That some small businesses are failing because they don’t adapt to the needs of their customers?

[Isawyou]

I try to shop local. Fortunately I do have some great independent places nearby.

What I am finding frustrating is for example the fruit and veg shop closes at 4.30pm. They start packing up at 3.45pm and it is really difficult to buy things from there where they are stacking all the stands with the produce inside. They also look unhappy at customers coming to buy at packing up time. It is easier to go to the Tesco express that stays open until midnight.

Other shops do not open until 10am and close early. So I can’t get there before work or after work.

They complain their businesses are not doing well and people do not shop local but they are not exactly facilitating it for the customers either.

X-posted with OP.

I think we're at cross purposes. My issue is that businesses think paying the minimum wage somehow makes them uncompetitive (or eats into the profits they need for their private school fees). My view is tough.

Some people always complain. Let them and ignore it just like we ignore the people who complain they came past at 9am or on Sunday to find us closed. Or the ones who stand outside the shop under the awning when it's raining looking in the window and saying: "How much? I wouldn't pay that. It's a rip-off."

It's amazing the number of people who think a shop window is like one of those one-way mirrors in detective films and soundproof too. We never say anything to them though.

Let them and ignore it just like we ignore the people who complain they came past at 9am or on Sunday to find us closed.

You've got to love the people who share their 'news' with you that they came by during the hours that you clearly advertise that you aren't open and found you closed! It's like when tiny children first learn that it gets dark at night!

You have no idea how much tax I pay, but if you think your family pays more tax in a year than I've ever paid, then you're obviously extremely well off and not doing too badly at all! And therefore have few grounds to moan.

I hope you don't make personal attacks on your customers, by the way.

Also, I am not ignorant about VAT. The business is the go-between. It collects VAT from the customer and pays to HMRC. I don't doubt there are various rules around that, but that is the general position.

Being VAT registered doesn’t increase the amount of tax that you pay as a business, it increases the prices your customers pay.

He is being ignored. That is why I and lots of others go to his local rival instead. He wants to pack up at 3.45 and complain that people do not shop local. People ignore him and shop elsewhere. The prices are better in the other shops too!

Not domestic customers it doesn't. If the selling price of a cup of tea is £1.20, it costs you £1.20 whether the shop is VAT registered or not. No sane person would pay £1.44 by going to a VAT registered cafe who added the VAT to the price would they? When you have a fixed price (the market price set by competition) the VAT has to be paid by the business. Therefore a VAT registered shop keeps £1.00 of the £1.20 cup of tea, and a non VAT registered shop gets to keep the whole £1.20. (VAT registered businesses can recover input VAT on costs, but there's no input VAT on tea bags nor water!).

You get better with every post!!! Absolutely loving your replies!

The Thai massage suggestion makes sense - they’ve already paid for the event and staff so any money is better than none.

The suggestion about cutting prices for food doesn’t necessarily. The food has to be bought at a certain price, the electricity for cooking it had to be paid for etc. For some cafes, ‘dropping a quid off the lunch’ when their profit on each lunch is 50p means they are literally paying for the customer to eat it. It’s better to not make any money than it is to actively lose money. With current price hikes, some cafes have their sale prices cut to the bone anyway and that’s without the death spiral mentioned previously where the cafe down the road drops their price £1.10 and the first cafe has to consider matching it.

It’s something Alex Polizzi from the Hotel Inspector bangs on about constantly on the programme when she looks at the subset of hoteliers who are busy but not making any money because they have no idea how much things actually cost.

Ok I get your point but I'm still confused...so, if the profit margins are so slim that to drop the prices even a little bit would mean the cafe is losing money, the n what's the point in having a business at all when you don't have any customers !?! I can obviously only comment on my town, but the cafes im commenting on aren't greasy spoon places with fry ups for a fiver, but offering eggs Florentine/ croque Madame type fayre for around the 10 pounds Mark plus a latte on top, so you're looking at a minimum spend of 14 pounds... For a lot of folk this is not a cheap lunch! And I don't live in a particularly affluent area. Surely, the ingredients can't be so expensive that you couldn't offer this cheaper and well, get some actual customers through your doors... I think a real problem with the local high street is there isn't a ' middle ground' - you've either got dirt cheap Wetherspoons or greggs ( great value but not particularly nice to sit in/nevermind the ethics!) or expensive independents who seemingly, can't always read the market.

