The Retail Landscape
The number of retail businesses in the US has surpassed 1M and has been increasing for over the past decade. This continued growth has persisted even as large big box stores like Walmart and e-commerce retailers/platforms like Amazon have grown insatiably in the same period. How could this be the case? The success of scale economies in the industry have worked to eliminate redundancies for commoditized goods and helped broaden the reach of specialized ones. This lowering of the cost curve has invited more retail demand all while the economy has experienced solid growth, resulting in a retail sector that has more than doubled in size since 2000. While eCommerce is growing faster than traditional commerce, it still only makes up less than 20% of the retail market. Many retailers have been swallowed up by these seismic changes, but opportunities are ripe for ones who are savvy and disciplined.
Understand Your Customers
As the internet and drop shipping have given customers unparalleled choices, it has never been more important to exercise strong business fundamentals. Who are your customers? How effectively are you meeting their needs? What is the potential for growth within your current customer demographic? Once you can clearly articulate the answers to these questions, you should prioritize driving high customer satisfaction among your core market first. Then, after you have demonstrated strong product market fit, you should explore expansion opportunities.
Expand into New Markets
A proven way to grow your business is to find customers who are similar to your current ones and market and sell your existing products to them. This can mean expanding your market reach by venturing into new geographical locations or targeting new customer segments who benefit from your value proposition. Conduct thorough market research to identify the right approach for your business. Opportunity sizes vary by business, but the convenience of e-commerce and efficiency of shipping have made it easier than ever before to expand geographical markets. Once you define an approach, execute in an iterative, agile way to reduce your investment risk.
Expand Product Offerings
Expanding your product line can not only attract new customers but also encourage repeat business from existing ones. Explore avenues for introducing complementary products and/or services that reinforce your existing offerings and cater to consumer preferences. Evaluate the market size, investment requirements, and alignment with your company vision. And then, test your ideas--survey your target users and use an MVP to get real feedback on how your product will be used. Validation occurs when your customers are willing to pay for your product or service. Before pursuing marketing and operations at scale, we recommend launching your new product in beta first.
Build Your Brand
In an increasingly crowded marketplace, establishing a distinct brand identity is essential for fostering customer loyalty and product differentiation. This entails developing a compelling narrative and reaching your target audiences with branding initiatives that resonate and communicate your unique value proposition. When you market deliberately and consistently across an optimized channel mix, you can solidify your brand presence and set your business apart from the competition.
While the landscape continues to shift rapidly, small retailers possess the ability and opportunity to thrive by systematically examining their businesses. If you serve your existing customers well, thoughtfully enter new markets, and scale strategically, your business can not only survive in the new retail world but emerge stronger and more capable than before.
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