We live in a world where the range of products available to us and the ability to compare the prices of those products is better than it’s ever been. As a large proportion of shopping has now transferred to online retailers who pile them high and sell them cheap it’s time we had a look at how saving a pound in an online transaction indirectly costs us so much more.
Firstly before we assume healthy local businesses are a good thing let’s just have a quick recap of the benefits: More jobs, better house prices, less crime, opportunities for young people, better consumer experience, opportunity to network and they can be better for the environment as products often travel less distance to get to the customer.
It’s quite the list and despite what the government says about saving, if everyone were to do it excessively then our economy would collapse overnight, so it makes sense to say that the health of a local economy will improve as more money is circulated through it.
So when money is spent online it doesn’t go into the pockets of local business owners who then use it to pay their staff wages, who then go on to spend it in other local businesses. It often ends up in other communities far away. The circulating power of this pound spent is also drastically reduced as people don’t stop in local coffee shops for refreshments when they are shopping on line. This means that there is no additional sales effect either or money for the business owner to spend on other local services like cleaners and business consultants.
One of the greatest ironies of internet retailing is that consumers are often very pleased with themselves when they bag a bargain and save £10 but they then go on to support their un-employed son or daughter to the tune of thousands of pounds a year when there are no jobs left in the local community for them to do. The greatest challenge is getting these online consumers to understand the link between the two.
How can this be done? Well local businesses need to blow their own trumpets when they do something good for the local community, whether it’s organising a local fete or helping a local charity, consumers need to be made aware of how their lives are improving due to the efforts of small business owners. It’s also evident that small businesses are in a much better position to deliver outstanding customer service because of their flexibility and the owner’s passion for their products, customers need to be made aware of this.
Small businesses working together is the ultimate way to compete with larger retailers especially when it comes to buying stock and achieving better prices by placing larger orders together. Other opportunities like local guarantee schemes on product quality, combined advertising and loyalty points that can be earned and spent in multiple shops will keep customers coming back time after time. Small business owners also need to make a commitment to catering for the needs of the local population and making their products and services as efficient as possible with a focus on a creating a great shopping experience.
A local community won’t always be able to provide everything that its population needs but the first step to building a more prosperous future is to identify what products we can actually buy locally and what can be done by local councils and government to make life easier for these businesses. This could be free parking for shoppers or reduced rates for businesses, it might cost money at first but as more shops thrive then tax revenues will increase anyway.
As accountants based in Northampton we help a variety of local businesses adapt to the challenges presented by national competition and help them to utilise their strengths rather than just compete on price, please contact us if you would like information on how we could help your business.