Small businesses have long faced the challenge of competing pricewise with the mega-retailers. But now that the big-box stores are slashing prices even further to try to boost sales during the holiday shopping season, they’re forcing mom-and-pop stores to rely on their strengths , personal attention and a charming atmosphere , more than ever.
Of course, offering quality merchandise at reasonable prices is crucial, too, says Jeong Min Han, owner of The Closet, a women’s clothing chain that has four stores.
On the sidewalk in front of her Ocean Beach location, Han has racks of brightly colored T-shirts displayed at discounted prices. The stores don’t advertise, but prefer to rely on a reputation for “good quality, good prices and good design” year-round to lure customers in the door of the 15-year-old business, Han says.
Planning to open a store in the spring in Horton Plaza, she stays informed about the new fashions and trends and spends 24 hours a day “thinking only about my business.”
Sales Better Than Most
Her drive to succeed has paid off. Last year, The Closet had sales of $9 million, and is projecting $9.5 million for this year, with holiday revenues staying flat, Han says.
That’s not bad, considering that U.S. chain-store sales for November fell by a record 2.7 percent on a year-over-year, same-store basis, according to the International Council of Shopping Centers trade group.
Not surprisingly, Wal-Mart Stores was not among the chains that saw sales decline last month. The retail giant reported an increase of 1.6 percent in net sales from $31.7 billion in November 2007 to $32.2 billion last month.
Karen Dole says that her two-and-a-half-year-old business, Hillside Artisans Children’s Boutique, which carries clothing and toys on Washington Street in Mission Hills, doesn’t discount items. However, she says she searches the Internet to ensure that the same items can’t be bought online for less.
“I definitely don’t try to compete with big-box retailers on prices or products,” she said. “If I know something is also sold at Wal-Mart or Target, I won’t buy it.”
Give ‘Em What They Want
Dole says she targets her wares to residents who live nearby, many of whom are seeking “green” items such as wooden toys colored with soy inks, and don’t want the hassle of going to a mall.
She declined to cite her annual sales, but says they’ve grown 40 percent to 50 percent on average each month since she opened.
She doesn’t advertise, but markets via e-mailed newsletters detailing special events that include in-store children’s art projects and new inventory.
“I also might mention what’s going on in the neighborhood,” she said. “It’s important to keep in touch.”
Gina Freize, owner of Venissimo Cheese across the street from Hillside Artisans, says she markets her gourmet cheeses by letting customers sample them before making their selection.
“We don’t advertise,” she said. “Our whole thing is to get people to taste our cheese.”
Overall, sales are expected to increase 10 percent this year from 2007, she says. In January, her Mission Hills location will be five years old. Venissimo opened its second store a year and a half ago in Del Mar’s Flower Hill Promenade, and its third last month in Long Beach.
Freize says Venissimo’s sales during Thanksgiving were up, particularly trays of cheeses, and she anticipates the trend will carry through Christmas and Hanukkah.
Nelson Photo Supplies, a 58-year-old business with stores in La Jolla and Little Italy, is seeing more cameras go out the door this year than last. However, revenues will likely be down this year because camera prices are down, says owner Larry Kuntz.
He says he competes with Costco Wholesale and Best Buy on prices, yet camera buffs looking for more accessories or neophytes who need help to use the cameras prefer Nelson Photo.
Armed with co-op dollars (credits from manufacturers), Nelson Photo is spending about $75,000 on advertising this year, with a beefed up radio campaign during the holidays to complement its newspaper ads, Kuntz says.
Although camera prices have fallen, Kuntz says he doesn’t have a strategy to put more cash in the till.
“We’ll just do what we’ve done in the past with competitive prices and a service component,” he said. “In this type of business, we don’t really look out five years. We open our doors every day and hopefully we’ll drive customers through those doors.”