Forecasters in some quarters are predicting the complete demise of the independent retailer as consolidation continues to take its toll.
I don't believe such a scenario is likely, and I would argue that the industry couldn't afford to lose its independent sector in any case. Still, if the industry had the capability to declare an Official Preservation Act, I would vote in favor of protection for independents. Everyone else learns so much from them.
That's partly because independents tend to share more information. But it's also that these smaller retailers can act so quickly because their size makes them more versatile. With fewer resources, their core strategies often appear to be based on simple but highly focused, strategic game plans, with little room for error. Talk to an independent about the elements most important to his or her business, and you probably won't hear about collaborative planning, forecasting and replenishment, or global synergies. What you will hear is a keen understanding of what needs to be done to survive in a particular market. Simple but effective rules. That's an important reality check and learning tool for other retailers.
One independent everyone else can learn from is Carole Friedman Bitter, president and chief executive officer of 100-year-old Friedman's, based in Butler, Pa. This week's cover story by Elliot Zwiebach explains how the seven-unit independent retailer remains a force in its market despite hefty competition from major players.
Bitter shared a number of basic beliefs about her company's strategy, and I've adapted these as instructive points for all independents and for retailers in general, calling them Bitter's rules for operating. Here are five key points from Bitter:
1. Size doesn't matter: Growing too fast can bring on disabling debt. Better to focus on retailer niche and stature in the community.
2. Price shouldn't be an obstacle: An independent like Friedman's can compete with giants like Wal-Mart if it can get to within 10% of the product-cost of the big retailers.
3. Wholesale supplied is not a disadvantage: You can always find someone to say that independents are at a disadvantage economically because they use wholesalers. But that's not the case with today's wholesalers as long as they've restructured and re-engineered to bring down the cost of product.
4. The family name on the banner really means something: The clout of the retailer's family name is a key selling point in a community. Bi-Lo was added as a second banner in the last decade for two stores operated by Friedman's, but now Bitter wishes she had stuck with the Friedman's name for all stores.
5. Community ties still count: It's hard for competitors to out-boast a retailer like Friedman's that can claim 100 years of community service. In general, independents that have long records of successful community involvement can still command a level of customer loyalty that other retailers can't match.
There you have the five points. Independents (and other retailers) that seriously consider these pieces of advice probably won't need a preservation act to ensure their survival into the future. They will already be on their way to creating more security for themselves.