Insight from small business owners in the retail industry
From the pandemic and inventory shortages to shifts in the economy and consumer expectations from online competitors, the retail sector is battling constant change. In our 17th Sharing Knowledge Series episode, host Kevin Vonderau, chief lending officer at Westfield Bank, is joined by guests Scott Maloney, owner and president of Century Cycles, and Chris Curcio, CEO and president of Litehouse Pools & Spas. They share their perspectives and insight into the state of the retail industry, in addition to their advice for small business owners building their business.
Below are some top highlights from the conversation with Kevin, Scott, and Chris. Watch or listen to the full episode here to hear all the finer points.
Litehouse saw a significant jump in demand during the pandemic as people began spending more time at home and sought to upgrade their entertaining spaces indoors and out. The growth, Chris says, “has carried over through 2020, into 2021and is still trending even in 2022.” Scott saw a similar increase at Century Cycles as many Americans leaned into outdoor activities during extended stay-at-home orders, including riding bikes. At times during 2020, Century Cycles had even sold out its inventory on its sales floors.
Ongoing supply chain issues have left them both still trying to get caught up on orders two years later. Retailers, including Chris and Scott, are attempting to mitigate long lead times by expanding their inventory quantity and selection. When demand is greater than supply, prices tend to go up and is a contributing factor to inflation. Both Scott and Chris are experiencing inflationary pressure and increasing their prices to adapt, something, they say, that customers are generally understanding of.
Interest rate increases by the Federal Reserve
Holistically, Chris believes that rising interest rates coupled with additional factors, including a falling stock market, consumers feel they have less spending power, but he’s hopeful that this is transitory rather than recessive. Scott adds that due to the seasonality of his business, the increase in interest rates will be felt by Century Cycles. He uses a line of credit to bring in products during the winter and then pays it down when sales go up in the spring.
On the other hand, Scott has found that high gas prices can motivate consumers to opt for biking as an alternative mode of transportation, resulting in more business. Similarly, Chris has observed that tightened wallets and rising costs for travel and vacations, consumers might invest in hot tubs and outdoor furniture so they can have “staycations” instead.
Online presence and competition
For both Century Cycles and Litehouse, having brick-and-mortar locations where customers can come and get familiar with their products is critical. But perhaps just as important is having a strong online presence. Some consumers are transactional: know exactly what they want and prefer the convenience and simplicity of ordering online. Whereas others use their company websites as a research mechanism to educate themselves on the product before they come into the store to make a purchase. Chris and Scott emphasize that having both options are important to staying viable as a business and meeting customer expectations. “The influence of Amazon has changed the way people shop. At the same time, we’re fortunate with the products that we sell will likely need service or installation at some point, which is one area an [solely] online retailer just can’t provide. So, having brick and mortar service departments to be able to maintain or install those products is of key value to the customer. Those types of things can’t be replaced” says Chris.
The customer experience
Century Cycles prioritizes customer service as a way to set its business apart from the competition. In the age of social media and online ratings and reviews, it’s critical to leave customers with a good impression following all interactions with the business. “The pandemic has made us better businesspeople,” says Chris about Litehouse and its staff. He adds that customer expectations have evolved over the last couple of years and his business is meeting customers where they are at by adapting and evolving also. For both Chris and Scott, it’s clear that every staff member is responsible for and has the opportunity to provide customer service in some way.
Navigating it all with supporting advisors
“There are four key people that I would tell anybody are vital to have good relationships with: your attorney, your accountant, your insurance agent, and your banker,” Chris advises. For retailers navigating through the constant change today (growth and challenges alike), those are the individuals and trusted relationships you want in your corner. As small business owners, Scott and Chris attest that community banks are well positioned to meet their needs compared to larger banks. A good partnership with your banker ensures support beyond financial services to help you navigate the highs and lows that come with business ownership and meet your goals.