Thinking Outside the Box

Four successful retailers—a bike shop, a cupcake boutique, a coffee house and an art store—offer universal insights on how they are thriving in the borderless, digital retail age by thinking locally. By Lyndsay McGregor

hat can a footwear retailer learn from a tasty cupcake boutique in Colorado or a snazzy bike shop in Connecticut? How about from a trendy coffee shop in Texas or a boutique art store in Indiana? The short answer: A whole lot.

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Four successful retailers—a bike shop, a cupcake boutique, a coffee house and an art store—offer universal insights on how they are thriving in the borderless, digital retail age by thinking locally. By Lyndsay McGregor

hat can a footwear retailer learn from a tasty cupcake boutique in Colorado or a snazzy bike shop in Connecticut? How about from a trendy coffee shop in Texas or a boutique art store in Indiana? The short answer: A whole lot.

Just because these retailers aren’t knee-deep in stocking sizes and widths or adept at the fine art of sit-and-fit service, doesn’t mean they can’t offer plenty of insights on how to build a strong brand name and loyal customer following in the age of online retailing and big box category killers. They face many of the same struggles, have met plenty of similar challenges and, most importantly, have developed their own unique strategies to survive and thrive in today’s increasingly cutthroat retail landscape. Let’s face it: Retail is retail, no matter if you’re hawking shoes, bikes, sweet treats or pretty much anything else consumers want and need.

And retailing in an era of flash sale sites, group-buying deals and online behemoths like Amazon is never easy, no matter your wares. But even as more consumers go online, the value of face-to-face contact at a brick-and-mortar store can never be underestimated. In the virtual world of online retailing, it is the one aspect that can’t be replicated—just yet. That’s why many consumers are returning to their neighborhood stores, seeking a one-on-one connection with their community that can’t be found in an anonymous online transaction. Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail consulting and investment banking firm headquartered in New York, believes this desire for local goods plays perfectly to the strength of smaller, urban stores. “Independents are in a perfect position to capitalize,” he offers.

Davidowitz uses “My Macy’s” as an example of how even big-name retailers are starting to think smaller, customizing each store’s merchandise according to their respective area. “The giant footprint just isn’t working anymore,” he says. “You are starting to see these mega-changes, but they are exactly where the strength of the independents has always been.”

The following retailers have heeded these lessons and learned that a commitment to their community—rather than trying to chase business thousands of miles beyond their physical storefronts—is often the most effective means to growing a business. For these savvy shopkeepers, developing strong local ties within their respective neighborhoods made them a shoe-in for success—sans the shoes.

ART PROJECT
Trail Collective Edge, Valparaiso, IN

For Brenda MagnettI Erickson, founder of rTrail Collective Edge in Valparaiso, IN, old-fashioned word-of-mouth is still one of the most underrated means of promotion. “The only reason I’m still in business is because other businesses refer me,” she says of her store, an artists’ hub that offers Midwest craftsmen a place to teach, exhibit and sell original works. To that end, Erickson always returns the favor and believes such good karma comes full circle. “I always try to find a way to refer another business and I think that’s a really important idea for shoe stores,” she recommends, adding that retailers need not be shy in establishing bonds with fellow merchants.

“Stores need to work together in order to be successful, and we really do work together.” Erickson adds, “It’s not like I could be successful if I was the only store on the street. Everything pulled together makes the town vibrant—we’re all part of that.”

But the karma—and customers—that come from supporting nearby businesses isn’t the only way Erickson pays it forward to her advantage. Her mix of locally sourced goods and made-in-the-U.S.A. merchandise has been a powerful lure at rTrail. “The No. 1 comment I hear is: ‘It is so refreshing to walk into your store and see that everything isn’t made in China,’” Erickson offers. “[Customers] are very excited to support local artists, but I think they’re even more excited that handmade, locally sourced products are as valuable, if not more valuable, than mass-produced ones from overseas.”

NOT YOUR Average JOE
Progress Coffee Shop, Austin, TX

It was that same feeling of community spirit that inspired Joshua Bingaman to open Progress Coffee Shop in Austin, TX, a few years back. “For me it’s all about people,” he says. “What I’ve learned through operating the café is the rewards of direct marketing.” Specifically, Bingaman advises that rather than just casting a big net in the hope of reeling in a few fish, you first find out where the fish are—who your direct market is—and target them. “Then you know you’re going to catch more fish,” he says. In a further effort to appease this local clientele once they’re in his grasp, Bingaman serves a locally sourced menu of organic foods and, of course, Austin-roasted coffee of the fair trade variety. Also on the menu: Local musicians, art exhibitions and a wealth of creative beings Austin is famous for.

