The eternal struggle: little vs. big.

The independent hardware store vs. Home Depot.

The locally owned grocer vs. Kroger.

Everybody vs. Walmart.

The differentiators?

Sam Walton said, “The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.”

Can independents compete with the chains? On most of these attributes, the answer is yes.

Price: Most consumers perceive that the big guys leverage their power to buy at lower prices and pass the savings on to the consumers. Walmart’s “Every Day Low Prices” position is built on this. Chalk this one up for the chains.

Service: No matter how hard the big boxes try to convince us otherwise, most consumers believe they get better service from smaller businesses. Local owners tend to live in the community and work in their stores everyday, whereas big boxes are owned out of town and tend to have higher staff turnover.

To maintain the edge, independents must focus constantly on delivering better service. There is great opportunity for differentiation here. Score this one for the little guys.

Selection: This attribute is in the eye of the beholder. Let’s say I want a pair of running shoes. Walmart offers Starter and Dr. Scholl’s. Huh? My locally owned running store features Adidas, Asics, Brooks, Ecco Biom, Mizuno, New Balance, Nike, Saucony, Under Armour, and more. No comparison.

Of course, chains tend to offer a broader selection of product categories. But if selection within a particular category is important, an independent may be the better choice. Let’s call this one a tie.

Quality: The same goes for quality. Chains tend to offer the more popular brands, which are often less expensive. If higher quality in a particular category is important to you, you will likely have better luck at an independent that specializes in the category, whether it be high-end cookware, apparel, home theater systems, or collectible comic books.

Here’s an example: Mad River Outfitters is one of the top fly-fishing shops in the country, offering quality brands such as Orvis, Sage, R.L. Winston, Scott, and Temple Fork Outfitters.

Of course, the brand categories that warrant better quality are a matter of personal taste. A brand to one is a commodity to another. (For more on this, see You say tomato. I say Fox’s Fine Gourmet Ketchup.) Accordingly, we’ll call this one a tie.

Convenience: This one also depends upon your your needs. If convenience to you means having lots of product categories under one roof for one-stop shopping, then the chains are the choice.

But shopping at chains can be an inconvenience if you need only a few items. The lines may be long and the parking lots crowded. Mom-and-pops may serve you faster. Let’s call this one a tie as well.

Final score: a tie.

The Davids will have difficulty beating the Goliaths on price. But in every other category the indies are competitive. To win, they should:

• Avoid trying to compete in every product category. Instead, indies should carry more selection in fewer categories.
• Accept that they can’t compete at the low end and carry higher quality merchandise than the chains.
• Feature well regarded brands that the chains don’t carry.
• Emphasize convenience throughout the shopping experience. Some independents offer free delivery, for example.
• Service, service, service. This one above all others.

Which other ways can independently owned retailers compete favorably with the chains?

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