3 Ways For Local Businesses To Benefit From Being Community Insiders

Being a believer in having a vibrant local business community, I want to support our town’s local businesses whenever I can. Recently, I spent over 3 hours at a recent Business Task Force meeting discussing ways to increase the vitality of our local economy. Putting my money where my mouth is, I set out last weekend with my 17 year-old daughter to run pre-prom errands as much in town as possible. We had the dress but needed it hemmed, needed a slip and had to schedule appointments for hair and makeup before the big event.

First order of business was getting the dress hemmed. In our town, there are several dry cleaners that do alterations. We went to the most exclusive one first and struck out. We struck out again at the number 2 provider. Apparently, people in our town only need their clothes altered on weekdays. Neither store had any one on site on a Saturday morning to pin the hem.

With two strikes against us and determined not to strike out on the dress-related errand front, we abandoned our local businesses and set off to Nordstrom at the nearby mall. They didn’t have the slip we wanted, but offered to order it and ship it directly to our home at no charge. Great service!

Next, we asked in a tentative voice if they would hem a dress that had not been purchased at the store. The timid associate who helped us with the slip asked a colleague and was told “no.” It seemed to us that the colleague hadn’t actually listened to the question – we asked our timid associate to ask the department manager. We got the answer we were hoping for, and the alterations lady appeared on the spot! Nordstrom has always gotten service. And they understand their customers’ lives. Score one for the Seattle chain store!

When it came to the hair and makeup appointments, we again went local. Here, the providers were far more tuned-in than the dry cleaners. We found a few who were willing or even planning to come in on Sunday (our high school’s prom is always on Sunday night, for some reason). One enterprising salon had created a Prom Special, a package deal for hair and makeup. Smart marketers at work!

What’s up with the alterations people? What can other local businesses learn from these vignettes? Here are three ways local businesses (providers of products and services) can take advantage of the fact that they are community insiders:

1. Make your services available when people in your town are likely to use them. Whether it’s the seamstress at the dry cleaner’s or the local coffee house, if you’re not available when potential customers are about, you’re not only missing a revenue opportunity you’re risking falling off the community’s radar. The last show at our local movie theater usually gets out around 11 pm. Almost all of the stores in town close at 6 and most restaurants and coffee houses close at 9. Affluent people are strolling back to their cars with nowhere to linger. Give them an opportunity to come in and buy something!
   
   
2. Make it your business to know what’s going on in your town, and tailor your offerings for local needs, tastes and events. Unlike command-and-control chain stores, local businesses can be more nimble. As the hair salons in my Sunday prom story show, being tuned into the local community can give local merchants an edge on the competition in the surrounding area. By offering specialized products and services (e.g., hair and makeup for the prom or box lunches for the mountain play every Sunday in June), they earn incremental revenue and as importantly, they motivate residents to give them a try when they might not otherwise, and have an opportunity to turn them into more frequent customers.
   
   
3. Help consumers extend the useful life of their purchases. As sustainability grows in appeal and shoppers become ever more frugal, interest in maintaining and repairing clothes and other items rather than simply replacing them is already on the increase. Expect it to continue. Being known as the place that can help people to get more use out of their clothing is on-trend and personal. It's more natural for a local business to provide these services.
   

Smart seamstresses will see an opportunity to help consumers make their clothing last, and will make themselves available to fit their schedules. Those who don’t figure it out will continue to reduce their hours until they are no longer in business, unless Nordstrom drives them out of business first.

Discounters Winning Our Wallets – Will Hearts & Minds Follow?

These days, consumers are more reluctant than ever to part with their hard-earned cash, and virtually every store is offering deals and discounts to entice them to spend. As USA Today reported last week, the stores with the sharpest pencils and price points are clearly winning the battle to draw in new customers. Walmart, TJX and Dollar General beat analyst expectations and are reporting decent performance while the competition misses badly. But who are they attracting, and are they building customer loyalty that will prove enduring?

