May 22, 2013
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My Big Prediction
I’ve never been big on making predictions. However, I feel confident enough about this next statement to put my name and reputation on the line: Small, niche based local businesses will dominate online search results in the next few years and will lead our economy to robust growth. In a world of stuff-marts and tax free e-commerce websites, the local mom and pop brick and mortar has been shelved as a way our grandparents used to shop. I believe however that the time is ripe for the local store to make a huge resurgence. Below I’ll discuss several factors as to why I believe this is the case:
The Rise and Decline of Stuff-Mart
I grew up in a small town in rural Utah. I remember as a kid in the 80’s hearing about this magic store filled with everything you could ever want or need: Walmart. We didn’t have a Walmart close to us, so I didn’t experience the overwhelming-ness of mass retail square footage until I was older. However, in my growing up years in the 90’s something happend to the stuff marts: The Internet.
I don’t know if it was the fact that I was maturing into a picky adult, or if this was always the case, but it felt like every time I bought a product at a big box store, it either broke soon after, didn’t quite fit, or was just low quality overall. In addition to the quality, the experience seemed to loose its luster as well. It went from a “Hi, how can I help you today” today, to a “I’m a low paid non-competent worker, please don’t interact with me” attitude. I don’t know how many hours I’ve wasted of my life wondering around thousands of square feet searching for a product that’s “pretty close” to what I needed.
While quality and prices were dropping at the stuff mart, the internet was taking hold of all those who were willing to wait a few days for a product to be shipped via the internet. This of course is why big box stores will always be part of the fabric of life. Sometimes we need something now. Or, we need something that the associated shipping cost is not worth the expense. These two factors used to be provided by the local mom and pop stores, during the past two decades the mom and pop stores have been slowly sifted out by stuff-mart by offering prices that local stores cannot compete with.
The Second Coming of Mom and Pop
Two things have shifted the buying paradigm of the American shopper over the past decade: The Internet, and the declining economy.
The Internet. As I’ve discussed in many previous posts on this blog, the Internet has allowed the consumer to peak behind the curtain into the businesses behind the products they love. What kind of people make products for my bike? Who is the farmer behind the herbs I buy? What sort of charity does my favorite company support, and do I relate to that charity? All of these questions and many more like them integrate me into the companies I support. They make me loyal, and locality is the holy grail of customer retention. Its not something that can be purchased, it has to be earned.
The Economy. Do remember going over to your grandma’s house and finding a huge pile of rubber bands? “Grandma, why do you keep so many rubber bands?” I would ask. “Just in case I need them.” she would tell me. In case of what? If I need a rubber band today, I run down to my local office supply box store and get some. Well, Grandma grew up in a different era than I did. The depression era. She knew that if she didn’t keep rubber bands, that for some reason something might happen to make them not available. So she collected them. When she passed away a few years ago, we found bags and bags filled with rubber bands. While this brings a smile to my face, it also teaches me a very simple lesson. When you don’t have much money, you are very discerning as to where you’ll spend your money. In many ways, the past ten years has brought about that same mindset to today’s consumer. I’m willing to spend a dollar or two more on something that will last me a lifetime instead of settling for buying junk.
These two mind shifts have slowly shifted the pendulum back towards the mom and pop store. While it still has a long way to travel before the mom and pop store have the advantage, the time will come soon when mom and pop stores can again open a store with confidence, and make business decisions with the anticipation of future growth.
The Refinement of the E-Commerce Website
E-Commerce is a great success story. Anyone with access to a product could almost instantly expand their market from a few mile radius to offering their product world-wide. What an incredible opportunity this has been for many. However, a shift is happening that will change e-commerce in a big way. This change is being administered by our friends at Google. Each and every search algorithm change that they’ve made over the past 24 months has increased the significance of local businesses. While the debate is endless on the why’s and how’s, the message is clear: Google wants you to find exactly what you’re looking for, right in your hometown. As an online marketer, my first reaction is panic and animosity for Google, but as a consumer, I totally agree with the move.
Here’s the thing. I WANT to buy local. I am human, and as a human, I am hard-wired to be loyal, to want to have a relationship with the person that is selling me something. I want to be able to buy my food, recreational equipment, vehicles, from the same person. These are natural feelings that I feel, and I don’t think anyone else is any different. Sure I want the best price, but price isn’t the only thing that’s important to me.
Stuff-mart and E-Commerce Will Always be Around
Please don’t take this post as a rant against Stuff-Mart or E-Commerce. They will be ALWAYS be successful, and here’s why. Let me share a short story that demonstrates why places like Stuff-Mart will be needed. Early in my married life, my wife and I had just had our first child. We had reached that point where our financial commitments had exceeded our monthly income. We were not heavy spenders, didn’t have credit card debt, but we were living a poppers life with thrift store furniture and ramen for dinner. While I think back on this time with both pain and fondness, I remember going to Wal-Mart with exactly $3.68 to my name. We needed baby food to get us by until I got paid again. I walked into Wal-Mart, a bit depressed, knowing that somehow I needed to walk out with some essentials for our baby. I’m not a thief, but if that’s what I had to do, I suppose I would have had to make that choice (que the Les Miserables theme music). As I picked up what I needed, I was amazed at how much I could buy with so little money. I learned a very important lesson that day, and as thousands in your community and mine are in that position, they will always need the “falling prices” model to put bread on the table.
E-commerce will also serve a purpose that will not change. The ability to provide niche based products that I cannot get elsewhere (hint, hint, that’s the key to E-Commerce success). Why would I ever buy something on the internet that I can get close to the same price, and much quicker (as in now) locally. It just doesn’t make any sense. Humans will always be moved by instant gratification. When we want something, we want it now. Until delivery via teleportation is invented, this will always be a challenge for the E-Commerce community. However, I am still an avid online buyer for things that I cannot get locally. Those types of things are always niche based on things and hobbies that I love, and am willing to both pay the price for quality, and wait for delivery.
Conclusion
What does this all mean if you run a local small business? Good news. You should be preparing for growth as Google has just become your biggest advocate and marketer. You do however still need to provide Google with tools. You need a website. You need to claim your local online space. You need to be recognized as a thought leader for your industry in your community. If you do these things, your company is positioned for positive growth over the next few years.