Taking on the big boys
Panic? Sell? Move?
Fortunately, for you can compete effectively.
Large corporate operations aim for large market-share, offering discount prices, large selection, extended hours and other incentives to gain and keep customers. They also compete for another precious commodity – quality employees. If a small business tries to compete with them directly, it will likely be steamrollered.
Many local businesses are answering – or will be answering – that question as more, larger operations are attracted to the growing area.
The latest corporate chain to announce plans for a store in Eagle County is Home Depot, which has publicly expressed its intentions of opening a store in the soon-to-be-developed Village at Avon. An opening date is forthcoming.
A new Starbucks, too, has opened in Edwards, and City Market, Safeway and Wal-Mart already are here.
For many small businesses in the area, the arrival of new corporate giants will mean further changing the way they do business.
Here’s what four operators of small business have done, or will be doing, to compete in the challenging and changing marketplace.
For Loren and Judy Gifford, co-owners of Ace Hardware in West Vail, news that Home Depot will be opening a superstore in Avon didn’t exactly excite them. They have run their 11,000-square-foot store since 1993. The customer base of their small franchise is squarely in the sights of the larger franchise.
Through their affiliation with Ace Hardware, the Giffords have learned that they need to get better at what they do, as well as change the way they do some other things.
Their store is somewhat atypical of Ace Hardware stores found elsewhere, they say. The majority of their business comes from property management companies, Loren Gifford says. “They buy a dozen items, not just one.”
“We’ve got to be realistic,” he says. “(Home Depot’s) intent is to take the lion’s share of the marketplace.
“For a while the fear was there, but Judy and I have taken the emotion out of it,” he adds. “We realize it’s nothing personal.”
To counter the challenge presented by the new corporate giant, the Giffords plan to employ a strategy that has worked elsewhere.
“We will be developing areas of service which the chains won’t do, such as glass, screens, locks and other niche markets,” says Judy Gifford. “We’ll be doing more special ordering. We’ll also be increasing staff training to provide the service level we want to provide.”
To increase profits, Loren Gifford says, they also will be getting better at inventory control. His store has 11 departments, from plumbing, electrical, paint, tools and more.
“There are some things we only sell one per year,” Judy Gifford says. “We can now special order that rather than keep it in stock.”
“We have begun to scrutinize what we spend on the business,” Loren Gifford adds. “We should be able to run leaner. I’m convinced we can be better at having things in stock.”
The Giffords also know that sales of some of the things they carry, such as barbecue grills and appliances, will dry up.
Fortunately for them, the Giffords say, the recession that struck nearly 12 months ago gave them an opportunity to begin doing some of the things they will need to do when major competition does enter the marketplace.
Driving the changes is the knowledge that for the first few months after the opening of Home Depot they can expect to lose up to half their business. But countering that will be the knowledge that superstores can bring as much as 30 percent more customers to an area.
Rex Keep has been operating photo labs in Eagle County since 1979, when he managed Vail’s first one-hour processing business, Picwick Photo in Lionshead. By 1984 he opened his own lab and now has others in Avon and Edwards.
Keep says he has chosen to be in a business with formidable competitors – City Market, Safeway and Wal Mart. Customers drop their film off for developing and pick it up a day or two later, he says. When he opened the Avon store, located between Wal Mart and City Market, he was told he was crazy, but those major retailers provide him a greater volume of business.
“They do 10 times more roll processing per day than we do,” says Keep. “Our niche is quality and service. We have a more premium price. We provide personal service above and beyond.”
Key to that, Keep says, is finding good employees.
“We have a very high screening level and expectations for the people we hire,” he says. “It’s a highly technical situation. You can’t just take someone off the street.”
Keep says he’s also had some good luck.
“Over the years, I’ve been fortunate to have people come to town that have those skills. We also train our employees and send them to seminars,” he says.
“If we were, as a mom-and-pop operation, to try and compete with the discount houses, we aren’t going to make it,” he says. “Many photo labs across the country have gone out of business doing that. We have to go above and beyond.”
The mantra for Keep and his staff, he says, is posted on a sign by his cash register: “If you’re not offering something unique in the marketplace, the only difference between you and your competition is price.”
Slicing it thin
There’s keen competition in the grocery business, too, where margins typically are small.
The Edwards Village Market is one of three neighborhood grocery stores owned by Vail’s John Buxman, with others in Telluride and Snowmass. Manager Rob Braatz says he carries a carefully selected product line.
“We compete in areas like quality and service,” he says. “When people ask for something we don’t have, we can special order.”
Braatz says he is familiar with how the competition operates. He worked for City Market for 23 years before moving to Village Market three years ago.
“We provide more personalized service here,” he says. “You can kind of get lost in the shuffle with some of the larger companies.”
Braatz says one of the areas where the smaller,12,000-square-foot store is able to compete with the larger corporate chains four times its size is in the quality of their products.
“We are able to order from a variety of vendors. People are always telling us how good our produce and meats are,” he says. “We buy from four different vendors, and it provides us much better quality, price and selection.”
The other area where competition is particularly keen is for employees.
“We’re pretty competitive as far as wages go. Our benefits program is better here,” he says. “The other thing that makes a huge difference is our atmosphere here is far more laid-back than at corporate stores.”
For Zac Stone, a 10-year valley resident and owner and manager of the French Press in Edwards, learning that Starbucks has opened a store two blocks away is not that big a deal.
Having worked in a number of local restaurants and seen what works and what doesn’t, he, too, believes adding another franchise business nearby may bring more customers to the area in general.
And despite a booming breakfast and coffee business most mornings, Stone says, the focus of his business isn’t just coffee.
“We’re a restaurant that happens to do coffee,” he says.
Stone has owned the New American-French cuisine restaurant for 14 months. “We’re a different business. We’re a coffee shop during the day and a fine restaurant at night.
“I have no problem with Starbucks coming to the area,” Stone says. “My goal is for this place to be a great place to come for dinner.”
The 1,200-square-foot establishment seats 50 and is open seven days a week. Stone says he wants to build his dinner business to where it is his “bread and butter.”
Stone says he didn’t not notice a fall-off in his breakfast business the first day Starbucks opened, as his coffee sales account for only about 25 percent of his breakfast revenue.
“We’ve managed to build a loyal clientele here,” he says.
“We think it may dilute some of (Starbuck’s) Avon store’s business,” adds “This shows the area is really growing,” he said.