Bingaman, it should be noted, is a master of creating unique retail experiences pitched perfectly to the local market. His previous retail venture was the Subterranean Shoe Room, a boutique that doubled as an art gallery in San Francisco’s Mission District. In addition, his current side business is designer of men’s boot brand, Helm. His advice to footwear retailers is simple: “Slow down. Get more involved in what’s right in front of you. Stop trying to be huge. Play small. Stay local. Put your heart into it instead of your brain.”

In fact, if Bingaman could re-create his Mission District retail venture, he would have concentrated less on the global picture and more on who and what was around him. “I had a super-dense home base that didn’t even know I was there,” he admits. Along those lines, Bingaman recently had his Helm staff embark on a meet-the-neighbors mission, going door-to-door in Austin with gift cards, inviting people to stop by the showroom and check out the latest collection. The result of focusing on the immediate community: “In the last four months, sales in our showroom have been three times those on our website,” he says.

PEDAL PUSHERS
Zane’s Cycles, Branford, CT

While few bicycles are made in Connecticut (if any) and many are sourced overseas, Chris Zane of Zane’s Cycles in Branford, CT, focuses on developing a friendly neighborhood bond to build sales and customer loyalty. Zane calls his approach “the science of creating lifetime customers.”

Specifically, he says, “You need to have a relationship with your customers and understand them in order to have a successful store.” And Zane should know, because since setting up shop as a junior in high school more than 30 years ago, he has built Zane’s Cycles into one of the largest and most successful bicycle stores in the nation.

Key aspects of that are Zane’s lifetime service guarantee and $1 rule—as in there’s no charge for any parts that cost a buck or less. “It’s easier to reach into a drawer, toss a couple pieces to a customer and send them on their way. We’re not always looking to ring the register,” he says. While this approach isn’t rocket science, Zane believes the reason his competitors—and most retailers in general—don’t adopt it is the fear of losing money. But as he has learned over time, “People are reasonable and don’t take advantage because they want the business to succeed so they can keep going there.”

To keep customers coming back, Zane says you have to sell what your target buyer really needs. “If you figure out what your customer needs, they’ll buy the things they want to buy,” he says. “That’s what the core of our organization is. All these programs we’ve implemented over the years have been customer-based rather than revenue-based.” Zane adds, “A lot of retailers don’t get this. They don’t understand the psychology of why a customer would have a relationship with a retailer.”

When it comes to the shoe business, Zane stresses that retailers need to look at the lifetime value of the customer as opposed to single transactions, whether that means offering to repair a damaged heel for free or accepting a faulty pair of shoes without a receipt. “If each customer has the potential to drive profit to your business, you will certainly do extraordinary things to keep him or her in touch with your business,” he says. “For us, I look from cradle to grave. We figure that every customer that walks through the door is a potential investment.”

HUMAN TOUCH
Happy Cakes Bakeshop, Denver, CO

The benefits of going local may be the new black in terms of strategy, but that’s not to say that retailers should snub the online world completely. In fact, Happy Cakes Bakeshop in Denver began as an online operation and became so popular that a storefront quickly followed. Laura Reynolds (center), one of the gourmet cupcake business’ three partners, says, “Building a real relationship with customers in person equals a larger opportunity for new business—foot traffic in our neighborhood is great and we get lots of new customers making spontaneous purchases.”

Reynolds notes that social media sites can open a lot of doors for traditional retailers, as well. “People love being part of our Facebook community and interacting with the brand,” she says. “You can offer them something of value. People are looking for that now in their purchases. They want to feel like they mean something; and that their business matters to the proprietors.” Reynolds adds, “I hate to say the ‘deal thing,’ but people are so into that now. Special rewards or deals for your customers can help foster loyalty.” As an example, she points to the deals Happy Cakes offers through its Facebook page and monthly newsletter. “We’ve also done six cupcakes for the price of three through Groupon and LivingSocial, and our existing customer base loves to get them,” she says. It’s that out-of-the-box mentality, Reynolds notes, which can lead to success, even for traditional stores.

And while retailers big and small are facing many of the same challenges, the basic rules of originality, imagination and ingenuity still apply. In today’s retail arena, there are two clear ways to win: Excel within your store archetype or take a radical path by observing other retail formats and applying some of what works well for them to your business.

As Reynolds from Happy Cakes puts it: “It’s easier to keep customers than bring in new ones. But if you can keep your current customers while bringing in new ones, your business will absolutely succeed.”

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