If you’re in retail and you research trends, news, or software solutions online, you might have heard the term “specialty retail” floating around. But it hardly ever comes with a clear definition and without that clear understanding, confusion can thrive and grow.
So what does specialty retail actually mean? Generally speaking, it’s a term to describe a certain category of retail, but I want to dig deeper. What I’ve heard is that specialty retail is a branch of the bigger retail tree where the merchant carries one or two particular categories of consumer goods, as opposed to the retailers who carry a large number of consumer goods categories. Think of yoga-wear store, Lululemon, versus the big-box, everything-in-one store, Wal-Mart.
But let’s be clear: specialty retailers can be those that carry a large number of SKUs in their store and need a strong retail tool to help them manage it. But all their SKUs will fit into one or two categories of products. So, thinking back to our comparison above, it’s the difference between yoga pants and yoga mats versus yoga pants and tortilla chips.
With a one-stop convenience shop being able to offer the consumer so many options all at once, what can a specialty retailer offer a consumer that a “Wal-Mart” can’t?
Personalized Shopping Experience
As a consumer enters a specialty retail store, it can be assumed that they are looking for something within the category of that retailer. Since this merchant has chosen to focus on one or two categories, they would be considered product experts. As a consumer, I trust their recommendation more than I would a store associate of a multi-category store.
Think about any interaction you’ve had in these specialty stores. In a jewelry store, you’ll consult the associates for their expertise on specific styles, diamond-sourcing, and the differences between different metals. On the flipside, a department store associate would likely not have in-depth knowledge of the jewelry pieces. Similarly, when you’re wanting to impress your wine-loving friends, you’ll likely head to a specialty wine or liquor store, rather than a grocery mart that also sells wine.
A Focus on the Customer
Another key difference between specialty and multi-category retail is the in-store experience. Specialty retailers place a high value on providing a positive retail environment for shoppers. Multi-category merchants prioritize convenience, ensuring customers can find all of the items they need as quickly and easily as possible—a customer is left to their own devices. A specialty retailer will also have a focus on a streamlined store layout but will be sure to welcome the customer, help them with their needs, and may even be able to provide helpful suggestions based on past purchases. Not only that, but specialty retailers can offer value-added features and programs that a box chain simply can’t do. If you buy a pair of yoga pants from Lululemon, they offer in-store tailoring. Other specialty stores, like Starbucks, offer loyalty programs that keep their customers coming back for more. While these few-product stores may not provide a lightning-fast shopping experience, their premium service that is customized for the consumer is what ensures repeat shoppers.
Of course, having chosen to play in one or two customer categories, specialty retailers experience some pain points. They’ll feel the impact of any shifts in their category or market, more so than a multi-category retailer would. A specialty retail owner will likely feel the pressure of the multi-category retailer like Wal-mart, who likely beats them on price on the items that the specialty retailers offer.
The main challenge a specialty retailer will face is to offer premium in-store experience, personalized and tailored to the customer, that relies on their product expertise. This service is their competitive advantage over lower-priced multi-category retailers, who can't offer the expertise that the specialty retailer can and will never be able to mimic the product knowledge of these specialty merchants.
Specialty merchants are holding their own in the retail space, and are becoming a destination for shoppers as they desire a more personalized service.
Want to learn more about how to market your specialty retail business? Read the 5 marketing tips specific to your unique business.