Going Local: Consumer Preferences for Local Small Businesses
Worried that consumers are skipping over your local small business for other shopping opportunities? According to a recent survey, localized SMBs may be positioned to achieve gains in today's economy.
Big box retailers, ecommerce sites and other retail opportunities are threatening for many small business owners. Large retailers have a lock on pricing thanks to economies of scale and it's hard to compete with the convenience of online retail.
But according to an August 2011 Small Business Saturday Consumer Pulse from American Express OPEN (based on July 2011 data), both consumer sentiment toward small businesses and consumer preferences for buying from local SMBs are on the rise.
Here's what the survey results may mean for your local small business:
Support for Small Business
An overwhelming majority of consumers (89%) indicated a belief that small businesses positively contribute to the local community. Furthermore, 93% of respondents said that it is important for shoppers to support the small businesses they value in their community. This indicates that consumer sentiment is clearly on the side of SMBs and consumers may simply need a small nudge to select your local business over a national or web-based competitor.
The survey also revealed that on average, respondents spend 33% of monthly discretionary income at locally owned, independent businesses. Surprised? Maybe you shouldn't be – the average amount spent by respondents at their favorite local store totaled more than $100 per month. The takeaway is that consumers are willing to exercise loyalty to local small businesses. But to capture their loyalty, you will need to nurture relationships with individual consumers through loyalty initiatives, personalized service and other tactics.
The Familiarity Factor
In a world dominated by anonymous connection channels and "low touch" mechanisms, it's easy to believe that consumers prefer to remain unknown during the retail experience. However, the survey would seem to indicate otherwise. Of those surveyed, 23% cited staff friendliness and being greeted by name as their primary reason for shopping at small businesses. Another 22% indicated their primary reason as, "The people that work there know me and make recommendations of products and services they think I will like." That's good news for most area small business owners because it means that even in today's economy, consumers value customer service and service features can still be relied upon to successfully differentiate smaller companies from chain providers.
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