A couple of weeks ago, I moved into a new flat and needed to get a key cut. I took the natural course of action and loaded up Apple maps to find a solution. I found a shop nearby, grabbed my coat and then headed down the road to get it sorted.
When I arrived at the shop, it felt like I’d stepped into a time-machine. The room was filled with a thick leather scent that hit my throat as hard as it did my nose. And it was coupled with the raspy-buzz of a belt-sander. Turns out the place did shoe repair too. “Who gets their shoes repaired in this day and age?” I thought to myself. But, judging by the shelf of antique shoes even my granddad would be embarrassed to wear, clearly someone must.
In all honesty, I couldn’t work out how this guy was still in business. He didn’t even take card payments! These days I’ll avoid most shops for the minor sin of not having contactless, yet there I was handing a tenner over for 2 new keys. A tenner I’d had to sprint down the road to get since I never carry cash. Supply and demand, I guess. The fact that this shop continues to operate in 2019 is counterintuitive—it’s completely antithetical to the digital-first nature of the most successful retail storefronts! The internet, as wonderful as it is, hasn’t yet found a way to cut keys… at least to my knowledge.
But this got me to thinking about the challenges faced by independent retailers in the internet and information-age. With the boom of Amazon and cutthroat big box retailers battling it out to compete on price, how can independents thrive and stand up to the big guns in retail?
The Chain Edge
Unsurprisingly, the bulk of the market share in the retail world is in the tight clutches of the big four supermarkets: Tesco, Sainsbury’s, ASDA and Morrisons. And, despite online goliath Amazon being hot on their tails, they’re showing no signs of budging anytime soon.
But this by no means ensures they’re safe. Nationwide store closures, management restructures causing thousands of redundancies and store-wide range reductions are all cost-saving strategies being implemented in an effort to keep big businesses financially viable.
For the smaller chain retailers, the implications have been more severe. Struggling to keep up with the more efficient, convenient and cost-effective internet retailers, household names like HMV, Maplin, Toys ‘R’ Us and House of Fraser all went into liquidation last year.
That being said, chain retailers do have one massive competitive edge when it comes to staying afloat: budget. When it comes to digital marketing and keeping your brand in the public eye, budget makes a massive difference.
A two-man-band independent High Street store is going to struggle to regularly post on social media, write blog content for their website and respond to email and phone customer queries with the speed modern consumers have come to expect. A chain retailer, on the other hand, has the budget to either employ or outsource agencies to take care of this stuff for them, ensuring they remain culturally relevant and keep their customer base happy; a huge advantage when it comes to both customer retention and acquisition.
And, as technology evolves, bigger budgets also open the doors for technological experimentation that allows brands to trial new ideas that simplify and streamline the consumer shopping experience. You only have to take a look at Amazon’s revolutionary cashless “Amazon Go” stores to see the technological potential large budgets allow. In a retail environment that demands convenience and simplicity, the ability to experiment in this way is a huge competitive advantage.
The Independent Advantage
You might read that and assume that it’s the beginning of the end for independent retailers. And it’s not helped by statistics from The Retail Gazette confirming that record numbers of “independent retailers were forced to shut in the first half of 2018.” But the truth is that many independent retailers are surviving and thriving in the current retail climate. While they might not have the large budgets the chain stores do, they do have other advantages that help them remain viable in a challenging retail landscape.
While chain retailers have huge budgets to experiment with exciting new technologies, when it comes to rolling out these technologies, it’s a long, drawn-out process. Since they’re smaller, independents can roll out new innovations much faster. That’s why (key shop notwithstanding) we saw so many independents ready to accept Apple Pay months before it was available in many of the major retailers. As a species, we’re often drawn to the shiny, the exciting and the new. So when brands don’t keep up with the latest technology, it can often be a turnoff. And that ultimately leads to lost customers—lost customers that technologically-aware independents can cannibalise.
Independents also have an edge in a market that’s demanding more and more environmental responsibility in products, packaging and logistics solutions. As much as the big brands may ‘try their best’ to offset their global environmental impact, it’s still difficult for environmentally conscious shoppers to trust their motives. McDonald’s, for instance, might be implementing more recyclable packaging and green energy sources, but are still criticised by many for being leading contributors to deforestation and environmentally-toxic methane production.
This provides a great opportunity for savvy independent retailers to win customers and remain profitable. As Business Reporter notes: “successful independent retailers have focussed on more ethically-sourced products”. If, as a consumer, you’re genuinely committed to reducing your environmental impact, who are you more likely to trust: the nearby McDonald’s or the small vegan café on the High Street that operates on a zero-waste policy? It’s a no-brainer.
And, with fewer brand restrictions, independents are better able to showcase their unique personalities through quirky social media accounts. They’re also more likely to have valuable social media engagement than bigger brands. For example, if you head over to ASDAs Instagram page, you’ll find they have 252k followers. Which sounds great. But their latest post only won them 537 likes: a mere 0.2% engagement rate. So it’s unlikely the page is winning them any new customers. Cranachan & Crowdie, a local Edinburgh retailer, on the other hand, have only 1,074 followers, but their latest post won them 69 likes. It sounds unimpressive, but in terms of engagement rate they’re at 6.4%. A significant 3100% higher than ASDA.
So, can independents compete?
With the explosive growth of Amazon and other increasingly convenience-based online shopping channels, both chain and independent retailers are in a seriously challenging retail landscape right now. But as many brands both chain and independent are showing, it’s by no means impossible to thrive in the current climate. So long as brands are willing to stay technologically-relevant, environmentally-responsible and increasingly savvy with social media marketing and digital marketing trends, success is in reach.
As always it comes down to that secret sauce that we here in the studio like to call Elastic thinking. For those brands willing to push the boundaries and adapt to the ever-evolving needs of the modern consumer, it’s more than possible to compete alongside the big guns in retail.