Why Small is the New Big

The big box era has gone boutique. From the quiet slippage of WalMart to the transcendent success of indie brands like Chobani, the monopoly of "bigger is better" is slowly being brought to it's knees. And thanks to a perfect storm of culture, economics & technology, smaller may not only be better, it may just the new “big”.

For starters, consumers are increasingly more willing to pay a premium for quality goods produced locally by skilled artisans. This on the heels of economic disaster. And while household name brands aren’t exactly in danger of extinction (yet), they are undoubtedly feeling the pressure to find their place in a more socially connected, accountability driven marketplace.

Once upon a very recent time, there was nothing more American than the image of a gleaming grocery store aisle, shelves neatly stacked to capacity with more per category options than any one customer could possibly ever process. Choice and limitless abundance symbolized everything that made America great. The antithesis to the kind of scarcity that only occurred in those “other” countries where we were so fortunate not to live. And capitalism taught us that this was GOOD for the consumer. From pricing to quality, rabid competition was supposed to mean a better outcome for the average Jane. 

Or so we thought.

Instead all of those choices at super marked down prices produced massive quantities of marginal. So massive that the good stuff was either overshadowed or altogether gobbled up by a handful of big conglomerates. And what was the consumer left with? 3,000 varieties of mostly forgettable salad dressing. Followed by the worst economic downturn in two generations.

As it turned out, there were limits. To consumer spending and to the good that blind capitalism could deliver on. We’d given up everything for what amounted to merely a perceived sense of choice. When in reality, all of that so called free market competition was really just a handful of ginormous purveyors disguised as individual brands. We’d been buying without questions or consequences and now we had to actually pay for it.

The good news? Our love affair with excess turned us into better more responsible consumers. Or as John Gerzema observed back in his 2009 Ted Talk, our once mindless consumption was turning mindful. And as we began to question our habits both personally and in the context of the bigger world, many of the very things that embodied the modern day American dream started to lose credibility. 

In line with this shift in consumer behavior grew early signs of a longing for a kinder, simpler, more preservative free existence. From slow food to the return of American craftsmanship, the glamorization of big, fast & excessive was beginning to feel increasingly “passé”. Smaller, niche brands and businesses were becoming more intriguing for all of the things that made them more “human” than their big box alternatives. And thanks to more educated, connected consumers, big brands were being placed under unprecedented scrutiny, over everything from their labor practices to where they source their ingredients from.

More recently, these evolving consumer attitudes have started to have an impact on the collective bottom line. A 2013 study of the food and beverage industry (Strategy&): found that small brands (those with under 1 billion in sales) are outperforming the competition in 18 of the top 25 categories, including the largest and most consolidated ones, such as bakery, dairy, snacks, and ready meals. Specifically, in packaged foods, small players experienced a three-year compound annual growth rate (CAGR) of 6.2 percent, and gained 1.7 percent of market share. Meanwhile, large players increased sales by just 1.6 percent CAGR and saw their market share decline 0.7 percent.

Big brands have responded as expected – by either trying to buy out or out mimic the little guys. But “small” is probably the one thing that can’t be manufactured. It just doesn’t “feel” the same, particularly for today’s already skeptical consumer.

So how can big brands fit into a more “small-minded” economy? 

  • By re-connecting to what made them great when they were small themselves. At some point in time, every business began as the brainchild of some audacious dreamer. What drove that individual? What problem were they looking to solve? What compelled them to push forward every day?
  • By going beyond superficial, surface renovations and examining how to maximize value through real change.
  • By raising the standard of everything you do and knowing when to cut bait. Even if it means a smaller product portfolio.
  • By committing to a culture of real innovation as if your livelihood depended on it (it does).
  • By ensuring that whatever story you’re telling is merely an extension of real, meaningful actions.
  • By forming real partnerships instead of buying up and ultimately destroying all of the values and practices that made that “little guy” so attractive to begin with. Or by thinking beyond a traditional acquisition and acting as an incubator for successful businesses. Hey, it’s working out nicely for Google.

And finally, by being extraordinary. Because successful small businesses have to be. They don’t have the luxury of hiding behind big passion brands, multi million dollar ad budgets or high paid celebrity endorsers. Their long-term success is inextricably tied to their ability to be exceptional. And there’s nothing small about that.


Laura CiociaComment