RECENT RESEARCH SHOWS that buying local campaigns provide only limited and short-lived results for small businesses. So, as budget-conscious consumers turn to mass retailers, Internet and malls for bargains, what can small business owners do? Here are three suggestions.

Focus on the fundamentals

“In downtimes, consumers tend to go where they still get the best value,” says Jeffrey Carr, the executive director of New York University's Berkley Center for Entrepreneurial Studies. His suggestion for small firms: Focus on the fundamentals of doing business.

“When money gets tight, you either have to increase the value side of the equation or reduce the cost equation,” he says. That means most small businesses, which typically find it hard to compete on price with discount giants like Wal-Mart Stores (WMT) and Target (TGT), should aim to beef up their customer service policies or bolster the quality of their products and services.

Broaden your definitions

Between buying local, fair trade, handmade, and sustainable, shoppers have quite a few labels to choose from. Making matters worse, they often confuse them. In surveys, consumers talk about buying local products, but when you do ethnographic research -- that is, watch them in the act of buying something local -- “they say 'look at this really cool thing I got from a tribe in Botswana',” says Steve King, a partner at Emergent Research, a research and consulting firm in Lafayette, Calif. 

His suggestion: Cultivate your product list with the understanding that the consumers are willing to buy local, but they have a broader definition of doing so. Also, play up your other attributes. For instance, hit applicable touch points such as safety, contributing to the community and being environmentally conscious, King says.

Tell a story

For consumers to view your shop as unique and deserving the premium that small businesses often need to levy, offer unique or even one-of-a-kind products and services, says Paul Kurnit, a business consultant and clinical marketing professor at Pace University in New York. Then, make sure those items have a story to go along with them, he says.

Perhaps a store carries porcelain dishes that were hand-painted by a local artist. If that’s the case, include that person’s story with the plates. “The handmade idea is good, but it’s not the whole story,” Kurnit says. “In a tough economy especially, play up the customer connection.”

—Write to Diana Ransom at dransom@smartmoney.com

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