Sep 15, 2009

State of independents

Are independent shops and businesses managing to survive against the big guns? What can they offer that their larger-scale counterparts can't?

Are independent shops and businesses managing to survive against the big guns? What can they offer that their larger-scale counterparts can’t? And is the recession more of a threat? John Bensalhia is on the trail for clues

Throughout history, it seems to be human nature to want the underdog to succeed. David and Goliath. Tom and Jerry. Eddie the Eagle. Ingrained in the human psyche is a support for the smaller element to beat the established giant at the top. That kind of support is greatly needed for the David and Goliath battle taking place in business - the independent
company against the big brand name.

Times are hard for both parties, with each side vulnerable from the effects of the ongoing recession. According to the Local Data Company, 12,000 smaller shops shut their doors for the last time this year, as opposed to 7,000 chain outlets. The Local Data Company commented: “Just as thriving town centres demonstrate vitality, empty shops lay bare weakness and failure. Empty shops have a corrosive effect upon the confidence of any area - and their numbers are growing.”

Still, there are other reports that suggest that the independent shop or business is not quite as ready to shut just yet. A report from business software specialist Intuit said that one in three small businesses have been unaffected by the recession.

Established high street shops have also taken a pasting,. The Local Data Company reported that more than 800 high street shops closed as a result of the recession. In fact, high street closures have soared, with northern England and the Midlands coming off worst. In particular Derby, Liverpool and Leeds had a retail vacancy rate of more than 20 per cent. And a report that compared Christmas 2008 with the preceding year’s festive season saw that footfall on the high street was down by 3.5 per cent.

So how are smaller businesses riding out the recession? Support for small businesses has grown in 2009. Lending to small businesses rose by £391million in June, with nearly 50,000 new small business banking relationships established.

It’s not just the support coming from the banks and the government, though. Time and again customers wants to return to smaller businesses, and that’s down to a number of factors. Alison Potter, sales manager of display equipment business Janaken, says that a key advantage of being in an independent business is that the smaller amount of staff can devote more time to giving the best possible customer service. “More personalised customer care allows for higher customer retention and also a good reputation for the company,” says Potter. “The company will gain a reputation for being hardworking and caring. We always help our customers. If there are any problems, then we do whatever we can to help.

“In a bigger company or shop, the service is arguably not so personal. It’s easier to be in control in a smaller business, and there are also less staff numbers to train. That means a smaller business can devote more time to the customer, and give him or her more attention and make them feel valued, rather than just a number, as might be the case in a larger business.”

Friendliness certainly counts in any shop, because people are seeking out that feelgood factor. They want to enjoy the experience of shopping, and they can do this in a smaller shop, where staff members can devote more time to talking to the customer and dealing with their requests and needs in greater detail.

Smaller businesses have wised up to the recession by offering discounted prices for goods. “It is harder for smaller businesses in the recession,” admits Alison Potter, “because there are big fish out there waiting to swallow up the smaller businesses. But what we do is to offer occasional discounts on our products and also on delivery charges. Deals and discounts encourage customers to buy more, and return again, because they know that there is a good chance that they will get an excellent product at a very competitive rate.”

More businesses are turning to the internet to sell their products, where it’s possible for customers to get a better bargain than if they walked into a high street store. “More and more companies are going online,” says Potter. “The days of mail shots are now few and far between because people do not respond so well to junk mail. They may throw catalogues and leaflets away, and may not even give them a single glance. Selling on the telephone is also hard work, because more people are wising up to cold calling and going so far as to block that sort of phone call.

“But internet sales are booming. More people have access to the internet, and this is an easy, convenient method of selling your product. People can go through a search engine, type in exactly what they want - rather than waiting for a sales assistant who may not know exactly what you want - and then the product that they are after will appear on the screen.”

Potter says that independent businesses would do well to join advertising engines, because there are a number of benefits to this. “If you advertise on different search engines such as Google, you stand to do well. It’s a good way of promoting your business and directories can also do mail shots for you, and provide sponsor links with other companies.”

The word on the street seems to reinforce these positive sentiments about the future of small businesses. I carried out a local ‘vox pops’ sample, and the reactions were as follows:

“Small businesses still have their place today, they offer the customer service that larger companies can’t provide so much.” Debbie Bevan.

“It’s a shame that the recession has put paid to so many small businesses, but then bigger shops like Woolworths have gone, so it’s not all that cut and dried.” Gillian Burridge.

“I think we should do our bit to save small businesses - more often than not, they’re run by people that we know.” Dicken Neame.

“You can get goods that are cheaper in a small local shop, which you could buy in a big brand store for a more expensive price.” Barbara Byrne.

“I wish that Gordon Brown would invest more in small businesses. After all, they have the potential to grow into something bigger and become the high street brand of tomorrow.” John Hurndall.

“You always get detailed service with a smile, which you just couldn’t get in a larger shop because they haven’t got so many hours and too many staff.” David Yardley.

“I think that small businesses are here to stay - they offer that something extra which the big guns don’t so much. They make you feel valued.” Roy Noble. 

Ringing endorsements for the small business. Whether or not the small business will grow in popularity, especially with the current challenging circumstances in the economy, remains to be seen. But if you believe the cliché that: “The customer is always right”, then the above opinions, as well as the general view of small businesses, indicate that the independent trader is here to stay.  For good. 


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