It seems like ever since I returned to Kauai, I’ve watched business after business close up shop. Many of the local businesses still operating are still struggling more than ever. These businesses are family owned and operated and have been gone through multiple generations. When asked why sales are so poor, they always cite outside sources; Costco, Wal-mart, K-mart, Safeway, the economy, etc. How can they compete with these big box stores with huge national financial backing?
I hate to see businesses struggling. I feel that there is always room for everybody to enjoy success. What frustrates me though, is the inflexibility and just lack of basic business decisions that need to be made. There are ways to thrive in a competitive business environment. I understand that there is always a problem of being too close to a problem and I am 100% sure that this is the case for these local companies. Here are the four major things I see wrong with most locally owned businesses on Kauai.
1. Value Proposition - This is the most important, but often over looked concept in business. What makes your business different from all the other businesses in the market? What makes your store unique. When I look at many local businesses that are competing with mainland stores, I can’t see any clearly defined value proposition. They are all attempting to do exactly the same thing as the big guys, offering a little bit of everything, trying to capture the largest market share by offering something for everybody. What these companies should be doing is coming up with a unique value prop that compels shoppers to at least give it a try. If you can’t say clearly and succinctly in one sentence, what makes your business unique and better from your competitors, you don’t have a strong enough value proposition. If you can’t come up with why people should shop with you, why should they shop with you?
2. Define what you are competing on and stick to it - There are only three factors a business can compete on, 1. Price 2. Convenience 3. Quality. Examples of businesses who stick to these factors are Wal-Mart (price), McDonalds (convenience), Mercedes (Quality). The mistake I see many local businesses doing is trying to compete on the wrong factor.
The approach of all big box stores are to compete on price (or the illusion of price). They undercut the competition because they know that price is easily quantifiable to everyone. This is cheaper than this therefore I should shop there. The response by many local businesses is totally wrong, either a) they try to compete on price because that’s what the big guys are doing and get killed or b) they do nothing and get killed. No small local business should be trying to compete on price against a company who is better financially backed and can play with economies of scale. They should instead focus their efforts on convenience (delivery services, helping you to your car, personal shoppers, pick up service etc) or quality, (best quality products or services, do not carry anything that is not the best). Quality and Convenience can in some cases be the same thing so smaller businesses would be wise to focus on that.
3. Define your ideal customer – By attempting to be everything to everyone, you end up serving no one. Local businesses need to clearly define their target customer and do everything they can to market, and provide services and products that are relevant to them. Making changes to try to attract a larger market share is counter productive because you will lose your existing customer base which has been supporting you. Focus on that base and increase your service to them.
Defining your ideal customer is so key because not only will you know how to provide for them, you will be able to cut significant costs by eliminating products and services that they are not interested in. A great example of this Papaya’s Natural Foods. You will not see steroid and antibiotic infused beef at Papaya’s even if it is cheaper. Sure the economy may be hitting them as well, but I bet not as hard as other stores who do not have a clear picture of their customers.
4. Care – Caring about your customer is the single most underrated business principle lost on business on Kauai. Caring doesn’t just mean doing sales and specials. Caring means going above and beyond the expectations of your customers. Caring means giving your customers every reason to give you their business.
One of my favorite local businesses in Hawaii that I feel does a tremendous job with caring for their customer is KTA Superstores on the Big Island. They are the one local store on a neighbor island who has been able to deflect any outside intrusion from mainland or outer island encroachment. They are still the busiest grocery store on the island by far even though Safeway, Walmart, Costco, have all moved in to try to steal their market share. How are they succeeding when everyone else is failing? Not on price, their products are more expensive than most other places. They just care more than the other guys.
They created a brand called Mountain Apple brand which is a KTA exclusive brand which buys and sells products all grown or produced on the Big Island. When you buy a Mountain Apple Brand product, you are supporting the local island economy. Where do you think everyone and their relatives who provide goods for Mountain Apple Brand are shopping? KTA offers a grocery delivery service that drops off groceries to senior citizens who can no longer drive (I’m not sure if they still offer this service). Derek Kurisu, VP of KTA, hosts a show on Public Access where he goes around the island showcasing individuals and businesses in the community. In fact it’s not uncommon to see Derek walking around the aisles of KTA saying hello to everyone shopping their and thanking them for their business. It would be easy for him to say he is too busy for this, he has a million things to do, but to him, showing his appreciation is just as important as anything else he has to do that day. All of this might sound like smart marketing which it is, but it boils down to one thing; CARING. They just care more and that is why they can’t be touched on the Big Island. Care about your customers and they will care about you. Simple but almost always overlooked.
I hope that many of the businesses here on Kauai will be able survive this current economic downturn. When it comes down to it, the companies who can recognize these things and implement change are the ones who will set themselves up to be successful in the long run. The marketplace is constantly changing the having the ability to adapt and grow instead of being stuck in the old ways is essential today more than ever.