So, is it actually possible for a standard High Street retailer to compete with an internet seller? This has been on the minds of small bike shops and probably many small retailers around the UK for years. Far from being a one day wonder, Internet purchasing is growing here in the UK at 5% a year. It simply isn’t going away, so what can an owner-run bike shop do about it?
It is a fact of human nature that we are capable of ‘thinking ourselves into’ the mire. People worry, they over estimate threats and often, they do not have the knowledge in house to overcome an adversity. Having trained in more than 600 bikes shops in the UK, many bike shop owners I have met have cited the Internet threat as their biggest problem because they cannot match a 25% discount and sustain a business.
Waterstones, the biggest retail bookshop chain in the UK had a series of whammys to contend with. The emergence of Amazon, now the world’s biggest bookseller was enough to frighten the pants off most of us. That alone took a huge chunk of business, but then came the second kick in the crutch, the development of the Kindle.
No more, they thought, were people ‘going out’ to browse and buy books as they had done for hundreds of years; now they were looking at an easy to carry screen and downloading books straight into it. For goodness sake, how on earth could anyone recover from that.
This event encapsulates where so many bike dealers I meet, stand today. To them, the Internet threat is seismic, so huge that there is no way a small business with a tiny marketing budget could ever recover. In bike shop terms, we also have a second whammy in the inherent, incorrect psychology of serial discounting, throughout an industry that believes, it simply cannot trade without giving discounts.
I have met owners who say they have built their business on discounting. With five branches and a turnover of millions, it is hard for me, a business man bred on RRP = best bottom line to argue. But the logic is unchallengeable. A turnover of £2m might have been £3m if discounts had been resisted and that means a great net profit. It is so simple. Discount, ultimately comes directly from the bottom line, period and the bottom line is what we are here for, end of story. Depletion of bottom line means less stock, less staff, less growth, less take-home pay, less in your back pocket and that has to be universal.
So what did Waterstones do about these seismic events?
To start with, they had enough reserves to be able to invest in their stores to enhance the customer experience. They looked for areas where the Internet could not compete. In essence, this amounted in their case to how customers were treated, to meeting the changes in products that interested customers and in redesigning stores based around the research they did to make the customer experience second to none. That included staff training.
So, what lessons are there in this story for us, the small trader, maybe in a secondary High Street location with rent to meet, staff to pay and less customers coming through the door? What does the average Bike shop have to offer the Internet either can’t at all, or can but only to a lesser degree?
Here’s the list: Service, hands on product experience, research attitude, the customer experience, but above all, the repair shop.
Before we go into detail in combating this retail evil called the internet, let’s say a word about training. How do your staff react when a customer offers the objection; ”I can get it loads cheaper on the Internet”. Brick wall? Nowhere to go? How do your staff deal with that and do they know what to say? What would a professional salesman say? Surely, he would resell the features and benefits of the product. The customer is holding the product, it is in his hand, he or she can have it now. This is the single greatest advantage, he can have it now, so use repetition. No delays in delivery. This fact alone goes to the heart of purchasing psychology. We research, compare and when we decide, we want it yesterday.
I can hear the top sales guy embellishing the service aspect, the suitability to the customer, the wonderful look of the product, the fact that the Internet does not give a free, 6 week service. You might suggest: “You may have to put it together yourself so you don’t die on the first trip out and have you ever tried sending anything back to an internet company – Sir!”
Ok, maybe not those words, but if you do not help your staff to avoid pitfalls and give them something to work with, your sales levels will be reduced. Staff training is investment, not expenditure – you get it back, over and over. It’s a policy matter. How is the company going to answer that objection. If every staff member knows what to say, practices it with other team members, becomes proficient, you have to save some of those sales. Staff confidence will be sky high if they know how to deal with the problem.
In this series, I am going to examine all of these areas and do my best to assist those who are in any way feeling threatened by this giant. The internet will, I hope, be seen not as a means of being crushed, simply, a competitor than needs kicking in the weak spots.
To those who ask what does this guy know; many years ago, there was a machine called the Telex. It was the way people sent instant messages to each other across the world before we had emails and there were thousands of telex machines in every big firm, government departments and offices. I negotiated with British Telecom International to send advertising messages over the Telex system. It was popular with advertisers as they were able to reach a huge audience at little cost. People unused to the medium for advertising reacted surprisingly well and response levels were high. Profits rolled in, the future looked pretty bright. Then, out of the blue, someone invented something called the fax machine. Overnight, we died as everyone threw out their telex machines, that’s probably why you may never have heard of them. So yes, I do understand the Internet threat.