Iowa State University

Inside Iowa State
Jan. 9, 1998

What makes small retail districts tick

by Michelle Johnson

It was the same old thing for many rural retailers this holiday season: quietly watching their friends and neighbors make the exodus to urban shopping malls. But research by Nancy Miller suggests that the answers to their woes may be well within the city limits.

Miller, an assistant professor of textiles and clothing, has found that the small town shopping environment is shaped not by economic factors alone, but by social factors as well.

Her study of consumers ages 18 to 85 years who choose to shop at home in three rural Iowa communities suggests that small town retailers should make a point of getting as socially involved as they can in the daily life of their towns. Sponsoring special community events, serving on community boards and committees, and being active leaders in children's activities are critical to small town retailers' success, Miller said.

"Part of the charm of small towns is that the owner of the gift shop also is a little league coach," Miller said. "The social fabric of a small town is woven very tightly."

When shoppers look elsewhere, that fabric experiences a loose thread.

The social interaction between retailer and customer is very different when there isn't a cash register between them, according to Miller. Community functions serve as a neutral ground on which consumers feel more comfortable sharing information about their shopping behavior. A friendly chat at a potluck supper might result in a new product line for the local hardware store.

So where does that leave the store owner whose social calendar is already full? Miller's research suggests two strategies: appealing to one specific segment of the market (core customers) or taking a more entrepreneurial approach and finding goods and services that might appeal to anyone.

In Iowa, the obvious target market for small town retailers is the elderly. Longer life spans, coupled with baby boomers entering old age, is bound to have a dramatic effect on the retail environment, Miller said.

Miller points to Ross Clothing Store in Boone, which has tapped into the elderly market with great success. The store's owner, Holly Larson, holds regular fashion shows at local nursing homes. The strategy is not uncommon for the small town clothing retailer, but Larson adds a twist by allowing residents to model the clothing themselves.

"Holly, like many business owners in small towns, has an enormous advantage over her urban counterparts," Miller said. "She has the flexibility to offer targeted personal service and one-on-one attention that would be difficult to find in most department stores."

Services reminiscent of a time gone by are alive and well in some small-town establishments. Allowing customers to take merchandise home on loan, offering customers an in-house line of credit and home delivery are just a few of the services Miller found in her research. Another favorite . . . greeting customers by name.

Are retailers fighting a losing battle with younger and middle-aged shoppers? Not necessarily. Miller said that in some European rural areas, retailers have taken on small side businesses within their stores to draw in the younger set. Examples include post office outlets, lottery ticket sales, tea rooms or coffee shops. One European retailer even provides a service to shuttle shoppers of all ages to and from the community. Miller sees the same side businesses popping up across Iowa and the Midwest.

Again, Miller suggests a targeted social effort to reach young consumers. Athletic team sponsorship or leading a church youth group are possibilities, she said.

Miller cautions that many rural retailers in small towns ignore one very important group of consumers -- each other. The local car salesman who spies an out-of-town dealer's mark on the barber's new car won't soon forget it. Sounds rather Mayberry R.F.D.-ish, but it is a reality in small communities. Miller said feelings of reciprocity translate from the social environment to the retail environment and vice versa.

Her latest research indicates that the stronger the feelings of reciprocity in a community, the stronger the likelihood that residents will shop locally.

But if all else fails for the rural business owner, a separate study by Miller suggests that there is strength in numbers. Groups of small rural stores are banding together in successful retail consortiums to position themselves against their bigger opponents.

One such consortium in the Midwest has grown to more than 50 stores. Members have found they have greater buying power. But even better is the support and guidance the retailers are able to provide one another, Miller said.

"Any small rural business must have a strong social foundation," Miller said. "Everything grows from there."

Miller, who has worked in the rural retail climate for more than 15 years, recently won two awards from the Academy of Marketing Science for her study, "Explaining the Inshopping Behavior of Rural Consumers."

Iowa State homepage

Inside Iowa State,, University Relations
Copyright © 1997, Iowa State University, all rights reserved
Revised 1/8/98