How Small Retailers are being affected by Big Box Stores and the Digital Ecommerce Revolution

Big Box stores have shaped Canada’s retail landscape and dominated market share for decades. Low prices, discounts and access to a wider selection of products have often made it difficult for local retailers to stay afloat, let alone compete. 

Now another large competitor has muscled its way onto the scene and is disrupting Big Box and small retailers alike: the Ecommerce store. 

Digital technology is impacting non-retail industries too, as companies increasingly hire remote workers and abandon traditional office setups. According to global market research company Euromonitor International, Ecommerce will be the largest global retail channel by 2021 and will account for 14% of total retail sales that year. It will surpass both bricks and mortar Big Box stores and small retailers.

So what’s behind the growth in online shopping? 

The reasons behind the rise in popularity of Ecommerce are similar to those behind Big Box stores. Convenience and price are significant factors. The range of products an Ecommerce store like Amazon offers feels almost infinite. 

What’s more, Ecommerce platforms are accessible 24/7, comparing products is made easier by customer reviews and the process is quick - especially as internet speed continues to accelerate. 

There are psychological reasons behind the popularity of Ecommerce too. Nowadays people tend to be attached to their smartphones; it’s their comfort zone and if they can use it to shop too, why not? Algorithms also enable Ecommercers to provide a more “personalised” service by recommending products based on an individual’s search or purchase history. 

So what can small retailers do to compete?

To survive these two potential “threats” to success, small retailers need to get creative, both operationally and from a marketing perspective. Hope is definitely not lost; in response to the rise of Ecommerce and hyperglobalization, there has been renewed interest in championing the local. For example, the Local Small Business Saturday campaign encourages consumers to #shoplocal. 

Canada’s first Small Business Saturday took place on October 20th 2018. The campaign was set up by Canadian Federation of Independent Business (CFIB) and sponsored by Interac with the aim of encouraging consumers to shop at local, independent businesses and to help local entrepreneurs promote their businesses online. 

“To escape the shadow of Ecommerce and Big Box retailer , small retailers must think “outside the box”.”

Some findings from Retail Dive’s survey examining the psyche of the American consumer.

Let’s take a look at some of the things small retailers can do to compete and stay relevant.

Provide incentives

“To see, touch, feel and try out items” is the primary reason why consumers choose to shop in physical stores versus online, according to Retail Dive’s survey. Millennials are often cited as preferring “experiences” over “items”, and this translates into retail, with many choosing not to splurge money on lots of cheaper items, but buy wisely and ethically.

There’s an opportunity here for small retailers to appeal to Millennials by focusing on the experiential. In creating immersive experiences, retailers can ensure that consumers purchase products, but perhaps even more importantly, leave with memories. 

Two ways small high street stores can do this is by adding something new and diversifying their offering. Many bricks and mortar book shops, for instance, have added cafes in recent years to provide an experience that Ecommerce suppliers just can’t replicate. 

One thing consumers sometimes complain about when comparing small stores with Big Box players is the higher price. Adding something unique will help to compensate for this. Other ideas for integrating an experiential aspect to increase footfall include running charity fundraisers, mini festivals with local acts and talks by local celebrities or industry experts. 

Embrace ecommerce

Like it or loathe it, Ecommerce is here to stay, so it makes sense for small retailers to embrace it and use it to compliment the in-store experience. 

Setting up an Ecommerce site, however small, can be exciting but it also requires a lot of research. One of the first things businesses should think about is whether they want to build a website in house or outsource it. Other things to consider include:

• Marketing, including advertising and SEO

• Stocking the inventory

• Branding, design and tone of voice

Before starting an Ecommerce arm of the business it’s a good idea to experiment with customer relationship management, accounting, project management, and email marketing software that can be integrated when it comes to the launch. 

Ecommerce websites like Etsy can also benefit small arts and crafts retailers who can use it to sell their products. Around 33 million customers shop on Etsy so it’s great for online reach. Sellers pay transaction and payment fees when they make a sale.

Craft communications

One clear advantage small retailers have it their extensive knowledge of the local area in which they reside. Leveraging this knowledge by integrating it into communications is a no brainer. For example, small stores can team up with other local suppliers to hold events or run a joint customer loyalty scheme. 

In newsletters, local retailers can promote events in the area, as well as new projects. Face-to-face interaction means they often know their customers better on a genuinely personal level. This makes it easier to interview customers for testimonials, for example, and get visual content for channels like Instagram. 

Although Big Box stores and the Digital Ecommerce Revolution poses challenges for small retailers, the current climate also presents a number of opportunities. A trend for the “local” and the desire to make socially and environmentally conscious purchases spells good news for small retailers that are driven by value, quality and integrity.