They're waiting for you to tap them.
Why don't more retailers focus on niche markets? It's mostly about fear. Fear of actually losing a sale. You don't have enough sales already... right? Your concerned you won't find enough customers and you'd be walking away from known sales dollars today that you already have? Wrong!
These fears are unfounded for the most part. While establishing your store in a new niche may take some time and it will mean getting out of your comfort zone, there are a lot of dollars to be found by being a big fish in a smaller more focused pond. There is nothing to be gained by being just another small fish in an ocean of customers filled with whales who may end up swallowing you whole. If you don't make a substantial change in your approach, how can you expect different results than you've had for years? The fact is, in the competitive marketplace of the future, the demand for specialized products or services will increase.
As I have preached often, the key to surviving and thriving in a competitive retail environment is to find and dominate a niche of your own. Unless you have the time and money to compete with the big boys, you'd be a lot smarter to do what they can't-focus and become the expert in a highly specialized segment of the market. Stop worrying about competing with the big boys out there on any level or category. You don't need the sales volume they need, you don't have the budget they have, and you don't have the staff or the stuff they have. So, quit trying to compete with them using the rules they play by. You can't afford it and you can't be successful.
When you have limited resources, why would you won't to spread you time, your money and your marketing efforts. If your store tries to sell carpeting, what are the chances that your customers will not perceive any greater value in buying from store or any other carpet store? What will make your special or different from anyone else? The lowest common denominator for customers will be the price, and if there's nothing else to compete with or compare to, naturally the cheapest alternative wins (usually). Price is King and your just another one of the kings court!
Instead, focus on one or two very specific segments of the market where you can become a real player in your geographic area. Why advertise and go after everyone, when you can focus on your customers in a more specific place where your customers can be found? You can and must establish your store by finding a specialty niche and being better at it than anyone else.
The more unique your store is, the less competition you will have... period! The less competition you have, the more in demand you are for "your" market. And the more in demand or unique you are, the less important price becomes. (MBA's would call this In price elasticity.)
By defining your ideal prospect as specifically as you possibly can in writing and then focusing only on that group, you increase your likelihood of selling your customers. You are more capable of success with your customers since you can focus your message to that group specifically. You can also focus your knowledge and your staff's knowledge to become the experts who really understand and know your niche. So, what are you doing to make your store truly unique for your ideal customer?
"Focusing on a niche means picking out a specialized corner of the market and diving in. It means making or selling products for one special person, instead of selling a variety of products to a variety of customers."
You Can't and Won't Please All Customers
The hard and scariest part of trying to do this is realizing that you simply won't be able to make all customers happy. If you choose to specialize in the sale of gourmet pet treats, for example, then you won't exactly please those who come into your store looking for parakeet cages. If you choose to specialize with a restaurant in New Orleans and Cajun food, you'll probably not be real popular with those looking for pastrami Reuben sandwiches. While I may be exaggerating here to make a point, there is a major temptation with retailers to keep extending the boundaries of whom you're your trying to sell and whom you're trying to appeal to. But if you do New Orleans and Cajun food really well and not in a half as?#ed way, you will much more likely have droves of loyal customers Cajun lovers.
The Downside is Small... The Upside Is Great
If you're truly going to succeed in a specialty niche as a retailer or even a restaurant, you WILL have to make some trade offs. End of story! However, understand that in the case of our Cajun restaurant, you would be trading the complacent, so-so, average customers for the fervent, dedicated, Cajun food enthusiasts. Doesn't this make some sense? Here's one important reason why. A lesser number of really enthusiastic Cajun customers who are raving about the first class no compromise way you do things will be much more loyal and vocal customer advocates than you would ever get by being and average me-too place trying to have everything for everyone. The only way you are going to stay in business is to have passionate customers. If you work to find a niche sector, the chances are your potential customers will be very passionate about that small market they are interested in -- for example, elite cyclists, gardening, book collectors, antique jewelry or health foods.
Niches Can Be Too Small Or Low in Sales
If you're having a hard time coming up with one really strong niche, you may even want to come up with a 2-3 smaller niches. While stores typically are not niche oriented enough, your niche can be too small. It would be much more difficult to locate your niche customer if you were planning on opening a mailbox store. Everyone needs a mailbox, but most customers do not buy him or her very often, or with a lot of thought. In this case, your niche might be too small or narrow. Your niche customers must be willing to spend money. You can target a specific group of customers and offer them your new niche, but if they're not willing to spend money on your new products, you've got nothing.
In addition, there should always be room for your niche category to expand. A niche must be active enough that new products are being created for it. If you are looking at a niche that hasn't seen a new product in the last 5 years, you're looking at a niche market that is pretty much over. A profitable niche will contain products that continue to evolve. Along the same line, the demand in your niche must be growing. If demand in your niche isn't growing, you'll quickly hit a dead-end with your profits.
You're going to need to do some research first and foremost.
There is also nothing wrong with focusing on more than one niche. Just do it them well and then adjust your advertising and marketing to fit these various segments. The customer ultimately must understand what your store is all about, so try to keep them logically related if at all possible.
Questions To Help Find a Niche
Your niche may be nothing more than being more complete and in depth than anyone else. Your niche might be nothing more than you're the only store that has a fantastic warranty behind everything you sell. It doesn't have to be a new category of products.
Do I have a niche or unique product category now that needs to be emphasized?
Can I use smell, sounds or atmosphere to better define my niche?
Could my niche involve loaning or leasing out the product?
Could my niche be total repair or replacement of my products?
