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4 Ways to Win the Holiday Shopping Wars

Holiday retail sales are expected to rise. But with big box retailers battling over who can offer the lowest prices, how can small businesses compete?
Customers shop for headphones at a Best Buy.
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To defend themselves against "showrooming"--when consumers test out a product in-store, only to buy it at a cheaper price online--big box retailers like Best Buy and Target have pledged to match competitors' prices through the holidays.

That's good news for shoppers, less so for small retailers. Though the National Retail Federation is more optimistic about this holiday season than it's been in years (sales are expected to increase 4.1%), small retailers will still have to be creative if they don't want to lose shoppers to deep discounts.

Inc. spoke with entrepreneur-led retailers to find out what strategies they're using to stand out:

Hosting Exclusive Events

Sure, Target and Toys 'R' Us know how to draw a crowd with a major blowout sale, but for most consumers, braving the throngs on Black Friday is a necessary evil, not a selling point.

Magic Beans, a chain of toy and baby supply stores based in Brookline, Massachusetts, takes a different approach, aiming to make the shopping experience, itself, as much of a draw as the discounts. Rather than maximum foot traffic, Sheri and Eli Gurock, the husband and wife team that co-founded the store, aim to limit their in-store deals to select groups, offering extended hours, and promotions to members of a mommy group or parents at a local pre-school, for instance. On days Magic Beans holds these private events, Eli says, the company averages an additional $5,000 in revenue.

"It becomes almost a networking event for the moms," Sheri says.

Plus, it alleviates the cost of advertising these deals. "If we say this deal is only for this school, then it drives the school to tell all their people we're having a special event for them," Eli says. "They help with the marketing and driving customers into the store."

Integrating With Facebook

Founded in July 2011, Zoostores is a San Mateo, California-based company that runs 250 e-commerce sites. Each product category--home, outdoor, kids, and fitness--has its own website, with entire sites dedicated to only bunks beds or trampolines.

The company has only been through one holiday season so far, but CEO Nikhil Behl says Zoostores performed well when it came to carefully-considered and researched purchases like a loft bed for a kid. It was less successful with "discovery" purchases. "When customers come in, they're looking at a specific category," Behl says. "They're not aware we have other categories available to them, as well."

Discovery is especially important for gift-giving, so this year, Behl is working with GraphDive, a company that recently came out with an API that allows e-commerce shoppers to log-in to an online store using Facebook. Once a user has done that, GraphDive can give ZooStores insight into that shopper's preferences, based on, among other things, Facebook posts, Likes, and geographic location. Zoostores can then use that information to personalize suggestions for shoppers. For instance, a shopper on Loftbeds.Zoostores.com, who has also 'Liked' Rafael Nadal on Facebook may begin seeing suggestions for tennis ball machines on Tennisballmachines.Zoostores.com. If that shopper's zip code suggests he lives in a wealthy neighborhood, Zoostores will suggest a slightly pricier machine.

"They might not purchase, but we've at least introduced them to the fact that we have these products," Behl says, noting that GraphDive, which costs a few cents per shopper, is about 15% the price of search engine marketing. "We're waiting to see how it transpires for the holidays, but we expect it to pay real dividends as we expand our portfolio."

Reinventing the Catalog

For years, Crutchfield, a Charlottesville, Virginia-based electronics retailer, has been producing original content for its print catalogs, highlighting new industry trends, and reviewing products to help customers make more informed purchases. But the era of catalog shopping is on its last legs, and Crutchfield execs know it. That's why this year, they're hoping to serve consumers with similar content, only this time, on iPads. In addition to the Crutchfield catalog app already sold on iTunes, the company has also published a 52-page iPad version of its catalog on Catalog Spree, an online directory where catalog fans can seek out all sorts of digital catalogs.

"With traditional catalogs, you're reaching people who are already familiar with Crutchfield," says Zach Zimet, the company's senior director of marketing. "What's nice about Catalog Spree is they're allowing you to reach an audience of people, who might not otherwise be exposed to the brand."

Spending on TV Commercials

Wayfair, a Boston-based business that sells home goods online, is another company hoping to catch consumers on their iPads, only it's focusing on a more traditional medium to do so: television.

According to Niraj Shah, now more than ever, people are watching television and using their laptops or iPads at the same time. Just as TV networks are hoping to offer a "second-screen experience" to their viewers, Shah says online retailers ought to consider the benefits of advertising on television.

Just after Labor Day this year, Wayfair ran its first television commercial as a way of testing the TV waters before the holidays. "The big question was: should we spend more online or should we take that money and spend it on TV, knowing that a bunch of people watching it might not pay attention to the spot?" Shah says. "Then again, nothing has quite the reach of TV. Thirty seconds is a long time, and you can really give someone a feel for who you are."

The numbers from Wayfair's test proved compelling. After each spot aired, Wayfair.com received a 30% spike in mobile traffic. "With that lift, we decided to get more aggressive through the holidays," Shah says, noting that Wayfair will be spending $1 million on television this season.




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