and worker’s compensation insurance, check out The Hartford’s small business insurance at TheHartford.com.
QUESTION: What Are My Options When Big Businesses Move in?
Elizabeth: Okay, today’s question, my small business is at risk of being pushed out of the market by a larger player with more resources? What are my options?
Gene: Shut, these are shut.
Elizabeth: I remember when I was in high school, I was working at CVS and I was checking people out, and doing this thing that they call facing, which is you bring everything on the shelf to the front of the shelf and make sure it’s all facing the right way, and looks really nice. I was fifteen it was my first job and they had a meeting, they called a meeting with us one day and they said Walgreen’s is gonna open up right next door.
Gene: First of all, isn’t that funny, like CVS is there and Walgreen’s is like, you know what let’s just open up right next door to CVS. Why do they do that?
Elizabeth: That’s a phenomenon though.
Gene: They do that all over and the pharmacy stores, the drug stores, they make it a habit of doing that.
Gene: It’s because they scout out the location.
Gene: And they know the demographics, they do their research.
Gene: And they’re like CVS is sorry because we’re gonna be selling just as much.
Elizabeth: Yeah, there’s this joke, do you know Louis Black?
Elizabeth: He’s a comedian.
Gene: Of course, the angry guy.
Elizabeth: He has this joke that if you’re in a city, like you can be standing on a corner, and you’ll see a Starbucks and then if you turn 360…
Gene: You’ll see another one.
Elizabeth: …360 degrees you’re guaranteed to see another one.
Gene: See another.
Elizabeth: So, same thing. So they called us in, the manager and I, I feel like I’m gonna take your thunder a little bit.
Gene: No, go ahead.
Elizabeth: Because, this is gonna be your answer too.
Gene: No, go ahead.
Elizabeth: The manager called a meeting and I was fifteen, I was like, I don’t really understand, like who cares, like Walgreen’s is opening up.
Elizabeth: You know, big deal.
Gene: Well, when you’re fifteen years old who cares about anything.
Gene: Other than boys and sports. Yeah, go ahead, right.
Elizabeth: So, she’s like you know how we’re gonna differentiate ourselves. Because our prices, I guess CVS’s prices were slightly higher than Walgreens.
Elizabeth: Or maybe it was because she was saying customer’s who go to Walgreen’s are super loyal to them.
Gene: Right, She said, we’re going to differentiate ourselves by having an amazing mobile app that uses artificial intelligence and bots to make sure that our customers are always in the know. And be able to make their lives much more better and productive.
Gene: She said this to you when you were fifteen, am I right?
Elizabeth: And this was like the mid 90s, so no.
Gene: Well she was a very…she was always thinking ahead, she was a very forward thinking person.
Elizabeth: She was, yeah, yeah, I think she herself was like seventeen.
Gene: See what I mean, she was two years older.
Elizabeth: She said, we’re going to focus on customer service.
Gene: Right, customer service.
Elizabeth: And Gene, I feel like that’s exactly what you would say, to your employee’s as well.
Gene: It is, I mean in the end, that really is important. Look, I mean, first of all I don’t want to sound too negative here but depending on the business that you’re in. If a large company, or a large business moves in down the street. There really is reason to consider, I don’t want to say completely shutting your business, but one of your options should maybe moving, moving your business. I mean location is important in this world and if you’re in retail and you’re a merchant. If your location is not as desirable as it was, things change.
Gene: And if your location isn’t desirable as it was when you opened up the business, fifteen years ago, maybe this is your sign to say, you know what, let me find a better location that’s 10 miles away or something like that where I might have a better shot. I just want to say that …
Elizabeth: No, you’re right, you’re right.
Gene: The world changes, I’m not saying, oh, I’m gonna stand and I’m gonna fight. Okay, maybe you want to stand and fight and we’ll get to that in a minute with the whole customer service speech. But, I want to say that if you’re nimble, right, and you want to make money, you might say to yourself, listen I can stand and fight but wouldn’t it be less expensive for me just to pick up and go to another neighborhood, or another place where there isn’t the CVS, or a Walmart, right around the corner.
Gene: And let me ply my wares there and do our thing and that might, that might, I’m just saying that might be a better option for you. So, you shouldn’t close the door on that just because you think you’re giving up or whatever.
Elizabeth: And that’s not failing, that’s just being real.
Gene: No, it’s being a smart business person.
