Small and mid-sized businesses (SMBs) in most categories took a huge hit during The Great Recession, according to Pam Danziger of Unity Marketing,who analyzed U.S. Census Bureau data on the number of SMBs before and after the recession. As one might imagine, some categories fell by single digits (measured by the number of stores), while others suffered double-digit losses. The number of clothing and accessories stores fell by 6%, for example, while the number of gift, novelty and souvenir stores fell by 20%. But as Danziger says in her white paper (“Small is the Next BIG Story in Retail”), that was then and this is now.
According to Danziger, the expected closure of about 40 Macy’s stores in 2016 and the lackluster performance of up to 60 enclosed shopping malls are good news for small, independent retailers. She writes, “Main Streets and the independent retailers that thrive there are on the cutting edge of a new shift in retailing. While the Great Recession took out a wide swath of retailers — economic natural selection at work — the successful retailers that remain represent, by and large, the best and brightest. They have come through the worst and emerged onto the other side stronger, smarter and more resilient.”
Small specialty retailers offer what bland big boxes have never offered: an experience. Drive right up to the front door, pop in for a chat with the store owner, and hear what is new and noteworthy. (Some of my local faves for gifts and home accessories, in my new city Arlington, Virginia: Timothy Paul Home, Knightsbridge and La Maison).
Aging Baby Boomers (like me!) and young Millennials are typically looking for a more personal shopping experience than they can find at big boxes. Especially important for specialty retailers are what Unity Marketing labels as the HENRYs (high earners not rich yet) – the top 20% of households with incomes of $100,000 or more. These so-called “mass-affluents” have discretionary income that they want to spend in smaller shops where they know store owners and staff.
While many owners of specialty stores are are in the black and happier than they were five or six years ago, most are not on easy street. Because most specialty retail store owners compete against other specialty retailers for the discretionary spending of this important target market, they need to stay top-of-mind with customers. They need email or direct mail campaigns; active social media programs; a robust website with blog content that changes frequently; and in-store events and promotions.
While drive-by and walk-by traffic generates enough revenue for some store owners, others need to inspire shoppers to drive an extra couple of blocks to see what’s new and trendy in their stores. Traditional (print and broadcast) and online media are important tools to help drive sales and increase profits.