How to compete with big retailers as a small business

Published Tuesday 4 November 2025

Table of contents

• Ways that your business can compete with large retailers
• Choosing the best retail strategy
• Punching above your weight
• Small can be beautiful
• Build customer loyalty and social proof
• Create your unique brand story
• Managing your retail business finances effectively
• FAQs on competing with large retailers

Key takeaways

• Leverage your business agility to respond quickly to customer needs and market changes by stocking trending products within days, implementing customer suggestions immediately, and adjusting pricing based on local demand.

• Avoid competing on price with large retailers and instead focus on delivering superior value through personalised customer service, unique product offerings, and expert knowledge that creates genuine customer loyalty.

• Utilise modern technology like cloud-based accounting software, point-of-sale systems, and customer relationship management tools to streamline operations and maintain professional standards that match larger competitors.

• Build a compelling brand story that connects emotionally with customers by sharing your business mission, values, and commitment to ethical practices that differentiate you from corporate retailers.

Ways that your business can compete with large retailers

If you're going to compete with bigger businesses on your terms, you need to think and act quickly. Here are some tips to help you compete:

1. Be agile when responding to your customers

Business agility means responding quickly to customer needs and market changes – something large retailers struggle with due to complex decision-making processes.

Agility advantages:

• Stock trending products within days, not months
• Implement customer suggestions immediately
• Adjust pricing, promotions and products based on local demand
• Build direct connections with customers for ongoing insights

2. Don't slash your prices

Avoid price competition because large retailers have economies of scale that allow them to operate on razor-thin margins; for instance, the benchmark for 'Total expenses' for large grocery retailers is as high as 96% of their annual turnover. Instead, compete on value, service, and unique offerings where size becomes an advantage.

3. Negotiate with your suppliers

You might not be able to lower supplier prices much, but you can negotiate other deals. For example:

• Get new products in your shop before big retailers
• Ask for custom-made product lines

4. Be different

In some retail sectors, being stable and predictable matters. In others, you can have fun. Use your unique perspective, involve your employees and add quirky notes to your marketing. This helps people remember your business.

5. Offer the personal touch

Personal customer service treats each customer as an individual with unique needs and preferences. This creates loyalty that large retailers struggle to match through their standardised processes.

How to offer a personal touch:

• Track customer preferences and purchase history
• Empower staff to solve problems for customers
• Use customers' names and refer to previous interactions
• Use customer relationship management (CRM) systems to improve service over time

6. Use technology to stay in control

A few years ago, it was hard for one person to manage accounts, inventory and sales. Now, technology like cloud-based software makes it much easier. For example, small business investment in artificial intelligence (AI) grew to 28 percent in 2024, up from five percent in 2018. Choose quality accounting software, point of sale (POS) tools and inventory management programs to save yourself time and money.

7. Be socially responsible

Be aware of the politics of corporate greed. Big business has a tainted reputation for many people. The perception is often that they ignore concerns about the environment, poverty, tax law and other legislation. Whatever the truth behind those beliefs, they can work in your favour as a small business.

8. Appeal to ethically-minded consumers

You can attract customers who care about sustainability, fairness and ethical trading. Choose products from ethical sources and use labels to show your values.

9. Get the best employees

The appeal of small companies attracts employees too – hire people who are passionate about small business. Many bright young people want to work in a fun, lively and challenging environment, which is more common in small businesses.

10. Get the best out of your employees

Employees at small businesses can have a big impact on the company's future. Give your team a say in how things run and offer reward schemes. They will respond with hard work, creativity and good ideas.

Choosing the best retail strategy

Retail competition strategy means choosing whether to compete directly with large retailers or stand out by using your small business strengths. Most successful small retailers either appear larger through professional systems or use their size as an advantage.

Direct competition approach: Match the professional appearance of big retailers with a quality online presence, flexible payment options and strong presentation.

Differentiation approach: Focus on personal service, agility and local connections that large retailers cannot match.

Punching above your weight

You can use professional systems and presentation to make your small retail business look as established and trustworthy as larger competitors. This helps you attract customers who value reliability and professional service.

Build a great online presence

Online presence builds professional credibility at a lower cost than a physical store. A quality website and active social media help your business look established and trustworthy.

Key actions:

• Invest in quality web design that reflects your brand values
• Post regularly on Instagram and Facebook to build brand awareness
• Share valuable content to show your expertise

Let customers pay the way they want to

Payment flexibility removes customer friction and shows your business is professional. Modern point of sale (POS) systems accept many payment types and connect with your accounting software for easy financial management.

Benefits: Customers can pay their preferred way, reducing abandoned sales, while you maintain accurate financial records automatically.

Interior design matters

Store design shapes how customers see your business. You can create an impressive space without a big budget by focusing on cleanliness, organisation and consistent branding.

Budget-friendly approaches:

• Keep spaces clean and uncluttered to suggest premium quality
• Use your brand colours and fonts throughout the space
• Use good lighting to make products and spaces look more valuable

Presentation, presentation, presentation

Present your business to a high standard. Dress well, speak politely and be helpful to customers. Show your brand on packaging and bags. This helps your store look like part of a larger chain.

Small can be beautiful

Small business differentiation means using your size as an advantage instead of trying to look bigger. Many customers prefer shopping with small, local retailers for personal service and unique experiences.

Why customers choose small retailers:

• Give individual service that large retailers cannot provide
• Offer unique products not found in chain stores
• Support your local community and economy
• Handle custom orders and special requests easily

Find out what your customers like about your small retail business. Use marketing and good service to offer what they want.

Build customer loyalty and social proof

Happy customers can help market your business. Build loyalty to turn one-time buyers into repeat customers. Use reviews to build trust and create a community around your brand.

• Send a friendly email after a purchase to ask for a review
• Create a simple loyalty program, such as a punch card or small discount for repeat customers
• Use social media to share behind-the-scenes content, ask for opinions and respond to comments

Create your unique brand story

Big retailers sell products, but you can share your story. Your brand story makes you unique – it is your reason for being. This helps customers connect with you and turns a simple purchase into a meaningful experience.

Share why you started your business. Add your story to your website, social media and packaging. When customers understand your mission, they buy into your vision.

Managing your retail business finances effectively

To compete, you need a clear view of your finances. Knowing your numbers helps you make smart decisions. Many high-growth business owners seek advice from accountants and management consultants. When you understand your cash flow, you can decide when to invest in new stock, run a sale or hire help.

Managing your finances can be simple with the right tools. Track sales, manage inventory and see your profits in real time. Cloud accounting software gives you a live view of your business, so you can spot opportunities and fix problems early. This lets you focus on running your business, not just recording it.

FAQs on competing with large retailers

Below are answers to common questions small business owners have when facing big competition.

Why is it hard to compete with large retailers?

Large retailers can buy and sell products at lower prices. They also have bigger marketing budgets and well-known brands. But their size can make them slower to adapt to new trends.

Should I try to match the prices of big retailers?

Competing on price rarely works for small businesses. Instead, offer more value with personal service, unique products, expert knowledge and a better customer experience.

What is the best way to build a loyal customer base?

Build loyalty by creating genuine connections. Offer a personal touch, remember repeat customers and ask for feedback. A simple loyalty program and active social media can help customers feel part of your community.