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Small retailer’s advantage over huge chains, but customer experience challenges

Research from the University of Adelaide is helping to show small retailers how they can compete against the huge retail chains due to better customer service and more product specialisation, while multiple retail channels may present challenges, according to a new Australian Retailers Association and NetSuite joint study.

The University of Adelaide study of more than 300 Adelaide shoppers identified a range of factors that draw shoppers to small retailers.

“There’s no doubt that small business has struggled to compete against the big retailers, especially in recent years with the growth of what we call ‘big-box’ or ‘category-killer’ store formats. In the face of such tough competition, this can leave the owners of small retailers wondering how they can possibly survive,” said Dr Steve Goodman, senior lecturer in marketing with the University’s Adelaide Business School.

Researchers surveyed more than 300 wine buyers at small retailers as well as large retail chains for comparison. “We found that most customers visit the category-killer retail chains because of the perception of lower prices and convenience of location,” Dr Goodman said.

“The main reasons why customers value a small retailer over a bigger one include: better customer service, a much greater depth of knowledge and more specialisation of the product—that is, the ability to purchase ‘rare’ items not easily found elsewhere. Overall, the small retailers offer a shopping experience that you just can’t find in the bigger retail stores.”

The joint ARA and NetSuite study of 100 ARA members reveals the proliferation of retail channels is making customer experience management difficult to achieve. But 42% of retailers (small retailers 51%) do not have a customer experience management strategy in place.

The study, conducted by Frost & Sullivan, said that retailers are now required to deliver a consistently high and increasingly personalised customer experience across multiple channels – brick-and-mortar stores, online, mobile, call centres and social media.

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