3 Ways to Unlock the Lucrative "Local" Market

As consumers increasingly focus on where products come from, embracing your localness can help you face down larger competitors

Written by Bryan Pearson

As a mentor in the AIR MILES Small Business Achievement awards, I’m frequently asked by SME owners how they can contend with larger competitors that can charge lower prices. My usual answer is simple: Don’t bother.

There will only be one winner if you try and take on Wal-Mart at its own game. In the retail space, these national chains and online e-tailers can deploy their huge economies of scale to indulge in costly price wars. Engaging in a discounting competition with companies of such vast resources is a futile endeavor. But price is only one of a myriad of reasons that determine whether consumers will give you their business.

MORE DISCOUNTS: How to Avoid the Pricing Race to the Bottom »

For over 20 years, we’ve delivered the same constant, unwavering message to businesses: Understanding what motivates your customers’ purchasing decisions is fundamental to running a successful enterprise. What we’ve found through our work and research is that customers have significantly different expectations for independents than for large chains, and that local businesses need not use lower prices as a primary area of differentiation. A joint research project we conducted with the Retail Council of Canada last year revealed that over four out of five Canadians do not expect independent retailers to price-match large retail chains or e-commerce sites. So what other motivations are driving consumers to shop at smaller independents?

It’s clear that there is a burgeoning “buy local” movement amongst consumers and that they have a huge appetite for locally made or sourced products and goods. In our recent survey of over 1,500 Canadians, more than six in 10 stated that buying local was important to them.

MORE BUYING LOCAL: What’s Your Localness Score? »

They’re also prepared to pay more to get it. Take local food as an example. Of those who said it was important to buy local, 90% were prepared to pay a premium for local fruit and vegetables. We’re not talking about a couple of percentage points either—58% were prepared to pay up to a 20% premium, and 15% said they’d happily pay 30% or more.

Why buy local? Given a choice of options that included concerns about the environmental impact of transporting goods from distant locations and perceiving locally-made goods as higher-quality, the most resounding reason Canadians cited was a desire to support local businesses, with 72% stating this as their primary motivation.

Given this context, here are three straightforward steps that independent businesses can take to capture an increasing share of the growing €˜buy local’ movement:

Curate your inventory

In our 2014 survey with the Retail Council of Canada, only 19% of polled independents were using a strategy of stocking local products. Given the attractiveness of buying local to consumers and their willingness to pay a large premium to do so, the vast majority of independent retailers are letting this opportunity slip by.

Tell the story behind your local products/services

Our research shows that nearly nine in 10 consumers (89%) say knowing where a product came from and the story of its producer made them more inclined to purchase the item. Interestingly, the research found that the larger the shopper’s monthly spend, the more likely they were to report being €˜much more’ likely to purchase such a storied product. Providing the origin story of the products or services you’re retailing could this be an opportunity to capture a high-value customer segment.

Fill the local gap

Our research found that the largest impediment to buying local goods was not the additional cost, but finding a wide enough selection of local goods to satisfy consumers’ shopping needs. Eighty-seven percent of surveyed Canadians said they would increase their monthly spend if there were more local goods available.

You also need to make sure that goods are clearly identifiable as being locally made. Over one-third of respondents listed the difficulty of locating local goods in-store as an impediment to purchasing greater amounts of them.

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Price is of course not irrelevant for consumers. But SMEs have an inherent legitimacy when it comes to €˜local’ compared to large chains, and consumers recognize and are willing to reward this. What customers want is a meaningful purchasing experience, one full of recognition, personalization and the karma-rich payoff of supporting a fellow community member.

Bryan Pearson is an internationally-recognized expert and author in the field of customer loyalty. As President and CEO of LoyaltyOne, a pioneer in loyalty strategies and data-driven marketing, Bryan has spent more than two decades developing meaningful customer relationships for some of the world’s leading companies. Bryan has spearheaded LoyaltyOne’s expansion into new markets across the globe and has grown the AIR MILES Rewards Program into Canada’s premier coalition loyalty program with more than 10 million participants.


Have you benefited from the “buy local” trend? Have you tried stocking more local products? Let us know using the comments section below.

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