How a novice entrepreneur competes with business giants
Quite often you can hear the opinion that if, next to a small store, a hypermarket opens, for example, the store will close very soon. Such an opinion, as a result, gives rise to the myth that big business is crowding out small businesses, and entrepreneurs have nowhere to go except to close their business or move.On the one hand, everything looks logical – hypermarkets and large chains can afford to keep very low prices due to the large number of customers, well-functioning logistics, and large volumes of purchases. In such a situation, they are able to remain in profit, even with low margins. Small businesses simply cannot afford such a thing, since processes that allow them to reduce costs must be large-scale and optimized.
Many beginning entrepreneurs think just like that – if the giant has low prices nearby, everyone will go to him, and not to me. However, this approach is fundamentally wrong. The main mistake in this approach is that we single out the price as the main indicator for the client, but the price is only one of the few indicators that is important for some customers (not even all).
In order to compete with the giants, small businesses need to be “different” and move away from any patterns inherent in large networks. Let’s look at specific examples of how small businesses can really compete with giants.
Forget about low prices. Small businesses will never be able to provide more favorable prices for goods that are sold on the chains.
What then to do?
Conclusion: increase prices! Yes, no matter how incredible it may sound, but it is. In the following paragraphs, you will understand why this really works.
2. Narrow niche
Most large chains operate in the mass market segment, that is, they offer a huge selection of products in general, but a limited number of specific categories. Indeed, buyers in the hypermarket have their eyes widen from the assortment, but going up to the shelf for a specific product, it is very easy to find that among the whole selection there is no exactly the brand that was needed. And this is one of the best opportunities for competition.
Conclusion: work in a narrow niche.
It makes no sense to open a grocery store next to a large chain store, since you will not have the opportunity to compete in price or assortment.
Let’s look at specific examples. In any hypermarket there is a wide selection, for example, cheeses or tea. But this choice is strictly regulated and limited, and the most popular positions. Cheese or tea lovers will never be able to satisfy their demand with mass-market products. This is the way out – by opening a specialized store of cheeses or the same tea, you can already compete with the giant, even if it is directly across the road. You will be able to offer a larger assortment of one specific product, make specific offers and satisfy demand among product connoisseurs.
3. Premium positioning
Let’s start right away with a good example of a narrow niche with clear positioning – selective (niche) perfumes. Such a perfume is positioned as created only from natural ingredients and often produced in limited collections. Imagine you are a perfume lover, where will you go? In a chain store in which only massively advertised brands stamped from pure chemistry at the factory and weathered in a couple of hours are on the shelves, or in a store where you can listen to rare flavors that open differently for each person, leaving a train all day long and created by real perfumers in a certain limited amount?
Conclusion: taking a narrow niche, pay attention to the premium segment.
Here is the answer to the first point, why is it worth raising prices and initially choosing a more expensive segment, rather than trying to compete with the giants on the field where it is impossible to win.
4. Unique “trick”
One of the most important criteria for competition not only with networks, but also with other players in the market is uniqueness. Come up with one chip that sets you apart from all your competitors. Forget all the templates and cliches: “Individual approach”, “Highest quality”, “The best …”, “Low prices”. This does not work, these are not chips or even advantages. These are template phrases that spun in advertising in the 90s.
Conclusion: think carefully and identify your “trick”.
Become the “only” cafe in which the hostess is a raccoon that can be stroked. Become the “only” manicure salon with pages with a fan. Become the “only” hookah, where in the center of the hall is the largest hookah in the world. Ideally, you need to grope and come up with what will make your business “unique” in its field.
5. Visual and tactile design
In the predominant number of networks, everything is done simply and clearly – primarily for the mass consumer. A simple and understandable logo, simple inscriptions, simple materials and objects in the interior design.