Gene: I mean, there’s no, you’re not retreating, you’re just moving away, people change product lines all the time, people change locations all the time. It’s not about failing, it’s about being smart, it’s about you.
Elizabeth: And one thing I want to point out is we don’t know what kind of business this is.
Elizabeth: This could be an online business.
Elizabeth: That’s like, someone’s eating up our…
Gene: Very true, I’m gonna make the assumption and you’re right, we don’t know. But I’ll make the assumption that it’s some brick and mortar business.
Gene: And it’s some shop and again, the big Behemoth moves in down the street.
Gene: Because that seems to happen so much and then people freak out about it. And by the way, you just raised another point, I mean, okay, Walmart moves in down the street but does that mean that without shutting down your store is there another avenue of revenue, like online sales that you might be able to do that maybe Walmart is not doing, or not doing as well.
Elizabeth: I’ll tell you how little small stores, smaller stores can compete with big box stores. Big box stores have not figured out delivery yet.
Elizabeth: I don’t understand why.
Gene: Right, right.
Elizabeth: For instance, I was on the Target website the other night and I was like, I need some tissues, because I’m highly allergic to everything.
Elizabeth: And, the only, I’m not gonna, I want tissues now, I’m not gonna order tissues and wait three days. So, I thought I wonder if Target like delivers, will they just deliver me tissues? Some grocery stores deliver.
Elizabeth: And no, you have to order it, either you have it shipped to your home, or you have it shipped to the store.
Gene: Right, or you get, or to the store, right, right.
Elizabeth: But, I won’t have it shipped to Target because I did that a couple years ago at Christmas. I didn’t want to stand in line.
Elizabeth: Because, it’s so crazy around Christmas time. And they ended up canceling my order because they couldn’t fulfill it. So, and I actually was listening to a podcast a couple years ago with some business expert, and she was saying big box stores have not figured out delivery. So, if you run, this is not a good example, but let’s say, maybe it’s a classic example, let’s say you run a hardware store, and a Home Depot opens up around the block. Home Depot’s not gonna deliver same day packages but you can, really cheaply.
Elizabeth: So, think about that.
Gene: Agreed. It really is, this now gets back to where we started the conversation and the store that you were telling at CVS. And that amazingly innovative seventeen year old boss of yours. Who I know was thinking of the mobile app at the time.
Elizabeth: Yeah, sure.
Gene: But, just didn’t share those ideas with you back in 1974 whenever this was. But this is…
Gene: I’m just kidding, the customer service part is, is extremely important. I mean, when people talk about fighting against Amazon even, or fighting against again, any big box brick and mortar retailer. We all know as a shopper ourselves that we’re gonna go into these stores, the big ones, because we know they’re going to have inventory.
Elizabeth: They’ll have what we need.
Gene: We’re gonna have choice, they’re gonna have, and the pricing is gonna be good, we know that, but we also know, we also know that there’s, the employees are basically useless. I mean they really are, there’s, you can’t even ask for them, I mean of course there’s exceptions to the rule but, if I go into Walmart and I ask the employee’s there for some advice on a new TV set. I’m just not really confident that I’m gonna get the best advice.
Gene: And it’s no offense, it’s just the training from the company isn’t that great.
Gene: And they sell too many other products. And by the way Best Buy is a different situation, they actually invest in their employees to do training.
Gene: I’ve had good experiences there.
Elizabeth: Yeah, my sister-in-law works there and she went through…
Gene: Best Buy’s pretty good, it really is.
Elizabeth: …extensive training.
Gene: If you’re a small business though, that’s your leg up is your people, and your employees. So, if you’re selling some type of commoditized product.
Elizabeth: Same day delivery.
Gene: Yeah, well that’s part of the customer service. If you’re selling some kind of commoditized product you can just walk in and get at Target. You’re really gonna get beaten on that, it’s just what it is. But, if you’re selling something that takes, or if there’s some advice that’s needed. If it’s fashion-related, or if it’s technology-related, or if it’s something food-related, something like that where there is some advice that’s needed. That’s where a smaller proprietor has a huge leg up on a larger business. Because, I am more confident when I go into a shop like that, if I’m gonna buy glasses, for example, or if I’m gonna buy, I’m gonna get advice from either the proprietor or the one or two employees there that clearly, they’re there and that’s what they do and they have the potential to give me better advice.
Gene: So, it is, it is the customer service and that brings me back to the other point you mentioned is things like delivery. So, you could, as a small business, you can respond to your customers way faster.
