I remember as a child walking to the corner drug store – literally. It was located on one of the corners in the downtown square where I grew up. It was the main drugstore of the town and everyone knew the pharmacist family who owned it. A pretty popular place!
Sure, they were successful because they owned the main drugstore in town, but they were more successful because everyone trusted them. The owner had a fantastic personality – such a fun guy! They provided sound medical advice when you couldn't reach your doctor. They would answer questions about your prescriptions. And at the time, there was no Internet available to research symptoms and remedies, so this was a godsend. They were like the stand-in doctor we all needed from time to time, available to help on weekends, off-hours, sometimes holidays if there was a real emergency.
And they carried medical devices (or could get them for you), trinkets and other novelties. It was quite a store!
When the big pharmacies came into town – think CVS and Walgreens – sure, the corner drugstore felt the sting of large, low-priced pharmacies with huge stock. And the drugstore felt the rise of the mail-order pharmacies. But this same corner drugstore is STILL in business. Actually, along the way they grew in storefront size and in what they carried.
Apparently, there is room for smaller, local pharmacies among the giants. But why?
Giant megastores killed a lot of businesses in industries like bookselling, apparel (think boutiques and shoe stores), sporting goods, food, liquor, office supplies, stationery, and more. They are able to buy in extreme bulk and pass that saving on to you. But at the same time, there are independent boutiques, booksellers, stationery stories, and more still in business today. Restaurants aren't all corporate and named Cheesecake Factory or Chili's. There are also some local, independent liquor stores and not just the supermarket-styled megastores that sells everything from Blue Nun to fine Georgian wine.
In fact, there has been a rise in local businesses. Local artisans who make beer, cheese, bread, pastries, and other fine goods are growing as a trend. As are smaller specialty grocers. As are software and app companies. As are innovators who are disrupting markets and established businesses like healthcare with home visits.
It makes you wonder if the death of some stores is really due to megastore pricing or if there is something else, something deeper, happening here.
We all want to buy more for less, but do we always buy based on lowest cost? I don't think so. If that were true, then the smaller stores that provide something special would all be gone by now. And I think the special touch is about relationships and connecting with customers.
People buy products generally because they are looking to solve a problem. Even if someone buys something for fun, he is buying an item for emotional benefit as well.
Why do people choose the products they do? There is a logical driver and an emotional driver, and sometimes the emotional driver is stronger than the logical driver. And a factor isn't only buying the product itself; you need to consider the vendor you are buying from.
If purchasing really were as simple as completing a transaction, purchase decisions would all be based on price and the megastores would have it. But they don't.
What are some of the reasons why we choose to buy or work with one vendor over another?
- Service and advice. We sometimes take this for granted by companies, but we really shouldn't. Not all companies will openly give objective advice. Many will give advice to keep you at their store and buy their products. But there is something to be said for a company that gives you advice that benefits you and meets your needs rather than their own bottom line and profit. That perspective builds trust – and ultimately, an emotional relationship.
- Shipping and time to receive product – this is key. Amazon is successful because they have fast delivery. From when you order to when you receive it is about 2-3 days. And it is free for Amazon Prime members. Now we have all grown to expect shipping to be free or low-cost as well as fast. Hearing a package taking a week to be delivered seems too long now. People want to go online and buy what they want when they want it and get it even faster.
- Having a storefront. There are some items that need to be purchased in person, especially high-cost items (and yes, high-cost is based on perspective). We want to see how that China pattern looks in the light and in person. Or the nuances of flatware. Or a car and how experience how it rides. Apple has a storefront so you can experience their computers. Believe it or not, this builds trust. If you, Mr. Company/Vendor, aren't afraid for a prospect to look at, touch, and experience your products that tells me that you trust me to touch and try (under supervision, of course) before I buy. In fact, you so strongly believe that this approach – me experiencing your products first-hand – will help sell them that you provide a place for this to happen.
- Cost. When all else is equal, people will make their purchase decision based on cost. So what does "all else is equal" mean? Services, advice, trust, relationship. They all factor into the decision. Why would I choose a vendor over Amazon, who has a great return policy, lots of stock, and great delivery options? The other vendor offers the same delivery turnaround, it's something I won't be returning, and that other vendor gave me great advice a while back. In the end, I have a better relationship with that other vendor. Money isn't everything.
Some other examples:
Why do I choose something like Virgin America versus another airline that may cost less? It's not just the points. I trust the experience will be pleasant – or at least tolerable – for the flight. There will be no hidden fees. And food I can eat.
For a computer, people choose Macs and iPads because they don't want to fret with connections and want an operating system that is easy to use. They are more expensive, but there is another driver for their decision.
- Quality of product for the price. Great quality product for the price builds trust in a brand. If you feel ripped off – well, you won't purchase again, now will you? If you purchase meat that spoils quicky, you won't go back to the store. If you purchase a phone that breaks frequently, you'll get a different phone.
- Easy. We tend to forget this one. We all like to do business with a company that is easy to do business with. What does that mean? (I wrote a blog post defining this.) Well, companies that don't give you a hard time when you want to return something. Or a company is upfront and honest about what is included in the price of the product (batteries, support, etc.). Be easy to do business with – that's a huge turn-on for most customers.
- How you feel when you interact with the store. We decide to go to some stores and not others based on how we feel when we are there. Do we feel helped? Important and valued? Like we are learning something new? Purchasing something precious?
The reason we visit some stores and not others is similar to why we are friends with some people and not others. It's how you feel when you are around them. Do you like how you feel? Do you agree with the values of the store? Do they align with their values?
As you can see, there is more to purchasing and interacting with a company than simply completing a transaction. There are a number of logistical factors that, when combined, can influence a emotional decision. Or one could say, depending on how a company exhibits and demonstrates those logistical factors impacts emotional decisions. What you do is a reflection of who you are. And it's all part of the experience.
The giants definitely have their place, especially for low-cost transactions. However, cost is not the only factor to consider in a purchase. This makes it possible to fight a giant and gain marketshare. Remember: business is done between people. Business is about more than a transaction – it's about the relationship between the customer and the company.