A few months ago, I read a conversation on the discussion boards of The American Specialty Toy Retailing Association (ASTRA). In the discussion, an owner of a small toy store was recollecting a conversation between two young shoppers she had overheard in her store. The couple, upon seeing a toy they really liked, scoffed at the price and mentioned that they had seen the same toy at a larger retailer for considerably less. The storeowner allowed the couple to leave without engaging or purchasing anything, and then took to the discussion boards to express her discontent with suppliers for bending to the whims of her big-box competitors and failing to "help" small specialty stores like hers.
As the co-founder of Wild Creations, a developer and supplier of toy products, I took issue with the discussion. We sell to both small and large retailers, and, sure, we give better pricing based on volume. It's Business 101. We are, however, a small company ourselves and deal with the same pricing pressures as the retail stores we supply. I would never expect our suppliers to treat us like a charity, so our strategy is to differentiate ourselves on something other than price.
We compete on experience.
I am shocked at how many small retailers fail to see this opportunity. Small retailers, quite simply, cannot compete with the likes of Walmart or Amazon on price and expect to survive, no matter how you slice it. Like Wild Creations, they need to compete on experience.
One of my favorite examples of how a specialty retail store competes on experience is Wonder Works of Charleston, South Carolina. A small chain of four toy stores, it is run by a vibrant and excitable entrepreneur, Christine Osborne. When I take my six-year old son for a visit, we don't expect to get deals from a clearance rack. We expect to have an experience.
Here are five things small retailers can learn from Wonder Works in order to compete on something other than price.
1. Provide Incentive
When you walk into a Wonder Works store, there is typically someone there with a bright smile to greet you and shove a toy in your hands. The stores are small, but there is always room to sample products and interact with others. It's a playground, and kids (and, admittedly, I) love it. As well, Wonder Works regularly holds events, such as outdoor festivals, sidewalk sales, and fundraisers to encourage people to visit.
2. Offer Value
Wonder Works doesn't hide the fact that prices are probably higher. Instead, they create value by providing an experience when you visit. As well, regular patrons are rewarded with frequent specials through e-newsletters and social media. Unlike most small retailers, they put experience ahead of keystone.
3. Differentiate Products
Because large retailers rarely take chances on new products or new developers, specialty stores have the first opportunity to offer exclusive new items. Wonder Works was one of the first stores to offer our Wild Creations' EcoAquarium, and it continues to be one of their best selling products. Now, they are one of the first stores we engage to test new products and ideas.
4. Get Online
Although Wonder Works is still small by comparison, they offer a fantastic toy catalogue and website to support the in-store experience. It should be no secret that online shopping will continue to become a preferred method of shopping, so offering your clients this convenience will be a key to success.
5. Go Social
Wonder Works excels at attracting and, more important, retaining fans, especially on a local level. A playful newsletter, constant updates to their website, and social media channels, and an owner that is ubiquitous in Charleston and throughout the toy industry, assures that customers and fans are engaged constantly. No matter how small your retail company, you need to be engaging your customers through social media.
For any small business, competing with large competitors with vastly greater resources is always daunting. For specialty retail stores, the challenge is ten fold. To succeed, retail business owners need to work hard...plain and simple. Wonder Works' Christine Osborne is one of the hardest working individuals in the toy industry, but if there is one thing you will learn from her and Wonder Works it never seems like work!