How to compete with large retailers and grow your small business

Published Wednesday 5 November 2025

Table of contents

• Why competing with large retailers is challenging
• Choosing the best retail strategy
• Punching above your weight
• Small can be beautiful
• 10 ways that your business can compete with large retailers
• Managing your business finances while competing
• Use your passion to your advantage
• FAQs on competing with large retailers

Key takeaways

• Leverage your agility to respond faster than large competitors by tracking customer preferences, anticipating needs through relationships, and making inventory or service changes within weeks rather than months.

• Focus on providing unique value rather than competing on price, since large retailers have greater purchasing power and can offer lower prices through economies of scale.

• Invest in essential technology including cloud accounting software, point of sale systems, and inventory management tools to access the same capabilities as large chains at lower costs.

• Use your personal touch as a competitive advantage by offering individual customer attention, building genuine relationships, and creating a company personality that customers want to interact with.

Why competing with large retailers is challenging

Competing with big-name stores can be challenging, but you have strengths they don’t. They often have advantages like lower prices from buying in bulk, big marketing budgets, and teams of experts. This can make it tough for a small business to get noticed and win over customers.

But being small gives you unique strengths. Understanding the challenges is the first step to finding clever ways to turn your size into your greatest strength.

Choosing the best retail strategy

Retail competition strategy involves choosing how to position your business against larger competitors. You face established competitors with bigger budgets, prime locations, and extensive resources.

You have two main strategic options:

• Emulate approach: Make your business appear larger and more established
• Differentiate approach: Use your small size as a competitive advantage
• Emulate approach: Make your business appear larger and more established
• Differentiate approach: Leverage your small size as a competitive advantage

Both strategies can work if you use them well.

Punching above your weight

Punching above your weight means creating a professional, established appearance that matches larger competitors' credibility. This approach helps customers feel confident choosing your business over bigger alternatives.

Key areas to focus on:

Build a great online presence

It costs less to create a stunning online shop-front than it does to build one in the real world. Ask for recommendations from other small businesses, then choose the best web designers, developers, and content writers you can afford. Make sure you regularly post on Instagram, Facebook and other social networking sites too. Your business will look more established online.

Let customers pay the way they want to

Accepting different payment methods helps your business look professional. Invest in a good point of sale (POS) system, preferably one that will integrate with your accounting software. Learn more about accounting software integrations. These don't have to cost a fortune and will give your business a professional air.

Interior design matters

You can create a professional-looking store environment on a small budget. If funds are tight, consider a minimalist look – it can help your store look modern and professional. Get fresh ideas from design magazines, blogs and other stores.

Presentation, presentation, presentation

Do everything to a high standard. You and your employees should be well dressed and well presented, speak politely to customers and be helpful. Show your brand everywhere, including on packaging and carrier bags. This helps your store look as professional as a larger chain.

Small can be beautiful

You can use your small size as a benefit, not a limitation. Many of your customers prefer to support local, independent retailers like yours.

Why customers choose small retailers

• give personal service and individual attention
• offer unique products not found in chain stores
• connect with your local community
• reduce risk with strong consumer protection and payment security

Find out what your customers like about small businesses, then highlight these strengths in your marketing and service.

10 ways that your business can compete with large retailers

You can use your agility and personal touch to compete with larger businesses. You can move faster than big chains, so you can respond quickly to your customers and changes in the market.

Here are ten ways you can compete with large retailers:

1. Be agile when responding to your customers

You can respond to your customers faster than large competitors.

How to be agile

• track customer preferences by monitoring buying patterns and feedback
• anticipate customer needs using your relationships
• check in regularly with key customers for feedback
• make changes quickly, within days instead of months

Benefit: Large retailers need months to change direction, but you can adapt your inventory, services, or approach within weeks.

2. Don't slash your prices

Focus on value, not price, when competing with big retailers. Economies of scale mean that the larger stores have more purchasing power than you, and can drive down their suppliers' prices.

