FEATURE STORY

INDEPENDENTS like Curtis Lumber, with 22 locations in New York and Vermont, hold their own against larger national competitors by leveraging their strengths. Pictured: Curtis’ VP of information systems Liz Irish.

The right tech helps independents compete with big boxes

Many large corporations, like Lowe’s and Home Depot, have been growing rapidly while their small business competitors have faced something of an apocalypse brought on by the coronavirus pandemic. In August, Home Depot reported its quarterly sales soared 23%; meanwhile, more than 400,000 small businesses have already closed, and millions more are at risk. In a landscape without much middle ground between those profiting and those struggling, the key to small business survival is remaining competitive with big-box retailers.

Big-box retailers have emerged in almost every sector— including lumber and building materials—and have changed consumers’ expectations of retail by offering a large assortment of products at perceived or actually lower prices. Given their size, they also have state-of-the-art custom technology that helps manage the thousands of stores, employees and e-commerce sites—such as a Buy Online, Pickup in Store (BOPIS) e-commerce model. This model offers many consumers the option to search online inventory, purchase and set a date and a time to pick up in-store—an appealing prospect to someone who doesn’t want to wait for delivery and doesn’t want to spend time in stores during pandemic conditions. According to Home Depot’s most recent annual report, consumers picked up more than 50% of $10 billion in online orders in-store, proving it’s a popular option. But BOPIS is logistically challenging for smaller retailers that don’t have the technology infrastructure to manage a more complicated inventory system, potentially causing them to miss out on revenue.

However, small businesses can thrive despite fierce competition. They need to compete intelligently by leveraging their strengths and maximizing the resources available to support their growth.

Here are the three ways small lumber and building materials businesses can remain competitive with big-box stores:

Make being local your advantage

Being local is a tremendous advantage for independent retailers. Small business owners have a chance to connect with their customers face-to-face, something the big-box retailers really can’t do. By talking directly to customers, independents can create a hyper-focused target market and provide the items customers want to buy.

To do this correctly, small business owners need to talk directly to customers, understand their work and plans, and learn how to be the best resource for them. It’s critical not to expand in every direction but instead become a local expert in the community on a particular area, providing items and advice customers may not readily or easily receive elsewhere. Because they don’t need to appeal to the masses, independents can also offer their customers harder-to-find items, such as supplies needed to restore antiques, custom millwork or unusual lighting—further separating themselves from the big-box behemoths. These in addition to easy and fast transactions without waiting in line can distinguish independents from the big-box stores.

Find the right technology

Small businesses might not think they can afford technology with the same capabilities as the technology the

big-box companies use, like advanced reporting, analytics and customer loyalty tools. However, this isn’t the case. Having the right technology partner and modern solution can help small business owners diversify off erings, keep customer information protected and help manage the daily running of operations. Of course, all businesses need to be fl exible, adapt to changing market conditions and be on the lookout for new tools to maintain growth and build profi ts, but this is especially critical for small businesses that already face tough competition from bigbox retailers.

For example, Boone County Lumber Co., an independent tool and building materials supplier in mid-Missouri, competes directly with the LBM mass merchants and has turned to its enterprise resource planning (ERP) solution to help it create the look and feel of a big-box retailer. During the pandemic, Boone County Lumber Co. leveraged its cloud-based software solution to continue running the business remotely. This type of access allowed workers to check inventory, access account information, or review business metrics wherever they were—as long as they had an internet connection.

Build a community

As a small local business, it’s important to remember that being part of the community you serve is something the big-box retailers do not do well. Profi ts retained at local companies help the communities that they are in, so by connecting with customers and focusing on the advantages of being local, small business owners can compete and ensure money spent in their business stays in the local community.

If possible, small businesses should contribute goods or money to local fundraisers and charities. Especially during this critical time, lending a hand to others in the community will go a long way. Let local sports and event organizers put fl yers in the store, or designate places where customers can put their business cards up. Additionally, independents can purchase advertising space in local directories or school programs, promoting the business or specifi c products and services. These mutually benefi cial community opportunities can help promote the independent retailer, while helping other small business owners grow.

Small businesses have the advantage of being able to carry items specifi c to their community and its needs. They can carry local goods and promote local activities. By doing so, customers will rely on these businesses for resources outside of lumber and building materials—becoming lifelong patrons of the store. Small businesses can take their role as a trusted resource a step further by building a network of experts who can provide advice related to building restoration and repair. For example, a small business owner can keep a list at the register of professionals in the area who are willing to advise homeowners who need help. Free consultations or discounted services for referrals can be a win for everyone involved.

It is undoubtedly a diffi cult time for many small businesses that have struggled in the wake of their corporate competitors’ success. However, by leaning into their strengths and investing in the right technology and building a community, small business owners can not only compete with big-box retailers, but they can also thrive.

– As president of the LBM & Hardlines Group at ECI Software Solutions, John Maiuri is responsible for the vision, guidance and strategic growth of his team within the Building and Construction Division (www.ecisolutions.com).