The data suggest upscale consumers are shopping these discounters big time, and while they may be enjoying the savings, they’re not loving the experience. That’s the interpretation of the latest retail data from the American Customer Satisfaction Index. The just-reported 2008 rankings for Department and Discount Stores show Nordstrom and Kohl’s tied for first place in customer satisfaction (at 80). Dollar General declined more than any other Department or Discount Store (to 75). While Walmart’s score increased last year, consumers still rated it the worst of the lot. (70). Among Specialty Stores, Barnes & Noble and Costco came out on top (at 83). TJX scored third from the bottom (73), with only Circuit City (72) and Home Depot (70) scoring worse.

What’s a discounter to do? Hire more sale associates or improve training in customer service? Clean the stores more often or improve store lighting? No! They should trust what people are doing more than what they are saying. Consumers vote with their pocketbooks every day, and the discounters are winning.

There must be a way for Walmart to use its commitment to packaging and energy efficiency to help upscale consumers appreciate the store experience more. Shopping at Ross and Marshalls stores is all about the thrill of finding amazing deals on brand name merchandise. And at Dollar General, it’s all about what a buck will buy. In a classic judo move, discounters might creatively turn a no-frills store experience into a badge of shopper frugality. Aldi and Costco both do this well. What could Dollar General, TJX and Walmart do?

Most pundits are projecting that the new behaviors being formed in this economy will have staying power. So, upscale consumers may learn to hold their noses while shopping the discounters. Just maybe, a few innovative discounters will find ways to make them happy to come back again and again.

How Low Can They Go?

This Thanksgiving, we did things a little differently at our house. Usually, we play late night charades after dinner Thursday and have a round robin tennis tournament on Friday. This year, we were with the other side of the family, and didn’t play any games at all. We spent a lot of time visiting on Thursday, slept late on Friday and went to see Transporter 3 at the mall in LA.

After the show, we stopped in a few stores to take the pulse of Black Friday in LA. Most crowded by far was the Nordstrom Rack. We went in looking for deals on jeans for my teenage daughter – preferably True Religion, though Joe’s Jeans or Lucky Brand would do. No big bargains to be had. On any of them. Even the deals being heavily promoted as bargains were not much different from their every-day-low-price prices. And the styles that were available were definitely not the hip ones.

Despite all the hype about markdowns, we didn’t see it at the Rack on Friday. Much to my daughter’s disappointment, we left with only a few long-sleeve T-shirts in hand and saved our money for another day. As the Sacramento Bee reported last week, "Even with the desperation discounting already, the shoppers who will save the most will do it by waiting until Sunday, December 21, when it reaches its peak," according to Strategic Resource Group, a retail consulting firm in New York.

My takeaway? Retailers are going to have a hard time selling off-trend merchandise this season. Even at a discount, we expect good stuff. So, merchants that took chances on a look or an item may get burned. Gap used to do this a lot, and mark down its way out of the inventory overhang.

Not this year. If it’s off-trend in any category, it’s going to sit on the shelf. People want the wii fit, not a wii wanna be. They want the brands they know and trust to make them feel taken care of, not knock offs which just remind them they're poorer.

This holiday, customers will line up and put up with a lot of hassle for the right goods at the right price. If you don’t have them, they may not buy what you do have…at any price.

Bring us your poor, your tired, your broken down merchandise

Seems like a lifetime ago customers brought broken merchandise back to the store or a designated repair center to get it fixed. Those days are long gone. Now, retailers allow customers to bring in their ruined merchandise and exchange it for new products or a store credit. Some will even issue a refund.

In their 2006 MIT Sloan Management Review article, James Stock, Thomas Speh and Herbert Shear lament how product returns have come to be viewed by companies as a necessary evil, a painful process, a cost center and an area of potential customer dissatisfaction. They show that many successful organizations have realized that an effective product returns strategy can provide a number of benefits, such as improved customer service and customer knowledge.

There's the famous urban legend about Nordstrom taking back supposedly defective tires - which they've never carried. Even more impressive as well as true - since 1986 American Girl has had a Doll Hospital. They invite customers – 5 to 9 year-old girls – to bring or send in their broken dolls to have them repaired. And that’s not all. The doll comes home wearing a hospital gown with a “Get Well Soon” balloon in her hand. That’s amazing – breathtaking, in fact.