It's better to make a fiver of profit per customer on 50 customers per day than to make £2.50 profit on 75 customers. It's elasticity of demand. No point in halving your profit per customers unless you can far more than double your number of customers buying the same thing.

By trying out price cuts, you jeopardise your entire business if you don't get enough extra customers, and you'll alienate your customers if you put up prices again, even the ones who previously paid the higher price!

There's also the question as to whether the cafe can even cope with more customers - most are limited as to the number of customers in the place at any time, the number of items that they can cook at any one time, etc. If they get too busy, then they get disgruntled customers who have to wait longer for their food, have to share a table with others, don't have time to queue, etc. You have to remember that cafes have busy periods such as lunchtime, so they may already be full and serving to capacity between 12.30 and 1.30 and can't cope with more customers at that time. It's not easy for them to "tweak" their menus/prices to charge less in their mid morning/mid afternoon quiet times as people would want to buy their "cheap" coffee or bacon bap at lunchtime when they're already too busy! It's why some places do "basic" breakfasts/breakfast buns up to 11am only and then have a fancy breakfast bun over lunch at twice the price, i.e. free range bacon on an floured artisan bun for a fiver at lunchtime compared with Morrisons bacon on a basic cheap white bun for the breakfast menu!

Family member opened a village shop and post office, ordered in meat from butcher, bread from baker as ordered by locals but couldn’t make it pay despite locals being ‘thrilled’ that a local shop was opening - the supermarkets won.

People like the idea of local shops but they want other people to use them while they go to supermarkets to get the cheaper prices.

Nail on the head.

Same with specialist shops such as hobby shops, customers only think of local ones when they need advice, want something repairing, or want 1 of something small but they have to buy a pack online or have to pay postage!

It does often make them uncompetitive sadly - which is why we import clothes from India and China and have very little manufacturing left here.

A t-shirt with sleeves takes approximately 3 hours to make. That's 30 quid in labour costs alone in the UK.

It's better to make a fiver of profit per customer on 50 customers per day than to make £2.50 profit on 75 customers. It's elasticity of demand. No point in halving your profit per customers unless you can far more than double your number of customers buying the same thing.

That is a very good point. A lot of people - including many of the business owners themselves - see a high footfall and turnover and assume that it must equal success; but this is not necessarily the case.

I remember reading a book some years ago about the Wal-Mart effect and one business sticks in my mind: an American micro-business that made expensive, top-quality lawnmowers. Their reputation and popularity grew and eventually, Wal-Mart got wind of them and got them 'into their fold'.

Instead of selling a handful of mowers a year, as before, they were now moving hundreds of them; but because of WM's demand that they not only set the retail price - which they insisted be more in line with the other cheaper, factory-assembled, brands - but also that costs be reduced by 5% every year, they found that they were shifting loads and loads of units, but struggling to make any profit at all, whereas before they'd done quite nicely for a small family business. It's a sobering thought that many people just don't want to take on board that you can be rushed-off-your-feet busy and still not make any money, or even lose money.

Also, the fact that everybody now associated them with WM meant that they were perceived as just any old lawnmowers, rather than the highly premium product that they were, so they couldn't even withdraw from the deal and go it alone again, as their brand was now irreparably tarnished.

I think there's definitely a place for small-scale businesses whose owners are not interested in growing any more than necessary. Maybe they figure that, if they can make a reasonable living by opening limited hours and serving a restricted number of customers, the work/life balance is worth more to them than doubling their income but also doubling their workload and hours that they have to commit to the business. Not really that different from 9-5 M-F employees, most of whom could take a second job in the evenings to increase their earnings, but most of whom figure that they earn (and work) enough and so don't.

All 100% well and good, just as long as you cheerfully accept that and don't start lashing out at people for not being able/willing to slot into your self-imposed confines in order to increase your income without impacting at all on the hours that you're willing to work.

Some business owners don't take into account rent, footfall, competition, running costs, stock costs, staff costs (including their own time) and some customers think they can make a cheese toastie and a coffee for a fraction of the price so can't understand why a cafe would have to charge more to take all that into account plus make a profit.