3. Negotiate with your suppliers

You can negotiate with suppliers for better deals, such as early access to products or custom product lines. For example, you could get a range of products in your shop before the big retailers. Or you might have some product lines custom-made for you.

4. Be different

In some sectors, stability matters. In others, you can show your personality and have fun. Use your unique perspective, involve your employees, and add personality to your marketing. This will help people remember your business.

5. Offer the personal touch

Deal with your customers on an individual basis – something big businesses can't easily do. Nobody likes dealing with a faceless entity, so give your company a personality that customers want to interact with. Reward your employees for thinking creatively about how best to serve customers. Consider setting up a customer relationship management (CRM) system to help manage your customers.

6. Use technology to stay in control

Technology helps you access the same tools as large chains, often at a lower cost. Some cloud software offers 99.9% guaranteed uptime – often better than what you can achieve with your own hardware.

Essential technology stack

• track your finances in real time with cloud accounting software
• process payments and analyse sales with a point of sale (POS) system
• automate stock tracking and reordering with inventory management tools
• manage your business from anywhere with mobile access

You get powerful tools without high costs, so you can run your business more efficiently. Many small businesses say that investing in technology has improved their profitability.

7. Be socially responsible

Many people see small businesses as more responsible and caring about the environment and community. You can use this positive perception to your advantage.

8. Appeal to ethically-minded consumers

Small businesses can appeal to customers who care about sustainability and ethical trading. Many small businesses dedicate time or resources to environmental, social, and governance (ESG) activities. Source your products responsibly and use product labelling to show your ethical standards.

9. Get the best employees

The appeal of smaller companies applies to employees too – so hire people who are passionate about small business. You can attract talented people who want to work in a fun, lively, and challenging environment – something small businesses often offer.

10. Get the best out of your employees

Employees at small businesses often have more influence over the company's future, which can motivate them to work hard and share ideas. Employees at small businesses have more influence over the company's future.

Giving them that influence can pay off. For example, research shows that letting staff choose their own mobile tools increases productivity. Set up employee reward schemes and involve your team. This can lead to more hard work, creativity, and good ideas.

Managing your business finances while competing

Competing effectively is not just about marketing or customer service. You also need to manage your finances well. For example, a small percentage of small and medium-sized enterprises (SMEs) can account for a large portion of total tax debt. One study showed that 10% of SMEs owed almost half of the total amount. Keeping a close eye on your numbers helps you make confident decisions and stay sustainable for the long run.

• track your cash flow so you know exactly what's coming in and going out
• use reporting tools to see which products or services are most profitable
• automate financial tasks with accounting software to save time and reduce errors

Clear financial insights help you invest in the right areas, manage costs, and build a resilient business.

Use your passion to your advantage

Your passion and expertise help you offer what large retailers cannot.

How passion creates advantage

• know your products better than chain store employees
• focus on customer satisfaction, not just meeting quotas
• try new ideas without needing corporate approval
• build genuine relationships with your customers

The result: When you are passionate, you can outperform larger competitors in customer satisfaction and loyalty.

Your next step: Use your passion in your chosen strategy – it makes every other advantage stronger.

FAQs on competing with large retailers

Here are some common questions small business owners may have about large retailers.

What are the main types of competitors?

In business, you'll generally face four types of competitors. Direct competitors offer the same products to the same audience. Indirect competitors offer different products that solve the same problem. Replacement competitors offer other solutions your customer could use instead. Potential competitors are new businesses that could enter your market. Learn more about competitor analysis.

Should I try to match the prices of large retailers?

Competing on price is usually not sustainable for your business. Large retailers can offer lower prices because of their size. Instead, focus on providing value in other ways, such as unique products, great customer service, and a personalised shopping experience.

How can technology help me compete?

Technology is a great equaliser. Cloud-based accounting software helps you manage your finances efficiently. A good point of sale (POS) system streamlines transactions. An online store and active social media presence can also expand your reach and help you connect with your customers in ways that larger, less personal brands can't.