Last year, I talked to a small business owner (in the Netherlands) who has been primarily selling camera equipment and complementary camera goods. We've had an interesting conversation. His business is a typical Dutch mom-and-pop shop run by a single guy with a few employees. And, he basically sells the same products as the Dutch stores of Media Markt, Europe's largest retailer of consumer electronics.
Some competitor. How does this mom-and-pop shop hold up?
Quite opportunistic. The owner banks on a certain lack of price transparency for his products. In this day and age - of the super information highway and all that - consumers continue to enter his store completely oblivious to the fact that they could save 15% by walking two blocks. Not even mentioning internet search here. Sure, perhaps his customers love that shop but unlikely enough to pay his hefty prices.
He could have aimed at giving stellar service or stand out in other areas of the augmented product, but that wasn't the case as far as I could see. I can't think of any rational argument to pay his premiums. But consumers still do.
Some buyers simply refuse to search for the best price. (Online) search costs might be incredibly low but they're not interested in doing the work. This propensity could change quickly in our recent economy. Banking on the oblivious consumer does not feel like a sound and sustainable plan.
I wonder how these small shops will reinvent themselves in the coming years to survive. They can't stay oblivious to the future.