Gene: I mean if you know that there’s a delivery issue with Target or whatever, okay Target’s gotta go through eighteen layers of bureaucracy to figure out how to fix that.
Elizabeth: Yeah, because they’re using a partner to actually do the delivery.
Gene: You can just do it tomorrow and start offering delivery service, I don’t know, hire somebody part-time to do it.
Gene: Or, figure out whatever your answer is but you can respond fast to what your customer needs are. Now it’s funny we were talking about pharmacies, there are still quite a few in the neighborhood where I used to live, there was like a little local pharmacy and down the street from us there was a CVS. And the local pharmacy continues to do well. And the reason why it does well, I think there are actually two reasons. One is that the pharmacist, you had a relationship with that pharmacist.
Gene: Way more than, I don’t know the person working at CVS and it’s no, no I’m not trying to diss on the people working at CVS, they’ve got a lot of really great people there, I’m sure. But, I don’t know it was like it was his shop and the other pharmacists that worked with him were like his people and you just felt more cared for. Because then, and he, he was able to take advantage of that. He also started a little online business as well, selling like specialty gifts out of the pharmacy and then also you could order them through like a website. And that also provided another stream of revenue for him.
Elizabeth: And this is in Philly?
Gene: Yeah, it was actually in a suburb of Philadelphia.
Gene: Lower Merion, called Babis Pharmacy, B-A-B-I-S Pharmacy, it was excellent. So, I guess, I guess my point is, let me just kind of sum up, right.
Gene: Number one, the big box store corporation moves into your area, oh my god, oh my god. Number one give some thought to moving, Okay? Really that’s what battle is all about you take up position somewhere else and thrive. Give thought to moving, you’re running a business here, this isn’t, don’t get too emotional about the location, you’re running a business, it’s your livelihood, so that’s number one. Number two is the customer service thing is actually that, that’s always gonna be your leg up. Number three is look for ways that you can do things definitely better than the big box store down the road. Like providing same day delivery, that you know the customers are gonna go to. And finally, just because you’re in a retail store doesn’t mean that you can’t have other streams of revenue coming into your store. So, changing up your product mix, you know what I mean, selling something a little bit more specialty or innovative. Like the pharmacist that I mentioned at Babis he sells, specialty gift goods, or whatever.
Gene: It’s still the same pharmacy with the, whatever, but he said let’s just go on ahead and start selling some stuff, I’m getting the foot traffic in here.
Elizabeth: Can his prices compete with a CVS or a Walgreens?
Gene: For the most part.
Gene: But, but no.
Gene: I mean they’re gonna be that much, if people are gonna buy bulk they’re gonna go there.
Gene: Which brings us to another thing in mind, as well. Listen you’re not gonna, there’s just always gonna be customers that are gonna go to CVS and Walgreens. I mean, what can I tell ya.
Gene: You’re not fighting for them, you’re looking for those customers that appreciate the extra value of service that you provide and you want to make sure that you don’t let them down.
Elizabeth: I just feel like those small business owners, they have so much knowledge.
Elizabeth: I almost want to go around and interview all of them.
Gene: I know, I totally agree with you.
Elizabeth: You would too.
Gene: And I find them fascinating, even like the owner of this Babis Pharmacy. I’m going on and on, I don’t know the guy, I could recognize the guy on the street, he wouldn’t know me from Adam. But, I see him all the time in his store and it’s a second generation store and I’m sure he’s miserable about a bunch of things and happy about a bunch of things, I’d love to interview that guy though.
Gene: The challenges that he’s facing and all the different stories that he has.
Elizabeth: Well Gene, come on.
Gene: Bring him in.
Elizabeth: Do it.
Gene: Let’s bring him in.
Elizabeth: Also, just imagine like going to there’s this hardware store in West Hartford, Connecticut where I grew up that was called Pheau’s.
Elizabeth: And they stayed open well, now…
Elizabeth: They’re now a True Value or something.
Gene: Right, right.
Elizabeth: But they stayed open well after the Home Depot’s and Lowe’s.
Gene: Well they don’t, True Value is just, they’re all independent stores.
Gene: They’re just, True Value is just an association that they’re all belonging to.
Elizabeth: It doesn’t say Pheau’s on the store anymore.
Elizabeth: So, I’m thinking maybe…
Gene: He probably made the choice to use the True Value Brand.
Elizabeth: Oh, Okay. So, anyway they like knew our family.
Gene: Of course.
