Are “cash mobs” the saving grace for local businesses?

I read on MSN today about cash mobs.  If you’ve heard of flash mobs — either the violent or the artistic kind — then it’s very similar to that.  The idea behind cash mobs is to give a booster shot to local businesses.  The cash mobs organize and descend on a particular local business to buy stuff.  It’s fun for the mobsters, and it’s great for the business, which gets an unusually brisk sales day.

This isn’t a bad thing, right?  The cash mobs don’t pretend that they’re going to single-handedly bring the country, or even their city, out of the financial doldrums.  If nothing else, they just plan to go out to have a good time:

We’d help businesses grow, we’d make people happy, we’d get stuff for ourselves, have a great time, and maybe we’d get a drink to celebrate afterward.

It’s the economy — a shifting economy

Brick and mortar stores have lost business with the rise of online retailers, most notably Amazon.com.  Booksellers have been the hardest hit — though to be fair, Borders Books and Music basically handed Amazon the keys to the front door! — mainly because Amazon is cheaper, has more in stock, and can be shopped in the comfort of one’s home.  Why settle for a measly 10% off of new books — with a paid membership, no less — when you can get 30% or more off every day, all the time?  Heck, why not go into a place with your smartphone and do a price comparison right there?  That’s what people have begun to do, and it’s not going to stop.

It’s the USP that will save a business — not charitable shoppers

Price, selection, and convenience can’t be the only reason that people buy things.  If it were, businesses would be worse off than they are now.  People must buy things in stores for other reasons.  The businesses that figure out how to capitalize on the advantages of buying from them over buying from Amazon will succeed.  This requires a crystal-clear unique selling proposition; the USP defines concisely the market it serves, and the key advantage it brings to that market.  For example, we have a local hardware shop.  It’s more expensive than Lowe’s in town for most items, but its key advantage is the personalized attention that the manager and staff give to their customers.  This isn’t at all to say that Lowe’s employees are rude when you find them, but it’s far easier to find a very helpful person at our local hardware store.

What’s more, a USP isn’t forever.  It can’t be.  The advantages of one particular store vs. cheaper alternatives will change, and the store has to adapt, branch out, deliver different value.

Local businesses with a rock-solid USP, a heart for customer service, and a keen eye for delivering value that lower-priced competition can’t, will do fine.  Local businesses that don’t will get eaten alive (though maybe a bit later if a cash mob strikes).

John Wedding

Husband. Father. Web publisher. Musician. John has blogged at Mighty Bargain Hunter since 2005, helping people to recognize life's good deals.

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Comments

  1. Thanks for the note and support!

    Andrew

  2. This cash mobs concept sounds cool and does encourage local shopping. It is bringing attention to everyone’s search for the lowest price. Hopefully in turn those people will turn to local businesses a bit more remembering why they used to go to them in the first place.

  3. I appreciate local business and the cash mob idea. However, I think more and more businesses will be victim of online stores, especially with the development of technology that helps online shoppers even more by finding good online deals.

  4. Cash mobs almost sound like Groupn deals, except that Groupon does not suck a huge percentage of the profits. This serves to drive business to one local company, and provides huge free marketing perks for that company for years to come! Never heard of this, but it is a very cool concept.

  5. good idea, fun way to patronize a local business,
    hopefully it brings them a dose of free advertising, showcases what they have to offer and maybe pick up a few regular customers

  6. Most small businesses would do well to read and understand Michael Porter’s classic business books, such as Competitive Strategy and Competitive Advantage. Small businesses can rarely compete on price with huge companies like Amazon and Walmart, which are price leaders. The price leaders have lower overhead and control the supply chain to a large degree.

    Small businesses need to target a narrow segment and offer differentiated products or services. The customer service at the local hardware store you mentioned is one possible strategy, but the good news is that there are many ways to differentiate. It often doesn’t make sense for the huge price leaders to target these small segments directly because it’s not worth their time to go around discovering and targeting a whole bunch of niche markets, as they can grow faster and much easier by just concentrating on the low price strategy. So this leaves available many small niches for local businesses to target.

  7. I’ve never heard of these and think they are interesting, but like you point out they may only delay the inevitable. If some business is going to go under, they are going to do so, just possibly later if 50-100 people come to their store and buy something one day. I think that the places with the best selling proposition like you mention will be able to stay around.

  8. The point you make about the USP is on the money. Any marketing/promotional tactics that aren’t done in an already solid business will hurt more than help in the long run.

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