It’s not uncommon that, in walking to the grocery store, you pass two or three chain coffee shops. In fact, your grocery store might also be part of a chain. Easily recognizable and order memorized you enter confidently knowing the type of product and service you will receive. Large business convenience is no secret. Neither is accessibility nor consistency. With these components stacked against small businesses, what exactly gives them an edge?
Let’s examine the failed expansion of Starbucks down under. In essence, Starbucks failed to replicate its dominance on the Australian continent on two accounts: over-saturation and lack of an Australian-specific business model. Within a few years of its arrival on the continent, Starbucks was, to the chagrin of old-school coffee lovers, everywhere. Tapping into the well-established and thriving Australian coffee market however, proved challenging. Lack of personal connections with staff and generally both sweeter and pricier drinks did not make a good impression on Australian consumers. The opening of several locations of the Seattle-based giant created a surplus of supply for a service that was not in demand. The spike of Starbucks into the Australian market was wholly artificial. Soon enough, over-availability took away from the excitement of the lucrative American powerhouse that had the world hooked on the new coffee shop lifestyle.
Differences between the respective coffee cultures also contributed to Starbucks’ lack of success in Australia. North American coffee culture, although in part about the coffee experience itself, does not largely view coffee as a purpose. Coffee is quick and on the go: an office pick me up. Although not always, it often serves as a commodity and a courtesy of the setting. It is part of a different, larger event in the consumer’s life (i.e. a business meeting or study session). Often consumers need the physical location of the coffee shop and in order to make use of it, must patron the business. Australian coffee culture, although reflecting some such elements, is largely the contrary. Rapid expansion without regard for these differences meant that Australians chose small business cafes which tended to reflect the coffee culture they were accustomed to.
So what can we learn from the small business victory in Australia? Essentially that business size does not inherently determine your success across all platforms. Small businesses have long been the unsung heroes of the entrepreneurial market and succeed because of the unique environments they foster. In fact, large businesses go to great lengths to mimic the small business vibe. A bonus is that personal connections formed between staff and clients in small businesses are often recurrent.
Within their own communities, small businesses can have a great impact on local causes. They are able to better respond to customer service issues and have a more direct connection to their community. Smaller businesses often have more specific goals and have the advantage of being more flexible than large businesses. They shed the complexities of bureaucracy and consequently, changes implemented within the company can occur faster and more smoothly. As a result, small businesses fare better in adjusting their operations to market changes as opposed to being tied down to a rigid, large-scale business model.
Small businesses often also promote other local producers. They may source their supplies from nearby businesses thereby creating a reciprocal relationship within their community. Beyond this, the fact that small businesses support each other and the community incentivizes customers to choose them over large businesses.
Menacing giants may be everywhere but, armed with commitment as a stone and a strong business model as a sling, beating them is a thoroughly achievable endeavour.
By Juliana Schneider