Elizabeth: And they like understood my dad was redoing our whole house by hand.
Elizabeth: And like, you just don’t get that at a Home Depot or something.
Gene: You don’t.
Elizabeth: You’re gonna see a different person every time you go in there.
Gene: Agreed. And look, a hardware store does not sell commoditized products in my opinion. I mean, yes you can buy that stuff online or you can buy it from a Target.
Gene: But, you really, most of the time you go in there you’re looking for advice on how to use these things.
Gene: And what’s best to be used.
Elizabeth: There are some products that I feel that only hardware stores sell, and of course, I will say their hours are terrible. Hardware stores are open from like 10:00 AM to like 4:00 PM, and that’s it.
Gene: Right, right.
Elizabeth: Okay. We are gonna be right back with Gene’s Word of Brilliance.
WORD OF BRILLIANCE: Pregnancy
Elizabeth: Gene, hit us with your Word of Brilliance.
Gene: Well, Elizabeth, my Word of Brilliance this time is pregnancy.
Gene: So, here’s the reason why I bring up the word pregnancy.
Elizabeth: He’s afraid I’m gonna cut him off, and tell him off.
Gene: No, no, not at all. As, business owners our job is to always be looking ahead. We always want to be planning. We always want to make sure that we’re avoiding any surprises. Because there are a lot of people that rely on us to run our businesses effectively because their livelihoods depends on us. So, we are looking ahead, where’s the economy going? There’s all sorts of metrics that we can read. And the metrics are, gross domestic product, the growth of the economy, unemployment rates, just trying to figure it out.
Gene: That what does this tell us?
Gene: Well a new metric has come out this is a report done by a university just recently and this is reported on BBC News. And here’s what this report found, the authors of the report tracked one hundred million births, miscarriages, and abortions in the United States since 1989 to 2016.
Gene: And they found that the rate of pregnancies showed whether or not we were going to be heading into a recession or not. In other words, whenever there was a recession they saw that for several months before the rates of pregnancies markedly declined. And that was for every single recession.
Elizabeth: That is so weird.
Gene: Crazy right, it’s almost like the analogy I gave is like that when animals can sense like an earthquake coming.
Elizabeth: They run away.
Gene: They, they run away. They, the report’s authors, I said that even, and by the way, they said they correlated to the depth of the recession, like before the great recession of 2008, 2009.
Gene: The pregnancy rates fell off several months before, five, six months before, even more precipitously than the way they fell off before other less, impactful recessions.
Elizabeth: What do they attribute this to?
Gene: So, what they attribute it to is that even though they say well CEOs and executives before the recession of that time were saying we’re still optimistic, or everything is good, or whatever. It’s the people that are on the ground, it’s you and it’s me and it’s employees of all these companies and whatever that are going to work that they sense. They sense that things aren’t going as well. Whatever you’re reading in the paper, whatever the boss says, they sense, and if you’re going to get pregnant and bring another child into the world. Clearly there’s financial responsibilities, it’s a big deal.
Gene: And it’s almost like it’s, something biological that’s telling these people you might want to hold off on having babies because we’re heading into a recession. And the data showed for every single recession pregnancy … Now, how do you translate that into the real world? Because we don’t know right now the rates of recession, excuse me, the rates of pregnancies.
Elizabeth: I feel like…
Gene: We don’t know who’s pregnant right now, and when and how that’s all correlated, you can’t really tell that in advance.
Gene: But, here’s how you can tell certain things in advance, now the authors are saying we’re gonna now start studying baby products, infant products, and prenatal classes. Because, if they see that enrollment in these things or if purchases of these kind of products are declining.
Gene: That we start seeing like declining, that might be a forward indicator that a recession is coming.
Elizabeth: What are other forward indicators of recessions?
Gene: So, there are, there are some, ones that most people go like sort of mainstream.
Elizabeth: This one’s definitely the coolest.
Gene: This is cool, I’ve got a couple other really cool ones for you. When people ask me how you can tell if a recession is coming, I tell them to check out the Baltic Dry Index.
Elizabeth: Oh, we’ve talked about this one.
Gene: A long time ago we talked about this.
Gene: The Baltic Dry Index is an index, a freight index that tracks the cost of freight through the Baltic Sea. Which, is one of the most busiest transportation lanes in the world.
Gene: When that index is going up that means the cost of freight is going up, if the cost of freight is going up, it means there’s more demand for freight. And it’s pushing the cost of freight up.
