I love bagels. When I just moved to New York City, many friends told me on how awesome the local bagels are. I felt so lucky to spot a local bagel shop a couple of block away from my new place in Brooklyn. After overwhelmed by large selection of cream cheese I ordered my daily usual, an everything bagel with scallion cream cheese. And then, the overcharge came to me: the order should be 2 dollars but I was charged by 3.5 with 1.5 dollar additional, which claimed by the cashier, ‘the tax’.
So the overcharging just happened, in such a natural and smooth way. I kept telling myself it was just an unintentional mistake during a busy morning. But several days after the same thing happened again, and I started sensing a pattern behind their overcharging mechanism. It is not surprising that I was the one got overcharged: an Asian-looking guy who speaks English as the second language and just moved to NYC for two month. I am indeed a new comer to this neighborhood.
Walking out with little anger, but very quickly I started feeling the sadness of this small business. Educated as an urban planner I am familiar with gentrification and the vulnerability of small business. In that exact week I attended the annual summit in Municipal Art Society on issues of urbanization and city development in NYC. Jeremiah Moss, the founder Vanishing New York presented striking comparison images of the disappearing small local shops in New York City, which stirred a very deep discussion in rocket-rising rent and vulnerability of local business.
I have no intention in turning this into a debate on high rent because it is truly a fact not just in commercial renting cost but also residential. I am also not condemning on big chain stores. What I want to talk is how the small business can survive in such tough and competitive market in NYC. Local mall businesses and giant merchandising chains build up the customer’s trust very differently. Big brands and international chains win the customers by its reliability: I can get a coffee from Starbucks in exact same price anywhere in the city and I will get the same taste when travelling to London, Singapore or Shanghai. On the other hand, small businesses build up their customers by their unique character, a sense of community, experience of the neighborhood, all these very small and incremental factors. In many ways small businesses have an irreversible disadvantage: while big brands calibrating their market image by adding more flavor and characters to form a ‘community’ (think about Whole Food Market), small businesses do not have the resource to power up their distribution, allocation and quality control like what large companies do. Furthermore, local business cannot afford to lose customer since their customers are really location based (unless you’re running a legendary shop like St-Viateur Bagel in Montreal). In a regular, not touristy neighborhood, once you lose a customer, it is very difficult to attract a new one to fill the vacancy without a large population flow.
Small local businesses are nourished from neighborhood and a sense of community. However, New York City’s neighborhoods are changing in many perspectives and there is rarely any resource or tool for these owners to capture such dynamic and adapt their business to such changes. The demographic features of millennials in NYC are quite different comparing early generations, which means there is a big shift of population attributes, culture, neighborhood characters and definition of community. This shift will have a deep impact on customer behavior, life style and business development yet it happened very fast and almost silently. Large merchandising companies use data mining and analytical tools to understand their customers and leverage the knowledge to calibrate market strategy. Yet small business owners are in such a disadvantage regarding the lack of information and knowledge in their customer. They will quickly lose if they are not willing to approach customers or trying to adapt to such changes.
So after all, what card should the small businesses to play? People. As human being we have a natural empathy with small business just like that we love supporting an underdog boxer fighting a giant. Small businesses need to be aware of the booming ‘Experience Economy’, which focus on ‘not just what you buy, but what you do, and whom you do it with’. When living in Cambridge, MA, I barely go to Starbucks because there is a coffee shop in my block with everything just so right: coffee, the music, the interior and most importantly, friendly people. They are truly with local pride and neighborhood characters, yet genuinely welcome visitors into their community with no prejudice. This is how a small humble business winning over big brands.
In the end I don’t think I’ll visit that bagel shop anymore, not just because of their overcharging, but really, I don’t want to be treated like a fool. For them this is nothing to care since I’m just one humble customer, but there is nothing small for the small businesses to care, because they started from small, and very often, ended from small.