Internet Sales Bury Local Business

Everyone who thinks about where to locate their new business or open a new store has heard the phrase, “Location, location, location”.  What the big deal about location? The area a business is located can mean the difference between a thriving, growing business and a business that goes from startup to shutdown in a matter of weeks.

I want to focus on a local business that has been in business for decades. (What really occurred is unknown, below is my thoughts.) The business of this business is shoes, and a small amount of shoe accessories. Their business model is very good, and the customer base reflects this fact. Some businesses like to track where their customers live, this is one of them. Keep selling shoes in mind as you read on.

Tracking where customers live provides more insight in knowing how far your customers are willing to travel for your product and their likely economic status. This business tracks customers by zip code.

Over a period of time, say five years, you find your most active customers are within xx miles of your business street address. It is also obvious from your tracking that new customers are emerging from areas where the city is growing and expanding.  This is usually families moving into new growth areas, or perhaps the city has grown into one or more small communities and the roads have improved enough to bring consumers looking for better prices.

We have to be realistic here. Most shoes are not unique. Competing businesses sell the same shoes we do. Companies that produce shoes are more than willing to sell the same shoes to locally competing businesses. It is all one income stream to them.

This shoe store did the smart thing and opened a second store in a new location where competition between stores would not be an issue. Each store had its own area and market. Sales in the new location skyrocketed. New customers were coming in the door daily. The original store maintained all its previous business.

By opening in the new well chosen location, the second had thousands of potential drive-by customers every day who were eager to spend money. The new location was located in a stand alone building at a mall. Prime territory.

After a few years, the second location had to find a new location. No business would willingly want to vacate such a prime location. Sales were terrific, and the repeat customer base was large. It was apparently decided a move of a few miles should be a non-issue.

The move it turned out, was to not only an issue, but a deal breaker. The second store closed within a few years of moving off the mall property to it’s new home.

Sixty years ago this Gas Station was in a prime location. Slowly business dwindled as expenses increased.

 

What happened at the second now defunct store? The second store according to circulating rumors blames its closing on the Internet. Too many customers found they could buy the same products online for less and online their customer base ran away it was decided by rumor control. How about a reality check?

While the Internet may have caused some sales erosion, the first store is as healthy as before. The true cause of the second store closing was the lack of the thousands of eyeballs from mall traffic.

People generally want to touch and try on shoes. No matter how descriptive and detailed the online ad is, it does not give a customer the opportunity to feel and try out a shoe. People also prefer to support local business whenever possible.

The second store closed not because of the Internet, but because of location. Tens of thousands of mall shoppers a week knew they could probably find the shoe they wanted at the store across the parking lot, for less than they would pay in the big box mall stores. Mall shoppers flocked to the store across the parking lot.

Money is money and savings are savings after all. More importantly it was not two minutes across the parking lot. It was a headache of major proportion to drive to and from the second stores new location.

When the store changed location to their second less desirable location something major happened. The new store lost  the eyeballs of thousands of mall goers every day. The store had relocated to near a major artery road, but it was choked traffic with poor store access. The good times were over.

Location is critical in a saturated market such as shoes where almost every big box and Mom and Pop store is selling everything from $1.00 flip flops to high end heels and boots. If a business is selling a highly desirable product not readily available at every strip mall, customers will put up with a more remote location and poor off the street access if the price is right because of perceived need.

Before you decide on a location, ensure your business model reflects how serious location is for a business that depends on customers driving to your business. What does your future business have to offer customers in exchange for inconvenience? If the answer is very little, look for a new location.

Customer Value Verses Customer Money

This is a comparison of two businesses. They both are in the food service industry. The areas they are located in are about the same, but they manage their business completely different.

One of these, a Mom and Pop business, has an inviting entrance and a pleasant atmosphere which invites repeat business. The second, a popular chain, has an entrance that looks like it is one of the worst neighborhoods in the city. Once inside, the walls are adorned with the usual fare, plus more negative signage.

