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Less could be more in this business climate, and business schools are helping their students understand how to spot the smaller, but hot, niche markets.
Niche markets enable small companies to compete with the giants. Niche businesses can provide their customers with a variety of choices in a specific product or service area. Companies seeking to appeal to a targeted sector of customers are now focusing on a narrow line of products, like lotions and soaps, plus sizes, skin care, chocolate, sneakers, condiments, vitamins, organic food, surfboarding products, natural cosmetics, mature women’s clothing, and natural pet food. Combine the targeted products with quality service and you have a winning formula.
It goes back to the days of the corner hardware store, a place where customers could go to get whatever they needed to fix something, and also find a knowledgeable store employee who could give them some advice on how to do the job. National chains just can’t compete with that. Big box stores are trying to serve everyone in the community by offering just about one of everything.
The niche market has a different appeal, concentrating on a specific product line and the customers who need those products.
One of the fastest-growing niche markets is the sneaker market. Big chains can’t offer every type of sneaker and all the brands customers are looking for. That leaves the door open for sneaker stores that can entice their customers with sneakers designed for running, walking, tennis, volleyball, basketball, cross-training or lots of other activities. These sneaker specialty stores can also fill their shelves with sneakers in an array of colors for the fashion-forward sneaker aficionado.
These niche stores fill a very important need. For instance, there is a whole market opening up in clothing for husky children. In the past, this was a totally overlooked market. But there is a real need for this type of clothing, and parents and kids are not going to find what they’re looking for–certainly not a wide-ranging selection–in a big chain store.
These niche stores generally have well-trained employees who know the products they sell, and if they don’t have an item in stock, they know where to find it. Return customers are critical to these businesses; satisfied customers are a must. The standard big chain answer to a customer query–”Whatever’s out there is what we have”–just won’t cut it in a niche business.
Paying attention to customers, knowing what they want, and offering free services that chains might charge for, such as home delivery and assembly–that’s what drives customers to these businesses.
Not every niche business will be successful in every region, and that’s where a good business school education comes in. Business schools teach students how to conduct market research to determine if there is a customer base and customer interest in a particular niche product and to identify those customers and reach out to them. Demographics figures into this process as well. There may not be a need for two sneaker stores within a 10-mile (16km) radius, so why open a second one? However, perhaps that area doesn’t have a store that caters to holistic shoppers, might need one, and you could tap into that niche market. Finding the right niche product and opening up a business in the right locale are as important as providing good customer service.
But what if an area can sustain two niche sneaker stores or two niche clothing stores–or even more? Then it might be worthwhile for someone to consider opening up a distributorship for that niche product to serve these stores. That propels the growth of the entire niche industry.
Here’s something to think about: While the big retailers reported a somewhat disappointing Christmas 2007 season at the cash register, sales at niche retailers were reported up during the same period.