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Small is Successful

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Last Updated: 08/13/2013 4:03 pm
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Are you inclined toward paranoia? Does the dark side attract you? If so, here’s a friendly suggestion: Launch your own small business—and, better yet, make it retail.

Why? Because the environment for locally owned enterprise borders these days on the nightmarish, with bogeymen at every turn. Margins are shrinking, the Great Recession’s clouds are everywhere—and then there are the big-box stores.

Ah yes: the big-box stores. Wherever you go, there they are—the Staples, Sam’s Clubs, and Lowe’s of the world, littering the landscape like oversize droppings from the Planet of the Terminators. If the view from progressive quarters is to believed, these national retailers are The Enemy, come to obliterate locally owned businesses and supplant local culture with a cheap homogenized knock-off of everything that’s real.

By all appearances, they’re doing a good job of it, too. Just check out the parking lot at a Home Depot or Best Buy, then visit our sleepy Main Streets—that’ll tell you pretty much everything you need to know. And wait, there’s worse! According to Frank Cohen, owner of Sun Wallpaper and Paint, an entire generation has come to view the national companies as their only real brick-and-mortar shopping option. “The rewards of shopping locally are lost on under-35-year-olds,” he says. “They only know the big chain stores.”

Is everything lost, then? Will the big-box Terminators terminate small business as we know it? Are we doomed to a future of heartless retail uniformity?

The answer, perhaps surprisingly, is no. There is a future for small business. For proof, we need look no further than the Hudson Valley, where more than a few locally-owned enterprises are holding their own (or better) against the big-box stores.

Let’s start with Sun Wallpaper and Paint, with stores in Poughkeepsie, Fishkill, and Beacon. The business, which has been in operation for about a century, was purchased in 1950 by the parents of Frank Cohen, the current owner, who joined the business after graduating from college in 1978. Under Cohen’s leadership, the company has thrived and is currently, he reports, “healthy and well capitalized.”

The big-box stores pose a stiff challenge to Sun Wallpaper. “Their marketing budgets are much bigger than ours, and they have this magical way of making you feel they’re giving you a discount, even though 80 to 90 percent of their products have standard pricing,” Cohen says. “They’re open evenings, and now that there are lots of two-income families, that’s when many people do their shopping. We can’t afford to keep those hours.”

Cohen’s response? “Sell what they don’t have and do what they don’t do. We offer specialized paint products that the big-box stores don’t carry such as Fine Paints of Europe and Farrow & Ball. We’ve also become ultra service oriented. We have designers on staff who go into customers’ homes and help them evolve their visions. You don’t see the national stores doing that.” He sums up the company’s evolution: “We’ve become a well-disguised commercial and industrial paint store with a high-end design department, selling some of the finest products in the world.”

Paul Solis-Cohen, owner of Catskill Art & Office Supply, sings from the same hymnal as Frank Cohen. Solis-Cohen founded Catskill Art 30 years ago in Woodstock. Since then, it has expanded to three locations, with branches in Poughkeepsie and Kingston.

For Solis-Cohen, the recession is his biggest obstacle. “If not for that, we’d be doing great,” he says. But the big-box stores pose a challenge too. On the art supply side of his business, he faces competition from Michael’s, and Staples and the Office Depot are looming presences on the office supplies side. Like his peer at Sun Wallpaper, Solis-Cohen’s strategic focus has been on differentiation, with special emphasis on customer service. “We have a graphic designer on staff. If you want banner ads or a restaurant menu, we’ll design them for you. We’ve also got an award-winning picture-framing department. Our customers really appreciate our knowledgeable personnel. We are a relationship-based business with strong roots in the community. That makes a huge difference.”

Meanwhile, the folks at Nekos-Dedricks Pharmacy in Uptown Kingston are bracing for a new threat: a CVS will soon open less than a quarter-mile away. It’ll be the third drug store within a short walk of Nekos-Dedricks: a Walgreen’s and a Hannaford pharmacy already take up space at the nearby mall.

These are neither the best nor worst of times for Nekos-Dedricks, which has been in Uptown Kingston since 1952. Margins for prescriptions, which were never large, are now razor-thin. The result: Volume is booming but profits are flat.