The negative signage tells the customers in a very negative way how long they can stay, and if they can use the facilities or not. Between the entrance and the barrage of signage inside my expectations were low. The place was neat and clean. I was also surprised at how good customer service was. Though there was a big downside of the staff being focused on the wrong things.

Customer satisfaction is second to money at this business.

Customer satisfaction is second to money at this business.

The staff were sales people and not wait staff. Every comment from the person helping me was to sell me more than I asked for. Did I want to add on to what I ordered for so much more? Did I want more choices than the items I picked? Did I want to double the size of my order for less than the stated price? Worst of all, there was a tip jar at the register. I was told as I paid my bill there was a tip jar – as if I could not see it – and all tips were appreciated.

 

 

The second location was the complete opposite of this. The service was prompt and totally customer focused. I was asked if I preferred a smaller portion than the portion listed on the menu for less money? The person who was waiting on us came to the table no less than eight times checking to see if there was anything that they could do. Top off the drinks, bring more napkins, refill the water glasses, more ice in the drink, more cream for the coffee, and other real reasons to show up at the table. The check was brought at the end of the meal and not during the meal. We were asked if we wanted to-go drinks to take with us (lemonade and coffee).

Repeat customers is the goal of this business

Repeat customers is the goal of this business

Both of these restaurants are in the same price range. Yet one totally out sells the other without so much as a hint of a sales pitch. One enjoys a growing list of repeat customers, while the other is trying its best to fleece every customer who walks through the door.

Put another way, one business will thrive in any economy. One business may be near to closing even though it sells a more popular product. Which business would you wish to spend your hard earned money at, and which business would you likely never visit again? If you are a business owner, which business more closely resembles you own business?

Running a business where customers walk in off the street is difficult. Competition is tough, and profit margins are generally small. However a businesses that focuses on making the customer and not the customer’s money the number one priority stays in business longer and is more successful than a business who thinks their product is far superior that customer focus takes a distant second customer’s money.

When anyone asks my opinion on a good place to eat, a fun place to visit or a good place to see, places where I felt special come to mind quickly and they are what I recommend. When you are asked your opinion on where to go or where to eat, where do you recommend?

More Words than a picture

A picture may be worth a thousand words. Having an on-top of it Manager overseeing your business is worth much more as seen in the following pictures.

The first picture is of a placard at a local Applebee’s. The business of this Applebee’s at least is customer satisfaction through employee perfection. The greeters, wait staff, cooks, and bus staff are true professionals. They work and maybe live the slogan (below) they walk by going to and from the kitchen area. I only stop in for lunch, and while I am there, I think, “Wow, what a great place this must be to work at!”

What every business should strive for - property of Applebee's

What every business should strive for

This store on the other hand is one store of a national chain. In this case office oriented products from paper to printers. One look at the trash can was enough to catch my attention about the state of the business at this particular store.

The outside grounds between the store and parking lot were filthy. The store itself needed better lighting. It looked like saving on the electric bill was more important than the customer experience. Not one person smiled as I was asked if I needed help.

It feels dirty and have not even entered the store yet.

It feels dirty and have not even entered the store yet.

The thing is, people notice. A very few people like me look around from the parking lot to the bathroom. For other people it is just a feeling that the business feels sort of icky and they want to get out as quickly as possible even. Customers in this second dingy looking store spend less time pondering whether they should make a purchase. Customers are quicker to leave and spend their money at a place that feels cleaner and fresher.

If you serve the public, and you want to make the best impression, look at your business as your customer’s do. Starting with the parking lot, is everything clean and tidy? Is the lighting appropriate? Do your employees look as if they want to be there? Do you want to be there?

Having a dirty building front, visible smoking employees, old gum and trash near the entrance, poor lighting are some of the things that turn off repeat business. The biggest hit to the bottom line is your customers spending their money somewhere else. Clean up your business so your customers want to stay and return in the future.