Finding Their Niche Is Crucial for Small Operators
NATIONAL REPORT — Whether operating a single store or a small chain, surviving and thriving against the larger convenience store chains is always top of mind for the industry’s small operators, and it can be challenging at times.
The big chains have more buying power to get better deals and can pass those deals onto the customer. The big chains can also flex their buying power when it comes to securing the best real estate. However, there are advantages to being small, particularly the ability to move faster in stocking new items or changing up offerings.
“Small operators can make things happen right away. [They] can make a decision to bring in a new product and have it in the store the next day or week,” said Mark Wells, president and CEO of LJT Management Services Inc., a provider of training and consulting services. “For chain stores, it’s a process that could take from three to six months to go through corporate. Small operators can make a change in their business with the snap of a finger.”
With the ability to move quickly, single stores and small chains can find ways to stand out and create a niche in their markets easier than the larger chains can. Savvy operators are focusing on unique product mixes, offering one-of-kind foodservice products, getting involved in their local community, and much more.
“If you don’t create a differentiator, you will lose out to the big guys,” said Mike LaVitola, co-founder and CEO of Foxtrot Market, based in Chicago and operating 12 stores. “The larger players have economy of scale, pay out for better real estate, and can be more involved when it comes to a loyalty program. You have to know what reason you are giving customers to come to you vs. someone down the street.”
How to Find Your Niche
For operators unsure of how to find their niche and create an offering or specialty that makes their store stand out from the crowd, Roy Strasburger, CEO of StrasGlobal, a retail management services firm, recommends starting out by developing an understanding of the neighborhood and customer profile of each location.
“Know your customer and know what they need. Then, you can know what you need to sell,” he said. “The more accurately you do that, the stronger your niche is in the community. Also, try to raise awareness within the immediate community where you are; focus on a six-block to three-quarters-of-a-mile radius around the store to make sure everybody knows who you are.”
It’s also important for an operator to know the competition and what is already being offered in the area of each store, so they can create something truly unique for that demographic and location, advised Wells. This can include products, as well as services.
One way to create a unique niche in the market is to offer local products grown or manufactured in the neighborhood either by other small companies or those headquartered in the area. Today’s customers are looking for local products because of the perceived freshness and community value. Small operators can add such items to their locations quicker than their big-chain counterparts.
“You can create a strong niche with localization, and we are working with local providers in the stores we operate to get more local products,” said Strasburger, whose company currently operates roughly 25 stores around the country. Most of its clients are one to 10-store owners.
“This can be farm to table from a farmer’s market where we can pick up boxes of vegetables, or working with local craftsman and artisans to sell their products so that we can help promote them and also let people know we are attached to the community,” he continued.
At Foxtrot Market, the 12-store chain works with 100 small vendors based in Chicago to offer their products to the local community. Similarly, single-store owner Matt Paduano, who operates Lakeport Market in Lakeport, N.Y, offers local milk from a plant not far from the store’s location, as well as locally produced snacks, beef jerky and maple syrup.
“People love to come in and find things they can’t find anywhere else,” said Paduano, a former long-time executive for a midsized c-store chain. “We carry local products and grocery items and unlike a big chain that might have cooler doors locked up by Pepsi or Coke, we have the flexibility to create a whole section of our cooler with gourmet sodas.”
Finding ways to get involved, help the local community or hold neighborhood events is another way small operators can differentiate themselves from the larger chains. Amidst the COVID-19 pandemic, many small operators have stepped up to the plate, finding avenues to help their neighbors.
Strasburger, whose company operates stores for those who own them but do not want to operate them on their own, implemented a number of measures, from working with the local chamber of commerce to offer job opportunities to those affected by shutdowns, to seeking out restaurants that were forced to close and having them prep and sell meals through the c-stores.
With children out of school due to the pandemic, Lakeport Market provided 4,500 lunches for elementary and middle school children Monday through Friday.
“A big part of what makes us stand out is the community involvement, and a lot of the bigger chains are missing that,” Paduano said. “We had customers coming in and donating product and dollars that allowed us to keep [the free lunches] going.”
Lakeport Market also supported the local Girl Scouts by selling nearly 800 boxes of cookies in the store and then handing over the profit to them. The store set up a display explaining that the Girl Scouts could not be out selling the cookies, so they were doing it for them.
“Get involved in the community and let them put a face to the independent operator,” said Wells. “Get involved in events, reach out to the chamber of commerce, and support local schools.”