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Small Shops See Smallness as The

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					December 15, 2007


Small Shops See Smallness as Their Big
Selling Point
By ANNE FIELD

Predictions of a weak holiday shopping season have led the big department stores to slash
prices and stretch their advertising budgets. But most small retailers, which cannot afford
either the price cuts or the expensive advertising, are doing something else this year:
making a virtue of their size.

Gregory Choron, for instance, the owner of Merry Go Round Toys, a small retailer in
New Rochelle, N.Y., is relying on his ability to glean intelligence quickly about what
customers want and then order products for delivery practically the next day. Darleen
Johns, the owner of a home accessories and furnishing store in Raleigh, N.C., called
Gecko’s Corner, recently held a midweek open house strictly for contacts on her private
e-mail list. Almost 200 people attended — and sales skyrocketed. “It was the best day
we’ve ever had,” she said.

Small retailers around the country are using a host of marketing tactics, from the usual
extra emphasis on customer service to putting out free cider and cookies. But their most
important step may be that they are trying to make the most of their inherent advantages
over larger competitors.

“Small retailers are finding a variety of creative ways to play up the benefits of their size,
“ said Ivan Friedman, an expert on retail practices who is president and chief executive of
RCS Real Estate Advisors, a real estate advisory firm based in New York.

The ability of small stores to react quickly and directly to customers may be one of the
most effective weapons they have, Mr. Friedman said. They can easily determine what is
selling, and then place orders without wading through a cumbersome bureaucracy. “They
don’t have to go to the corporate office, wait for their request to be analyzed and then
shipped to them, by which time Christmas is over,” he said.
Mr. Choron, for example, said he was spending a lot of time calling wholesalers directly
when popular items sell out, sometimes he said, “on a daily basis.”

To speed up the process even more, he is paying extra for United Parcel Service to
deliver the products.

Similarly, Sally Lesser, owner of Henry Bear’s Park, three toy stores based in Arlington,
Mass., said she was also watching sales more attentively than usual. “After the weekend,
if we sell out of something we’ll figure it out on Sunday night, so we can reorder the next
morning,” she said.

In addition, store owners say they often hear directly from their customers about new
products and then quickly see how the items sell. A year ago, Mr. Choron said, customers
began telling him how much they liked an electronic dice game called LCR. So, he
started stocking it. A week later, it sold out. He reordered, and it sold out again in a week.
Now, he said, he keeps a steady supply of the game by the cash register. “You’ve got to
pay attention to the feedback,” he said.

Small retailers also have an advantage over bigger competitors in other areas, particularly
customer service. This year, said Mandy Putnam, vice president of TNS Retail Forward,
a retail market research firm in Columbus, Ohio, “Stores are upping the ante with more
personalized customer service, particularly if they’ve depended on that for sales in the
past.”

Greg Larson, for instance, the owner of Larson’s Toys and Games in Columbus, says that
he makes sure his staff of 16 and 6 additional seasonal helpers have a list of
recommendations they can offer to bewildered shoppers buying for children of different
ages. He also offers free gift wrapping.

Stephanie Gamble, co-owner of the House Downtown, a home decorating store in
Baltimore and Havre de Grace, Md., is taking a somewhat different tack. With a largely
upscale clientele, she is offering free gift wrapping for purchases over $50. Ms. Gamble
says she has already had a handful of customers return for a second shopping trip, just
because of that extra service. “They’re telling me, we love that you wrap it and I don’t
have to think about it anymore,” she said.

Taking advantage of those more personalized relationships, some retailers are also doing
more direct marketing, especially through e-mail messages. Ms. Johns of Gecko’s Corner
has an extensive e-mail list with members of the 15 or so community groups, from the
Chamber of Commerce to the local country club, that she belongs to. She is mailing
special promotions to the people on that list. “I probably wouldn’t be doing so much
direct e-mail marketing if I were expecting a different shopping climate,” she said.

Open houses and wine and cheese events are another way small retailers are adding a
personal touch. Ms. Johns is putting out free samples of food, including some items she
sells in her store. She is offering something every day, instead of the once a week treats
she had originally planned.

At Creekside Books & Coffee, a bookstore and coffee house in Skaneateles, N.Y., the
owner, Erika Davis, recently started offering corporations a program for buying gifts for
employees and clients. She held a wine and cheese evening in October to promote it and
says the promotion could add about 5 percent to total revenue.

Small toy stores may have a particular advantage this year after the recent reports of lead
in some toys made in China. Most toys are manufactured there, but the stock of items
from countries other than China is likely to be bigger at small retailers than at big chains.

Small toy stores “have the opportunity to leverage the fact that they have toys that are
from European-based companies,” Ms. Putnam said.

Ms. Lesser has made an effort to find toys made in this country or Europe this year.

Mr. Larson recently sent e-mail messages to his customers with a list of safety
testimonials from toy companies, published in a catalog jointly produced by a group of
small retailers.

Of course, another crucial area for retailers of any size is smart use of the Internet.
Consumers are expected to do 30 percent of their shopping over the Web this season,
according to the National Retail Federation.

“If you don’t have a Web site in this environment, you’re at a competitive disadvantage,”
Ms. Putnam said. In some cases, shoppers are making their purchases in the store, but
using the Web for comparison shopping, checking out prices and ensuring that products
are in stock before making the trip, she said.

Other small retailers are taking a tip from the big stores and increasing their advertising
spending, albeit to a smaller extent. Cecelia Hardacker, co-owner of Two Fish Art Glass
in Forest Park, Ill., which sells Tiffany lamps and other decorative glass products, as well
as home furnishings, said she and her partner were advertising in additional publications
and spending 30 percent more than usual on advertising.

Ultimately, according to some analysts, certain independent stores, especially those
marketing to wealthy consumers, may do better than anyone else.

“Many small retailers cater to more affluent customers and stores that sell to that market
will probably do better this year,” said Fred Crawford, managing director of AlixPartners,
a management consulting firm in New York. “The luxury end of retail is going to be the
one bright spot this year.”

				
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