Customers also vastly overestimate profit margins, many resent the idea of a retailer making a profit which is known as a wage to the rest of us at all and often think they could do it better.

Hospitality and clothes retail are the worst for people thinking because they can cook and pride themselves on their dress sense it must be easy.

some customers think they can make a cheese toastie and a coffee for a fraction of the price so can't understand why a cafe would have to charge more to take all that into account plus make a profit.

See also childcare, where parents are outraged at the idea of paying £X per hour for somebody to earn a living so that they can go and earn a bit more than £X themselves for their own living.

Frankly, people who complain about the fact that a cafe will charge them more than they could make a cup of coffee at home for, or that a taxi costs them a lot more per mile than the petrol (they always ignore all the other baked-in costs) in their own car, just don't seem that bright to me.

Absolutely fine if you weigh up the two cost/benefit options and just get on with choosing the home-made option for yourself, but complaining about the difference to anybody who will listen, as if it should come as a surprise, is just seriously dim.

Surely they didn't set up a whole business on just what a few locals 'ordered'?

Frankly, people who complain about the fact that a cafe will charge them more than they could make a cup of coffee at home for, or that a taxi costs them a lot more per mile than the petrol (they always ignore all the other baked-in costs) in their own car, just don't seem that bright to me

I would also argue that business owners who complain about lack of trade and dont get that customers can make their own for a fraction of the price dont seem that bright to me either. If you own a business then you have to accept that high prices arent going to wash in times of austerity when people are having to cut their costs or "luxuries" to survive. I totally get that business owners have to make a profit but it makes zero sense to me to spend £££ on a coffee or a home made muffin when I can do it myself and save a tenner or whatever the cost is. Its just not a good use of my money so I wont do it. Yes, its hard for the business owners but its hard for EVERYONE right now. I know people who are employed in the public sector who are really struggling to pay their heating bills. The rising cost of living hasnt only affected businesses, its affected everyone.

Interesting take. The opposite of Lord Cohen who started Tesco…’pile em high and sell em cheap!’

Thighlengthboots

I think we're arguing from the same side! Nobody is criticising somebody's choice/necessity to make something much cheaper for themselves at home.

Similarly, business owners (usually) understand when their line is in selling the kinds of things that will be the first to be dropped from the budget when people need/want to make savings.

It's just the whining that makes no sense to me. What purpose does it serve to stand outside a shop/business that doesn't interest you and waste your time by going on about why you won't be using them? It reminds me of the people who faithfully keep watching TV programmes every week and also moan every week that it's a load of rubbish!

I totally get it when it's council tax, public transport fares or water bills that rocket in price; but if you don't want to pay £15 for a cappuccino and a pastry in Cafe Trop Cher, just don't - go to a cheaper cafe, bring a flask and a tupperware tub from home or just go without!

People who go to the effort of railing at somebody for selling an optional item in an open marketplace that they know/claim they could get much cheaper elsewhere are not really doing anybody any favours!

Interesting take. The opposite of Lord Cohen who started Tesco…’pile em high and sell em cheap!’

I suppose it's all about margins and the Mr Micawber principle. Sell a hundred million items with 1p profit on each and you'll be very happy; sell a hundred million items for 1p less than the total cost to you to make and supply them and you'll soon be bankrupt!

Totally agree!

I think business owners really need to start thinking outside the box to compensate for charging higher prices too.

Eg, a cafe near me has made going in there a whole sensory experience- they have lovely mood lighting and soothing meditation music, they have wifi to attract people who want to work there, they have a little play area to attract mums with toddlers and they dont hassle people to leave as soon as they've drained their coffee cup (something I have experienced independent cafes doing), they also sometimes have live music in the evenings and they host community events there. As a result, they are thriving and its always super popular. They have compensated for the higher prices of drinks and food to attract a wider market and they have engaged with their community which means more people know about them and support them. Its this kind of thing that has drawn people in.

I have also seen some cafes proudly announce "we dont have wifi because we want you to talk to each other!" and its so stupid because now people who may go in to work online dont go there- they'll go to the cafe next door and those people would also buy drinks and maybe even order food. If you have to raise prices I totally get it, but then offer other things to make the experience of going there pleasant and enjoyable. If you can muster up a sense of community, you'll be far more successful than sticking rigidly to silly rules you think people should follow like no wifi etc