In honor of Independent Retailer Month, SCORE researched the role of small retail businesses on our economy.
The Internet’s steady disruption of the retail industry over the last 20 years once led many to the mistaken belief that brick-and-mortar stores would eventually become a thing of the past. While it’s true that the digital revolution how most consumers shop in 2019, the demise of the physical store presence is largely a myth. Rather than being devastated by technology, many brick-and-mortar retailers have simply adapted their shopping experiences to reflect the modern consumer’s busy lifestyle and evolving needs.
This month’s infographic, “Small Retailers Can Compete and Win,” focuses on how small retail businesses stay competitive against big brand stores.
SMB Retailers Power the Industry—and the U.S. Economy
As an industry, retail is the largest private employer in the United States, directly or indirectly supporting 42 million jobs and contributing $2.6 trillion annually to the U.S. GDP. What’s surprising is that it’s not the Amazons, the Wal-Marts, or the Apples that are providing the juice to the retail sector. The real titans of the industry are small-to-mid-sized retailers.
98.6% of all U.S. retailers employ fewer than 50 people, yet somehow account for 39.8% or 11.5 million of the 29 million jobs in the retail industry. With an average monthly revenue of $22,341 and an average gross margin of 51%, it’s easy to see why SMB retailers remain the powerhouse of the U.S. economy.
Here’s a list of the top-performing SMB retail sectors broken down by monthly revenue:
- Furniture: $40K
- Beer, Wine, & Spirits: $39K
- Sporting Goods: $30.4K
- Jewelry: $30K
- Furnishings: $28K
- Beverages: $27.7K
- Electronics: $26.4K
- Fashion: $25K
- Specialty Foods: $20.2K
- Cosmetics & Beauty: $18.6K
So, if the Internet isn’t putting SMB retailers out of business, as so many people once predicted, how has the little guy managed to stay afloat in the digital age?
Developing an Omnichannel Sales and Marketing Strategy
While certain industries such as travel, news, and cable television have been irrevocably changed or destroyed by the emergence of the web, retail has managed to stay fairly consistent. In 2018, eCommerce consumers spent $517.36 billion with U.S. merchants, an increase of 15% from 2017. Yet that’s just a fraction (9.46%) of total retail sales in the U.S. Not including the sale of items normally bought at a physical location such as fuel and restaurant food, 87% of all consumer spending still occurs offline.
This doesn’t mean, however, that SMB retailers should disregard the importance of the Internet to today’s sophisticated consumers. Instead, they should implement an omnichannel sales strategy that creates a seamless buying experience online and in-store.
While there are many ways to do this, one popular method is known as BOPIS, which stands for “buy online, pickup in-store.” According to the National Retail Federation, more than 56% of shoppers are aware of BOPIS, and 70% of those who are aware of it have tried it. Of those who have tried it, 65% say BOPIS has enhanced their shopping experience. Most BOPIS customers love it because it allows them to avoid paying shipping costs. SMBs love it because it increases foot traffic into their store and gives their sales associates an opportunity to upsell or cross-sell.
Regardless of the rise of e-commerce over the last two decades, the majority of online shoppers (55%) still prefer to buy from retailers that have a physical store presence versus an online one only. Savvy SMB retailers understand this and are adapting their sales and marketing strategies to fit the changing buying habits of their customers.
One of the emerging trends across the industry has been the rise of “experiential retail.”
Digital platforms may provide an outlet for serious shoppers looking to find reviews, research product details, and get questions answered, but in-store events and promotions feed the desire customers have to be dazzled and entertained. While the “wow” factor has always had a significant role in retail, the emergence of “retailtainment” events has given it a whole new spin.
Over the last year, 82% of shoppers attended a retail event of some kind, and 58% are interested in going to one in the future.
Of the customers surveyed by the National Retail Federation ...
- 87% are looking to attend an event providing early or exclusive access to a product or sale
- 81% are interested in attending a retail party
- 80% wish to attend an in-person product demonstration or tutorial
- 71% want to participate in a retail game or competition
- 69% would like to visit a pop-up shop
Up and down the retail sector, SMBs are finding new ways to keep up with the evolving demands of today’s modern consumer. Whether they’re engaging online to bring customers into their shops or showrooms, offering online purchases with in-store pickups, or engaging in experiential retailing, thriving brick-and-mortar retailers are becoming increasingly innovative in how they interact with the market and stay competitive
If you’re struggling to attract customers to your brick-and-mortar retail business, reach out to a SCORE mentor today to get back on track.