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How Mom-And-Pops Can Compete With Big Retail

May 25, 2021 | By Hugo Britt

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In an increasingly homogenous and globalized world, how can mom-and-pop businesses keep up with the biggest players in the retail industry?

The term mom-and-pop is a colloquialism used to describe small, independent (and often family-owned) businesses.

These restaurants, grocery stores, bookshops, drug stores, or other retail offerings typically operate in a single location, serving customers within their local community. They handle relatively small business volumes and have a modest employee base.

Big retailers, such as Walmart, Amazon, McDonald’s, or Home Depot, enjoy many benefits that are mostly inaccessible to mom-and-pop businesses. They can leverage economies of scale to reduce operating costs, secure capital investment, and allocate large budgets to marketing campaigns and innovation. These businesses are much less vulnerable to any changes in local markets – any losses they make in one geography can likely be offset with gains somewhere else.

Mom-and-pop businesses often find it challenging to compete with their big retail competitors when it comes to the pricing of products and services. To maintain a healthy profit margin, smaller businesses may not be able to offer their customers discounts, deals, and bulk-buy offers in the same way big retailers can.

Nevertheless, there are several ways for mom-and-pop businesses to gain a competitive advantage over the industry’s biggest players.

Five ways for mom-and-pop stores to compete with big retail

1. Personalized products

The amazing thing about a McDonald’s Big Mac is that it tastes exactly the same no matter where you are in the world – right? There’s a comfort in knowing that when you bite into your burger in London, New York, or Sydney, it will be totally familiar and equally delicious.

There will always be customers for whom this sentiment rings true – they simply prefer the reliability and standardization that comes with a giant global franchise.

But the appeal of personalized products and services is growing, and this is an area where mom-and-pop businesses have a unique advantage and chance to shine – not least because they can quickly pivot their service offerings to follow new trends and maintain their relevance.

Additionally, mom-and-pop businesses can stock high-quality, niche, or even one-of-a-kind products – things that customers would never be able to purchase from a big retailer. In an increasingly globalized and homogenous world, the pursuit for individuality is driving consumers away from big corporations and towards independent businesses.

2. Personalized customer service

Mom-and-pop businesses are in a position to build unique and meaningful relationships with their customers. Not only can they personalize products and services, but they can personalize the customer service they provide.

For starters, staff turnover at a big retailer is likely to be considerably higher than at an independently owned business. The value of long-serving, devoted, and genuinely invested employees should never be underestimated. These employees are often excellent brand advocates and they’ll go above and beyond to cater to their customers’ needs, remembering their names and personal preferences. As many as 56% of employees at locally-owned firms have high commitment scores, which includes a sense of loyalty and the demonstration of commitment to the organization.

Secondly, with no corporate bureaucracy or stifling red tape to navigate, mom-and-pop businesses have the luxury of flexibility. They can throw open their doors at different times to suit their customers, host private parties, or provide personalized shopping experiences.

Finally, mom-and-pop businesses can use their space to build a network of loyal and like-minded customers. They could choose to provide workshops, host seminars or presentations featuring local talent, partner with local charities, or do outreach work within the community.

3. Appealing to consumer values

Consumers are increasingly cognizant and concerned about whom they buy their products and services from.

Mom-and-pop businesses can leverage this by directly appealing to their customers’ values, whether it’s buying local, sustainability, diversity and inclusion, or ethically sourced components and labor. The smallest of details, such as packaging choices or the design of a storefront, can attract a specific customer base.

Independent businesses should seize every opportunity to proudly tout their status as a minority-run or sustainable business that sources all products and services locally – it’s all but guaranteed to drive customer loyalty. In 2020, local businesses were generating 70% more local economic activity per square foot than big retail.

4. Start small but think big

It’s not uncommon for a mom-and-pop business to evolve into a major retailer. Several household names, including Nike, Ben & Jerry’s, and Whole Foods, were first established as mom-and-pop businesses.

Leveraging technology is the best way for mom-and-pop businesses to achieve growth. This includes building a website, growing the business’ online presence through social media, and using data analytics to track marketing campaigns, sales, and consumer behavior to consistently improve their service offering.

5. Embracing eCommerce

In the past year, national lockdowns and various social distancing measures have seen the eCommerce industry boom. The number of online grocery shoppers increased from 16 million in August 2019 to 40 million in April 2020. For smaller businesses, this has been a hugely challenging time, with more than 70% shutting down in March 2020.

For mom-and-pop businesses to stay afloat in the years to come, it will be necessary to integrate online and no-contact shopping experiences. With web development becoming ever more cost-effective and accessible, there’s no reason that smaller businesses can’t provide an online shopping experience for their customers. Not only will this cater to an existing customer base, but it provides an opportunity for mom-and-pop businesses to expand their reach and boost sales.

For those businesses that don’t have the resources or funding to establish a delivery service, curb-side pick-ups make a great alternative.

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