Local Heroes – in prime position for a lasting success story in retail

'Ohr am Markt' – Local Heroes – Small and Medium-sized Enterprises

They still exist, locally and passionately managed specialty stores with one or very few branches and a strong focus on purely stationary or regional omni-channel market development.

And while many of these stores have disappeared from the market or run into difficulties in recent years, others are outperforming the retail market. We call them Local Heroes. While the reasons for the vanishing of some local players are relatively similar to the general retail issues (barely differentiated and interchangeable product ranges, undifferentiated price and discount campaigns, a lack of or non-existent local customer relationship management (CRM), too little innovation and excitement at the POS and an inadequate omni-channel/digital strategy), the successful ones are thriving on a strong brand, long-standing, very personally cultivated customer relationships, a high level of customer loyalty and a retail POS in a prime location as well as a product range tailored to local customers.

In short, successful Local Heroes have successfully managed to clearly differentiate their business model to local and digital competition and offer a special shopping experience based on good leadership and great teams. We believe that many of these Local Heroes are in an excellent starting position for even more growth, as they can operate from a position of strength, with a strong and emotionally loaded brand and successful product ranges and services.

What will it take for the successful Local Hero of the future?

The market potential of Local Heroes is generally much greater than previously realized. In an increasingly standardized retail landscape with completely interchangeable offers, many customers are looking for real buying impulses, authentic services, emotions when shopping and local uniqueness. Good Local Heroes offer all of this, and this is precisely where we see the need for action:

In developing the local market further, a more professionalized approach is crucial for sustainable success in today’s highly competitive (especially digital) environment and declining attractiveness of city centers. The right strategy and the right measures must be smart and specifically tailored to Local Heroes. This is where we are currently diagnosing the greatest deficit, because in our day-to-day work as consultants and in the many projects with our clients, we often see the following same behaviors:

Either Local Heroes try to copy successful (digital) strategies of large retailers, e.g. by adapting digital/marketing measures in a relatively unspecific way, or by hiring agencies who fail to adapt their concepts to regional needs. Even worse, sometimes the less successful local players completely neglect enormously important market development tools (e.g. local search) and thus build up long-lasting market deficits.

In our view, Local Heroes should confidently choose a smart and locally specific digital/marketing mix that is relevant and attractive for their respective target groups and that sets them apart from their competitors and the large retailers.

Based on our experience, this requires the following key points:

#1 Focus on CRM & Customer Intimacy: Maximum customer knowledge is Key! We believe that Local Heroes are great in one-to-one treatment when customers are in the store but truly lack CRM systematics. And they could thrive much more on deeper understanding of their customers and the cultivation of long-term customer relationships. Achieving this requires a CRM strategy, the use of (simple) customer management systems and personal, customized tools such as personal selling apps, as well as outstanding top customer management. The focus on CRM is vital for Local Heroes, as they often have more limited marketing budgets and therefore cannot use traditional mass communication tools on a large scale. Instead, they must concentrate on selected mass marketing activities. And although local heroes often do an excellent job on a personal level (employees to customers), the lack of systematic collection and structuring of customer knowledge is often the greatest weakness of all. This is more about customer-centric development of the business and management concept and understanding how to turn customer knowledge into more sales and less about big investment in tools.

#2 Omni-Channel/E–Com: For many Local Heroes, this involves two key issues: Firstly, clarifying the strategic role of online business (What opportunities/options does E–Com have as a sales channel?). Secondly, the vital definition of the Omni-Channel Concept, i.e. a customer-oriented and meaningful omni-channel offering (“online shop window, click & collect, digital reservation, store communication, etc.). While E–Commerce potential can range from “low to national” depending on the initial situation and product range differentiation, a clear concept for digital “research online” is vital to avoid losing customers in the future.

#3 Tourist marketing/acquiring new customers: Depending on the location, tourists offer very attractive additional potential that is rarely consistently managed by Local Heroes as they often cannot afford to set up their own tourist marketing team.

#4 Local Cooperation’s/Partner Programs: Many Local Heroes have intensive and personal relationships with rather affluent customers of the respective city. There are numerous other business models in every city (not necessarily in retail in the narrower sense, but in hospitality, restaurants, sport, art and culture, etc.) that serve similar target groups. Systematic networking and intelligent, reciprocal acquisition of respective customers offers great potential. But the trend we do see goes in the opposite direction: most local cooperation networks have been discontinued in the past due to a lack of suitable concepts and collaboration. We believe it is time for a “3.0” concept, a new and consistent concept for joint differentiation from the undifferentiated mass market and the use of the specific competitive advantage.

#5 Smart local online marketing: Local stores/branches often do not recognize the relevance of local search enough (e.g. cannot be found in web searches or are ranked very low). This is a fundamental disadvantage in terms of acquiring new customers, as virtually all potential new customers have some form of digital pre-information. Accordingly, the development of an overall concept for the digital marketing of local stores, e.g. dedicated websites for stores, SEO/SEA/Google marketing for specific keywords, etc., is a further step towards successful specific market development. Semi-thought-through E–Commerce activities make the situation even worse, as relevant and convincing store content (“Why should I buy stationary at XY”) is ignored in favor of an often unproductive E-Commerce-Operation. And while E-Commerce can be a very attractive component of consistent online/Omni-Channel growth for Local Heros, they often ignore digitally their (yet) most important shopping channel (bricks-and-mortar).

To summarize, it can be said that Local Heroes have excellent prerequisites. They are already successfully established and still have enormous potential to grow, provided they approach the right things in a structured way. If you are interested in further discussions, we would be delighted to hear from you via email (kathrin.maurer@ohr-consulting.com).