Gene: When that index is going down and trending down that’s giving you and indicating that the level of shipments is going down as well and that could potentially be a forecast that a recession is on the way. There’s other indexes that you can look at as well, like consumer confidence starting to go down.
Gene: Is also, sort of a reliable thing. Alan, oh my God, why am I forgetting the name of the chief of the Fed? Greenspan, Alan Greenspan.
Gene: His index, and this is documented, you can read this, find it and put it in the show notes those articles. He used to use an index for the men’s underwear industry. He used to track, this is the chairman of the Federal Reserve.
Gene: And his theory was that when men start or stop buying underwear that’s a sign that hard economic times are coming.
Gene: And he would actually look ahead and say he could prove that by saying, listen as a guy, Elizabeth, it’s just the underwear if you want to cut back a little bit.
Elizabeth: You’re like I don’t need any new underwear.
Gene: You turn them inside out, that’s usually what works for guys. So, there’s lots of different indicators, I do tell, I do tell my clients, follow a couple of good economists so that you can see what metrics they’re sort of coming down the line. A lot of people have good ones.
Elizabeth: Could you name some.
Gene: I can, the American Enterprise Institute, there’s James Pethoulikis, look him up it’s P-E-T-H-O-U-L-I-K-I-S. And there’s another economist, Mark Perry.
Gene: Both of them are excellent.
Gene: Okay, two great economists and then the other place that I would recommend is there’s a great blog called the CalculatedRiskBlog, it’s one word CalculatedRiskBlog. And if you look at CalculateRisk it is an economist that writes on all different types of data going through, but he writes it in layman’s terms.
Gene: You can subscribe, they’ll send you an email every day with different economic news, gives you a head up, where things are coming.
Elizabeth: So, do you think that there are a bunch of Wall Street Analysts right now looking at like the…
Gene: Men’s underwear?
Elizabeth: No, the, the…
Elizabeth: The upcoming birthrate?
Gene: Well right now they don’t have the data to track that, okay, and by the way if you’re on Wall Street you’re looking for stuff like this, right?
Elizabeth: Okay, yeah. So…
Gene: You don’t, it’s tough to say, but what I think they’re most interested in is this BBC report and from the study that was done is that if there is some way to correlate the decline in pregnancies to actual dollars, which is what they’re most interested in things like the sales of prenatal equipment, or the sign ups in classes for birthing.
Elizabeth: Wait, they’re saying that this is predicting a recession they’re not saying it causes a recession?
Gene: No, no, it’s almost like people can tell in advance.
Gene: That there’s a recession coming.
Elizabeth: That’s what I thought you meant.
Gene: Right, right.
Elizabeth: So, a couple years ago, I’m sure you remember this, this is when marketers got into a lot of trouble. So, this young woman went to Target and she bought unscented moisturizer.
Elizabeth: And that triggered her to get a mailing from Target, I can’t believe they send mail, but they did, and it was full of coupons for baby stuff.
Elizabeth: And her dad found it and he didn’t know she was pregnant.
Gene: I heard that, yeah. That was terrible, that’s terrible.
Elizabeth: So, that’s basically saying when people start buying things that are unscented it usually means they just found out they’re pregnant.
Gene: See, that’s interesting as well. I never knew that.
Gene: What I can see is I can see a new index coming out someday called the Pregnancy Index. Where they, where somebody puts together a bunch of economic data, like unscented products.
Gene: Again, sign ups to pregnancy classes, prenatal baby food, and bought in advance.
Elizabeth: Diaper sales.
Gene: Whatever, whatever companies, diaper sales, whatever, things that might give you an idea of pregnancy rates and then come with the index and then if you track that index and if it starts falling, it should be saying like these people are telling us something, there’s a recession coming.
Elizabeth: And we should all run for the hills?
Gene: Run for the hills.
Elizabeth: Okay, thanks for joining us, for another episode of the Small Biz Ahead Podcast. Don’t forget to subscribe on Apple Podcast and leave us a review, we’d really appreciate it.
Download Our Free eBooks
- Ultimate Guide to Business Credit Cards: The Small Business Owner’s Handbook
- How to Keep Customers Coming Back for More – Customer Retention Strategies
- How to Safeguard Your Small Business from Data Breaches
- 21 Days to Be a More Productive Small Business Owner
- Opportunity Knocks: How to Find—and Pursue—a Business Idea that’s Right for You
- 99 New Small Business Ideas