Editor's note: This is a follow up to a previous blog by our guest blogger Daniel Lohman regarding the challenge and threat to our industry's future posed by Kroger (click to read).
There are a lot of opinions and advice around strategies to protect natural retailers against mainstream retailers like Kroger or Walmart. I'd like to share a story about a local retailer who took on a large box store and is still thriving today. The parallels between natural and conventional retailers are identical.
Several years ago, the first national big-box home-improvement retailer moved into our neighborhood and instantly began to challenge smaller retailers in the area.
Several of the local lumber yards, building supply, specialty and hardware stores tried to compete on price alone and lost.
Smaller retailers chose to discontinue items available at the large box store. Customers stopped shopping at the smaller stores due to their limited inventory of key items. They too succumbed and went out of business.
One local hardware store survived and is still thriving today. The key to its success was maintaining distribution of key items in addition to a wide variety of specialty items. And, it refused to engage in a pricing war.
The local hardware store changed its promotional strategy to focus on its:
- Years in business
- Reputation and connection to the community
- Incredible customer service
- Unsurpassed product knowledge of their sales staff
- Connection with local tradesmen, and
- Their ability to customize orders.
The store never tried to match or lower their prices to compete. Sales grew and continue to grow because of its focus on core consumers.
This is the model natural retailers should adopt to remain competitive against mainstream retailers.
Natural product sales will continue to grow in mainstream. This will benefit us all. The advantage natural has over its mainstream competitors is where we need to focus our energy and efforts.
Our goal should be to encourage customers to fill most, if not all, their shopping needs while at natural retailers. This is how you grow sustainable sales.
Agree? Disagree? Share your thoughts in the comments.
Daniel Lohman is the owner of Category Management Solutions (CMS) which provides innovative strategic solutions for natural and organic CPG companies interested in gaining a significant competitive advantage.