Niche Retailers Use Savvy And Smartphones To Outflank Big Boxes

“There’s an app for that” is a common refrain, one of the Internet age’s many wrinkles.

It’s a wrinkle that has placed more power in the hands of consumers, and presents challenges and opportunities to retailers.

This is particularly true in specialty retail, the collection of sometimes quirky chains focused on selection and service within specific categories vs. the broad, shallow approach of the big box generalists led by Wal-Mart and Target.

Nasdaq CEO Bob Greifeld, right center, joins Michaels Stores CEO Chuck Rubin, center,  to celebrate the Michaels IPO, on June 27, 2014 in New York....

Nasdaq CEO Bob Greifeld, right center, joins Michaels Stores CEO Chuck Rubin, center, to celebrate the Michaels IPO, on June 27, 2014 in New York…. View Enlarged Image

Pet owners, health-conscious consumers and artists interested in more than just an aisle or two of cut-price products are prime targets for specialty chains.

Customers who shop with a finger tap on their smartphones are prime targets.

As of this year, 58% of American adults own a smartphone, according to the Pew Research Center. Pew says smartphone owners tend to earn good money and have high levels of education; 71% of Americans who attended college own the phones.

Among Americans earning $ 75,000 or more per year, 81% are smartphone owners.

Retailers recognizing that smartphones provide a link to up-market consumers are helping drive the expansion of online marketing.

“E-commerce is becoming a bit bigger than the traditional brick and mortar,” said Jason Gere, managing director and equity analyst at KeyBanc Capital Markets.

PetSmart (NASDAQ:PETM), the Phoenix-based chain of more than 1,300 pet supply stores, grooming salons and pet hotels, has an app that connects its customers to its online store for fast-track refills of treats and goodies for Fido or catnip for Tigger.

The app also sends photos of the pets to customers to let them know their animal is ready for pickup at a salon, has learned a new trick in training class or is enjoying a life of comfort in a pet hotel.

On Dec. 8, the 13-member specialty retail group ranked sixth out of the 197 industry groups monitored by IBD.

Having their business based in the U.S., where consumer spending drives 70% of the economy and helps insulate the nation from economic troubles in Europe and Japan, also helps them.

1. Business

Specialty retailers often find themselves caught in the Internet’s swath of creative destruction. Online shopping’s popularity doesn’t necessarily translate into a equal increase in profits, according to Matt Nemer, managing director of equity research at Wells Fargo Securities: “As business shifts online, it tends to get less profitable. In a store, you’re more likely to buy items other than what you intended to buy. Your basket just isn’t as big online.”

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