I recently had a great discussion with a business owner who had built, from the ground up, a very profitable retail store. This business is loved by its customers. Most of the customers in the community support it. This owner has even studied like stores around the country to look for best-practices, and when he’s compared similar size businesses to his, he is achieving the same or better sales results than they are.
This owner should be happy with his success, shouldn’t he? Unfortunately, this owner isn’t. He wants more sales. He wants to see the store’s growth accelerate more quickly. He needs it to grow fast to achieve the financial goals he’s laid out for himself and his family.
That’s a tough one, isn’t it? This business is operationally sound, functional and profitable, but it’s not meeting the expectations and demands of its founder.
In this case, it’s no consolation to hear other business owners in your field tell you that: “This is just how it is,” or “I think you’re doing pretty well.” Changes have to be made to this business.
Here are a few questions this owner needs to ask himself before embarking on a series of tactical steps to pull in more customers. If you are an owner of a business, you can ask yourself these questions, too:
Could your business be uprooted and transplanted into another marketplace, and do as well as it is now? Would your business thrive and grow because of the new demographics? Or, would it deteriorate and decline in sales?
Put another way: How dependent is your business on its current location for its sales?
If your answer is that your business is VERY dependent on its location, you have a problem.
For example, some businesses cannot be moved without sales being impacted. Some businesses are tied to their specific location, and moving them even 10 or 20 feet one way can cause consumers to stop frequenting that business. (If you don’t believe me, you’ve never relocated retail stores for a living). Businesses like these are solely location-dependent, and take the most work to reinvent into Destinations. Put more bluntly, these businesses are parasitic and feed off their marketplace’s traffic and if you move them, they are going to be hurt. Some even die.
These words always get shopping center developers stirred up. When I say things like “Location doesn’t matter anymore”, I usually don’t get invited back to speak (example: International Council of Shopping Center convention, early 2000; lots of leasing agents feeling a little threatened when I said that comment).
Let me just say that location-dependent stores are fine IF the marketplace never declines, or IF new competitors never come in, or IF the underlying costs of that location never increase. That’s a lot of IF’s. But the truth is that marketplaces do decline, and competitors do come in, and other business owners that are less creative start copying what creative owners do, and then, some manufacturers start selling the same product to your competitors and tell you: “Hey, it’s not in your marketplace.” Yes, all of this stuff happens.
Unfortunately with this owner, when I evaluated the strengths and weaknesses of his business, and compared the business with other like businesses, this business was near identical to most of them, with no inherent core strengths that made it one-of-a-kind.
Here’s the reason I tell you this story: The process of creating a destination is really an alternative marketing strategy that positions your business differently from every other business in your field, from every other business that sells the same product, and offers similar services, to what you do.
Unless you as an owner, step outside the “traditional” business model you have created, your business will never be a true Consumer Destination. Now, you’ll get a lot of flack for deviating from the traditional way businesses like yours are traditionally operated, which is often proclaimed as the “Only Way to Do It” by some trade groups that you might belong to.
But the test of a Destination Business is if a consumer will illogically go out of their way to come to your business, past your competitors, and willingly spend more time seeking you out, versus purchasing from or choosing your competition. If your uniqueness is not compelling enough, and your points of differentiation are not strong enough, consumers buy elsewhere. This means your business never maximizes its sales and profit potential in your immediate marketplace, nor will it maximize the greater potential sales and profits from the distant marketplaces it could tap into. And that applies in this recovering economy, and the prosperous ones we can expect in the future.
It all comes down to one challenge: What makes your business different from everybody else? If you have trouble answering this question, this is your logical starting point for 2011. It’s not an easy starting point, but without addressing this question, every step you take trying to turn your business into a preferred Consumer Destination will fall short.