Competitive Strategies in the Craft Product Retailing Industry

Shopping is an important activity for tourists (Littrell, et al. 1994), and as part of their travel experience, tourists enjoy purchasing goods which serve as symbolic reminders of the trip (Graburn 1977; Littrell 1990; Littrell, Anderson, and Brown 1993; Schmoll 1977). Retailers in tourist market areas traditionally supply goods and services that make the tourists' visit in the area more pleasant and memorable. One product category that has proved profitable for small-sized retailers in tourist areas has been handcrafted items made and distributed by individuals called craft producers. A craft item is handmade with attention to materials, design, and workmanship. Locally handcrafted items are receiving greater attention by the tourism industry as a means of providing cultural enrichment and an economically viable market that can be further developed (Weaver 1991). An increasing number of craft producers residing in rural areas of the United States have expressed interest in selling to the tourist consumer; however, developing marketing strategies for selling these goods has been a major problem for craft producers (Kean, Niemeyer, and Maupin 1994; Littrell, Riley, and Stout 1991). Retail stores are viewed by craft producers as an excellent channel for distributing their work. Presently, the strategic planning required of retailers to market the handcrafted items is not clearly defined. It is not known whether tourists, when targeted as consumers, require a different promotional approach or whether deployment of unique marketing strategies is required of small business owners. Although many retailers presently operate successful small businesses by marketing craft products to tourists, little is known about the strategies they employ. A study to determine specific marketing strategies that have contributed to the success of these businesses appears timely. Researchers from three adjacent states in the North Central region of the United States collaborated in an effort to aid both craft producers and craft retailers in identifying better strategies for marketing crafts to tourists. The tourism industry is cited as a major growth industry for the 1990s and beyond (Naisbitt 1994), and the tourism bureaus in all three states are engaged in aggressive promotion of their state as a tourist destination. The findings presented in this paper are targeted at informing small-sized retailers who market craft products to tourists and at aiding crafts producers in better meeting retailers' and consumers' needs. Specific objectives were to: 1) identify how craft retailers use competitive strategies, and 2) determine differences in selected strategies relative to specific characteristics of the retailers. Existing research in the area of small business has been criticized for not producing information that is useful for entrepreneurs or small business owners and for failing to ask these sources for suggestions in solving small business problems (Banks and Taylor 1991). In this study retailers were asked directly about their competitive strategies in an effort to produce useful information for them. THEORETICAL FOUNDATION: COMPETITIVE STRATEGIES Porter (1980) introduced three generic strategies that businesses could implement to enhance performance and outdistance competitors. Retailing and "creative" enterprises, such as crafts producers, exemplify industries which Porter categorizes as fragmented - an industry in which "no one firm has significant market share and can strongly influence industry outcomes" (Porter 1980, 191). These firms face greater uncertainty in the market environment (Dess 1987). Pysarchik (1989) observed that in tourist communities where there is no central coordination of tourist-related business and services, the market environment is fragmented and inefficient. She reported that over 95 percent of businesses located in tourist areas encounter difficulty surviving tough economic periods due to their small size, under-capitalization, and seasonal market conditions. …