It's still early days for the technology revolution transforming the retail industry, but the changes have already placed many kinds of small businesses under immense stress.
Bookstores, movie rental stores and photo shops have been notable casualties of changes in the way people 'consume' entertainment.
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Many of these kinds of stores have just disappeared from both suburban strips and shopping centres.
Ten years ago if you went to your nearest regional shopping centre you would, on average, have been able to choose between three photo shops. Now you are likely to see no more than one. In smaller centres you would be lucky even to get that.
While most of these kinds of retailers have been party to a mass vanishing trick, others like them are attempting something trickier still - to transform themselves into new, leaner and more differentiated businesses that are fit to prosper in the future.
These entrepreneurs can be role models for what independent retailers need to do to stay alive and thrive in sectors that are undergoing radical change.
One possible role model is trading from a retail strip barely 200 metres long in Waverley, in Sydney's eastern suburbs.
Charing Cross Photo, owned by Daniel Caillau and his partner Hai Yan Yang, is one of a string of small businesses battling it out on a block with only modest foot traffic.
Caillau and Yang are presiding over a massive and lasting transformation of the business they have been running on the strip for 16 years.
“Once you would have called us a photo shop,” laughs Caillau. “That business has gone to chains like Harvey Norman and Officeworks that let you print photos for 20 cents or even less. We've had to move our whole business concept to a place where the Harvey Normans can't touch us.”
Around the time of the Sydney Olympics, Charing Cross Photo had 12 employees and its principal business was developing snaps for the family album.
Then, around 2004, they saw a change coming. Digitisation took over and although Charing Cross still processes photos it cannot compete on price with the big retail chains who use photo printing as a loss leader.
By 2010 the shop had downsized to a lean operation consisting of themselves and a few casuals. The owners were working 80 hours a week and they still do.
But those hours are spent very differently to what they were 10 years ago.
Says Caillau: “The first thing to understand is that if you are in this or any other kind of business for the money you will not succeed. You have to have a passion for what you are doing.”
Passion is a good start but in order to turn a deeply commoditised business like photography into a differentiated one you need to find ways of adding value that the large chains cannot.
This requires a combination of creative flair, technical know-how and willingness to experiment and change.
Luckily, Caillau and Yang seem to have all three.
First, they have shifted their sights from the individual consumer to the small business customer. Interior designers, architects, photographers and other businesses have a greater need for high-quality imaging and presentation. This gives Charing Cross an opportunity to add value along the whole production chain from raw digital file to final product, which could be anything from a conventional small print to a framed enlargement to wallpaper for a living room.
Second, they have worked hard at gaining a reputation as a high-service shop.
“We've become educators and consultants,” says Yang. “Our customers rely on the expertise we share with them that they can't get anywhere else.”
Third, their knowledge of the complex machinery they work with has been put to good use. When an office machine breaks down it costs time and money to fix it, but Caillau and Yang are usually able to do the maintenance themselves.
Fourth, they make a habit of listening to their customers. Too many businesses will only do what they are in the habit of doing and what they are already set up to do. As customer needs evolve, the business is unable to evolve with them. Caillau and Yang keep their antennae aloft, believing that an unusual customer request can be turned into a larger business opportunity.
"If you want to know what your business needs to do, listen to your customers,” says Caillau.
Fifth, the couple have made a conscious decision to become a one-stop shop for image production rather than a specialist in one area. “Being a specialist isn't enough to stay in business,” says Caillau. “We support the whole process from end to end because that's what our customers want.”
Be passionate about what you're doing, evolve the customer base, elevate the service model, control costs, listen to your customers and master every aspect of your business. Not radical ideas and some of them have resonated throughout the retail industry for years. But except for cost control they are often ignored in the implementation.
As retail comes under ever greater pressure from the technology revolution, small businesses need to take more of this advice on board.
Michael Baker is principal of Baker Consulting and can be reached at email@example.com and www.mbaker-retail.com.
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