Ask current suppliers where they feel a niche opportunity could be found.
Could my niche involve handmade or customized products?
What category or area of my store excites me the most?
What category or area of my store bores me and needs to be put out of its misery?
Could my niche involve homegrown, home baked or better quality?
Could delivery or shipping become part of my niche?
Is there a dominant aesthetic in your product category or assortment? Does your assortment have a similar style to just about everything else on the market? Consider finding the dominant style in your niche, and do the opposite.
Ask customers what they're not finding at your competitors or even your store that they'd like to see more of.
Can I do something different with my products by creating a unique atmosphere, story, or tie-ins with what I already sell.
Finding Your Niche Peeps
Take a look at three or four potential target groups of customers. These maybe customers who are already coming to your store and like some of what they see, but they're just knot seeing enough of what they want. Find out what their common needs and wants are and then break out segment specific needs. Once you find them you're going to want to target each group directly with these needs in mind. Try to think like your target customer. Put yourself in their shoes if at all possible. Create a survey and ask people what they want to see more of. Then just remember, you can't target everyone. Again, you can't please everyone and you can't market to everyone. It's simply too expensive, so drill down to one or two do-able niches.
Don't necessarily be afraid of competition within your niche. There is nothing wrong with running into some competition in your niche. Competition at least means there is a market out there and someone is making a living doing what you want to do. No competition could mean there is no market.
Step one in identifying YOUR target customers for your store is to clearly define your special niche to yourself at first. What can you offer that's unique, different, better, more in-depth, more educational, more of an experience than any of your competitors? You're going to need to do a little research and maybe a little brainstorming. Find out what customers like best about you already. Find out what customers are looking for and make sure there's a healthy market for what you plan to sell. Identify possible underserved categories and opportunities with your store. Once you've identified your own niche, you're then in a much better position to go after "your" target customers. It's much easier to after YOUR group of target customers than to try to market to everyone. TRUST ME! You cannot be everything to everyone.
Take the first and best customers who are already fans of your niche products or services and consider them a bit of an experiment and use them to refine your store as you go forward. Your customers have related needs and desires. Keep things somewhat related. If you sell baking molds it is very likely that your customer also needs a spatula, or whisk. It is unlikely that the same customer coming to your store will be there looking for a shovel. While a niche might be successful that is totally unrelated, it is more likely to be the exception.
"All of this may seem obvious, but you'd be surprised at how many people merchandise their stores with merchandise that makes no sense to anyone! Sports collectables don't belong in a clock store. And "Shaklee" products don't belong in a corner of a cookie store. You may be selling both niches but confusing customers and compromising your store and your efforts without realizing it."
When you're starting out especially, you want to get very clear on what your customer's needs and desires are, and you need to be very specific at letting your customers know what you're all about.
Your niche could very easily capitalize on a specialized product of an existing product line. Most new niche markets are adaptations of existing ones. You'll rarely find a niche that is totally new and it usually doesn't come from a market that never before existed. It is more likely to come out of an industry where there is demand already. While you can build an unrelated product line into a niche, it won't be as easy or as rapid as selling in a niche with existing demand.
Clearly Define Your Store To Customers
Define your niche and make it clear to your customers what you are all about. Don't be wishy-washy here. Once you know who your target niche customers are, differentiate yourself from your competitors. Developing an expertise in a given niche will give you a better understanding of the group and help make your store the go-to store. Once you've decided on your niche and you feel you can clearly define what your store is all about to your customers, you'll want to continue to find all the extras you can add to develop the category and bring more even more value to those customers. It always comes down to knowing the customer and finding out what would be of value to them.
Marketing To Your Niche
The next step requires a bit of creativity and research as well. Think about the customers who will be the most interested and jazzed about your new specialty or niche. Be tough and strong here. Don't focus on the people who might be interested. Focus only on the people who will be genuinely excited about what you will be offering. Your marketing presence and possibly even physical presence needs to be where those target customers can be found. For example, if your offering specialty gardening supplies, you may want to target garden clubs, gardening magazines or newsletters. The local newspaper may not be targeted enough or specific enough to really efficiently go after YOUR customers. Go after the places where your most passionate and fervent customers can be found.
Once YOUR target customers find you and like you,they will become a natural arm of your advertising budget and best of all this doesn't cost a thing other than taking good care of your customers.
Where To Look For Your Niche Customers
Work to learn everything you can about that customer: What motivates them? Is price important to them? What makes them smile? How do they decide to buy?
- Organizations and associations and meet-up groups. Offer to be at the events where they get together. Be a workshop presenter and get your store out there in front of them.
- Special online blogs, communities and groups.
- Direct mail lists
- Yellow Page advertising
- Local clubs and meetings
- Specialty magazines and newsletters
- Trade shows
- Internet communities
- Facebook
- Conferences
- Check with your local Chamber of Commerce or local government newsletter or website for opportunities.
- Local clubs and meetings
- Fan clubs
- Where does your niche customer go for entertainment, further education, etc?
- Also consider working with another large well-known company that already offers some related services or products your target group buys. You may be able to offer up your services or products to their customers.
Note: If you can't find a variety of good ways to market to your niche group, you might want to reconsider your choice for your niche. If your "niche" is too big to define and target, and you have no good way to market to groups as outlined above... then your "niche" may not be a good niche at all, and you'll need to work harder to find a niche that can be marketed to. While I' don't know "your" store, I'm betting that it probably needs a more narrow scope or specialty that will create a winning and profitable formula for your business in a difficult economic time.
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