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Small Business

Managing Your Business

How Independent Retailers Can Compete with Big Online Stores

This article originally appeared on Vox.com.

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Data doesn't lie. Not to the man who calls himself the Retail Doctor.

When you mention to Bob Phibbs — CEO of a consultancy based in upstate New York — that ecommerce sales between 2009 and 2014 rose at an average annual rate of 16 percent, compared to an average annual rate of 5 percent for total retail sales, he'll tell you that most brick and mortar retailers would interpret that as a crisis. "But not all retailers think of that statistic as a crisis," he says.

Phibbs says that owners who truly understand retail, those who know its value proposition is customer service, can successfully compete against online and evolve their stores into the profitable realm of "boutique".

"For the customer who's in your store, it's not about price," says Phibbs. "It's about the experience. In fact, boutiques paved the way 50 years ago in that way, by focusing on the customer. Many have forgotten that, and adopted the Big Box attitude of making it a numbers game. But the idea of customer experience, of personalization, started in boutiques."

A focus on customer service and personalization is what Connie Boone believed was lacking at Blue Havana Cigar Lounge in Chicago, where he began working in 2007. Last year, when he and three partners purchased the store from the owner, he finally had the chance to act on it."I knew the store couldn't compete with online shops," says Boone, a Navy veteran who served for five years and retired in 2005.

"They do so much volume that they can buy hundreds of boxes of cigars in different sizes and get a lower price than any brick and mortar shop can." The first thing he did after buying Blue Havana was to move its location, cast aside the dark wood paneling of so many old-style cigar lounges, and provide wi-fi, a TV, and a BYOB lounge.

"We wanted to create a destination that evoked emotion," he says. "To give customers a conversational atmosphere that they could call their home cigar lounge."

As Boone's customers relax and smoke in the lounge, ruminating about the sweet spice of five-year-old Nicaraguan tobacco in one cigar or the core flavors of dark chocolate and espresso beans in another, Boon is listening to the market. Based on this feedback, he's able to refine his product sweet spot: the rare, small batch, limited edition, hard-to-find cigar."You're a partner with your customer," says Phibbs. "Instead of just saying 'I need your money,' if you personalize the experience, be curious, mine the clues that the customer is giving you about their needs, the world opens up."

Creating Customer Connection

It's an insight that Jill Lindsey leaned on when she opened her eponymous clothing and accessories boutique in Brooklyn last year. In the one-on-one service she offers each client who visits the store, she's uncovered her unique business proposition. "I have more connection with my customers and clients and can really create a person to person atmosphere," she says. "It's being attuned to what I'm selling, and why I'm selling it."

Phibbs says that a good retail experience shouldn't be quick and easy. "This is not online, where the idea of good customer service is quick and secure checkout, or an app that works," he says. "The better boutiques realize that a curated, smaller selection gets people to want to buy."

Like Connie Boone, Lindsey also leverages the physical space to create even more "brand advocates" with wine tastings, Tuesday evening facials, even children's singalongs. "Feedback and interaction from customers is important because it's a way for owners—and particularly their employees—to learn how to compare and contrast products, to truly be helpful to customers," says Phibbs. "That's how you create a community around your offerings, and that's how you get raving fans."

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