Network: December 1991
My store offers a little of everything -- farm equipment, outdoor power equipment, household appliances and hardware, even repairs. I'm convinced there is a niche for my business, but it's being squeezed by two large equipment dealers and a department store nearby. I need to reposition the business. How do I decide what I should keep?
Mary M. Christopherson
Ree Heights Implement
Ree Heights, S.D.* * *
"The worst mistake retailers can make is to try to reposition themselves instead of working with the customers they already have," says Chuck Krallman, CEO of Tusk, a high-tech design firm in Lake Park, Fla. "They don't attract new customers, and they alienate the ones they've got." If you start by better serving your existing customers, they will purchase more, and customers on the fringe may start to purchase more.
Start by finding out what share you capture of what your customers buy. Ask them how frequently they come to your store. Then, for each product category you carry, ask where they bought it last time. Find out why some went elsewhere: was it service, selection, or price?
Determine whether you have an opportunity to increase sales by changing your assortment, lowering prices, or carrying different brands before you eliminate a category.
Ben Zinbarg didn't have Krallman's patience. "If you have a gangrenous leg, cut it off," he says. Zinbarg, president of Sun Hill Industries, a Stanford, Conn., mail-order retailer of novelty items, used to sell all sorts of products, but focused on holiday themes after noticing that Easter items always sold well, with no special attention. "It was a major gamble that paid off in spades, diamonds, clubs, and hearts." He admits he took a bath on inventory that didn't fit his new focus. But those were necessary losses, he figures. "If you're not a specialist in something, you're going to fail."
Steve Silverman differentiated himself without specializing. He owns clothing stores in Fargo and Grand Forks, N.D., and was in essentially the same situation Christopherson is -- "a David among Goliaths" -- until he started slaying the giants with service. The key was market research.
Silverman asked customers how they ranked service against price, selection, and other factors; how they defined service -- was it free alterations or gift wrapping, for instance; and how they ranked Silverman's and its competitors on price. The answers told him to forget competing on price. Instead, he stressed service in his advertising and unpositioned his competitors in the process.
For help, check with the U.S. Small Business Administration (in Sioux Falls, S.D., at 605-330-4231; in other states, consult your telephone directory under "U.S. Government"), which publishes a very basic pamphlet, Researching Your Market ($1), and The National Retail Hardware Association (317-290-0338), which publishes the 63-page booklet Toe-to-Toe with Wal-Mart, K-Mart, and All the Other Marts! ($29.95 for nonmembers) and will supply reprints of pertinent articles from its magazine, Do-It-Yourself Retailing.
Before you survey customers, Silverman says, survey yourself. "Sit down and list the reasons you're in business, what makes your business viable, why people come to your store. Then go out with a hypothesis and prove or disprove it." Either way, you'll learn what brings customers to you. "Then you've found a position, and you can hammer away at it." n -- Michael P. Cronin