“Goliath-sized” (Big Box) Operations, Smaller “David-sized” Local Businesses

“Goliath-sized” (Big Box) Operations, Smaller “David-sized” Local Businesses

When Fighting Goliath, David had a Competitive Advantage!

With the continuing evolution of “Goliath-sized” (Big Box) operations, smaller “David-sized” local businesses have had to close their doors due to lost revenue. Wherever you look these days, you can find urban communities that once showcased thriving small businesses now riddled with vacant buildings; local employment opportunities are drying up, leaving an increased dependence on social services by the unemployed.

Examples of this Big-Box phenomenon can be found in many industrial areas as well.

Neighborhood Stores: In times past, neighborhood grocers and other retail stores were found in every small town in America, serving the residents of those communities. Today, “Big-Box” stores (Costco, Sam’s Club, Wal-Mart, etc.) have sprung up two to four at a time in each community, squeezing out the smaller local establishments. The attractions; Big Box offers one-stop shopping, reduced product pricing, and convenience.

Building Service Contractors (Janitorial companies): Building Service Contractors (BSC) are also subject to the same squeeze as many other local small businesses. Roughly one percent (1%) of the bigger BSC companies command about 80% of the building service contracts.

• Why? Similar to neighborhood local small businesses, the larger BSC companies typically bid contracts at lower rates for services. Further adding to their advantage; the more floor-space they control, the greater their potential to bid a lower rate and still remain profitable.
• How? The cost cleaning supplies represent a major contributor to the cost of doing business. In some cases, as much as 8%! The larger BSC offer a lower bid because the by products in volume and are, thereby, able to negotiate reduced pricing.

Can anyone offer additional support to this assessment?