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Why Small Local Retailers Shouldn’t Try to Emulate Amazon

Retail monoliths like Amazon and Walmart are driving innovation in digital retail tools like cashier-less shopping, but smaller retailers need not reinvent the wheel. Instead, small and local businesses should focus on areas like customer service and building consumer loyalty online, both areas that consumers value according to this year’s Cox Business Consumer Pulse on Small Businesses report.

Despite improvements in tech like Amazon Go’s cashier-less shopping model, the majority of shoppers aren’t invested in the technology. Cashier-free checkouts are only of growing interest in one age group, Gen Z and millennial respondents between 18 and 29, increasing eight percentage points since 2017. According to 77 percent of respondents, interacting with a human during checkout is preferred.

Other technology is growing slowly but surely in consumer favor. An increased number of shoppers said that POS systems that accept mobile payments would enhance their customer experience—21 percent of shoppers, versus 18 percent in 2018. That number might seem low given the frequency at which new mobile payment options seem to spring up, but a separate study by Hill Holliday indicates that 45.3 percent of consumers don’t see a reason to use mobile payments versus cash or card.

The number-one reason consumer respondents gave for shopping at small business was to support their local communities, with almost three-quarters of those surveyed listing that as a top reason. Convenience and excellent customer service were the next most-popular reasons. In fact, over half of respondents said that their local shopping options provide better customer service relative to a larger business.

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A sense of loyalty also drives consumers to small businesses, and most don’t think that local business receives enough support. Sixty-nine percent of consumers said they don’t feel the U.S. government is doing enough to support small business growth nationally. They listed increased tax incentives and support programs for businesses owned by veterans, women and minorities as top ways to support local companies. In addition, around 72 percent of consumer respondents said it’s important that the small businesses they support practice inclusion and diversity in hiring.

Consumers also feel the urge to connect with their favorite local businesses online, which presents a great opportunity for small retailers looking to increase engagement. Almost 40 percent of consumers reported that small businesses should improve customer engagement through social media, and 60 percent said that small businesses should increase their email marketing to improve engagement. Interestingly, 14 percent of consumers said email or online product recommendations based on past purchases would enhance their shopping experience—a number that’s actually down eight percentage points from last year.

“While big-box brands are forced to prioritize uniformity across their markets, small businesses can—and should—emphasize what makes them different,” Steve Rowley, executive vice president of Cox Business, said in a press release. “We’re seeing interesting trends in social consciousness among shoppers, as well as important stances on what roles technology should play in the retail experience. This information allows us to better understand the needs of our customer’s customer, thus making our solutions more tailored to business owners.”