The prospect of having CVS virtually around the corner doesn’t please co-owner George Nekos, but he doesn’t seem all that worried, either. This is because his business is already—you guessed it—differentiated. A significant percentage of revenue comes from medical equipment, a “line of work no chain store wants to get into,” according to Nekos. He also recently took the pharmacy into the sterile compounding business, with a sparkling lab that’s on view to customers. That’s another line of business chain stores like CVS will never get into—and it just happens to have bigger margins than commodity prescriptions.

An equally important differentiator is—and here, again, the refrain is familiar—customer service. “We want to be like the bar in ‘Cheers’—the place where everyone knows your name,” he says. “We try to greet our customers within a minute. We have a lot of elderly patients who have trouble getting out, so we offer free prescription delivery five days a week in Kingston.”

The company’s phone system offers another example of the pharmacy’s commitment to personal service. “It’s state of the art,” says Nekos, referring to the nondigitized perfection of the human voice. “It would be easy to set up an automated multi-menu answering system, but we haven’t done it. Why not? Because our customers want a human being to pick up that call. Would it be easier for us to be automated? Yes. But we’re here for our customers.”

In the battle against the big-box stores, it helps to have market forces on your side. This is the case with Nature’s Pantry, a locally owned alternative grocery store with shops in Newburgh and Fishkill that “had a great 2009,” according to supplements manager Sarah LaVallee. In recent years, all the major supermarkets have opened natural foods departments, as has Walmart, which has made a major push into organics.

So are the big guys eating Nature’s Pantry’s (organic) lunch? Not at all! “We welcome their involvement,” says Erin Sine, general manager of the Fishkill store. “They give exposure to what we do—it’s like free marketing!—and they can’t compete with our expert staff. At the big stores, if you have a question, you can have trouble finding a sales clerk, never mind a useful answer. At Nature’s Pantry, all our customers’ questions get answered.”

If this sounds familiar, congratulations: You’ve been paying attention. In the competition against the big-box behemoths, customer service is the name of the game.

Make that the name of one game. The other is—all together now—differentiation. “We offer lots of local products that the big stores don’t bother with,” says LaVallee. “We also carry niche products like the Crystal Star line of herbs that you won’t find at Walmart. And we have the largest bulk section in the area, which saves customers lots of money.”

These success stories aside, the power of the national stores mustn’t be underestimated. They’re ubiquitous, they’ve got deep pockets, and they’re also, to put it bluntly, sneaky. A recent Office Depot ad depicts a Big Bad National Company opening a $6 haircut establishment (“Nitro Cutz”) directly across the street from a locally owned barber shop. How does the little guy prevail? By going to his friends at Office Depot, where he has a big ol’ sign made reading, “$6 haircuts fixed here.” The result: Nitro Cutz closes down six months later, leaving our local barber to live happily (and grow wealthy) ever after. That’s right, folks: Office Depot is the ally of locally owned business! Who’d have thought it?

Is this a bogus proposition? Of course it is. Hypocritical, too. The last person you’d expect to agree with the advertisement’s premise is Paul Solis-Cohen of Catskill Art & Office Supply, who faces direct competition from the local Office Depot. Improbably, though, he does. “I love the big-box stores!” he gushes. “They’re very good adversaries and I relish competing against them. They make my business look great by comparison and they make me better at what I do.”

Solis-Cohen isn’t being disingenuous. Crack open his enthusiasm and you’ll find a pearl of wisdom there. Business has an outer and an inner game. The outer game is about strategies like the Big Two of customer service and differentiation. The inner game is all about attitude. More specifically, it’s about copping an attitude—an unabashedly positive (though realistic) one. You have to relish the competition, and you have to believe that you can and will win.

Paranoiacs, take note: Believing you can win isn’t delusional. The truth is out there, in our own Hudson Valley. The People’s stores can prevail against the Terminators. Small, locally owned businesses can and do succeed.

RESOURCES
Catskill Art & Office Supply
www.catskillart.com
Nature’s Pantry www.naturespantryny.com
Nekos-Dedricks Pharmacy www.nekosdedricks.com
Sun Wallpaper www.sunwallpaperandpaint.com

Sustainability columnist Carl Frankel has been writing about green issues for two decades.

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