Can small and medium enterprises join forces to take on big businesses?

We all have our favourite local business, whether it’s a coffee shop, deli or fashion store. However, many SME’s are still losing out to chain stores that can often afford more prominent locations and higher marketing spends. A new trend sees smaller retailers joining forces to take on bigger businesses and encourage people to choose independents. It’s officially the Year of the Cooperative - but can SME’s working together really take on the big guys of the business world?

2012 marks the UN international year of cooperatives, promoting member-run cooperatives as a sustainable form of business in today’s economy. Cooperative numbers grew by almost a quarter from 2008-2011, and by 9% in 2011 alone. And these are serious business prospects - the cooperative economy grew by 9% in 2010 and 2011, compared to the overall UK economy, which only grew 3%. Even the charity sector is getting involved, with Chatroulette spinoff Catroulette being formed from a cooperative of animal charities, all using one (brilliantly quirky) website rather than competing for market share online.

Business ideas such as Disloyalty cards turn everyday ideas on their head to support local businesses and tackle the power of big brand loyalty cards. Mainly used by larger retailers such as supermarkets and chain restaurants to encourage repeat business, we all have a few loyalty cards in our wallets. However disloyalty cards reward people for going to different retailers rather than sticking to the same one each time.

The idea was piloted in London in 2010 by a group of independent coffee shops. Customers pick up a disloyalty card in a participating coffee shop and after buying a drink in all participating shops, can claim a free coffee from any of the participating shops. The scheme is estimated to have attracted an additional 45,000 customers to these retailers over the past two years, driving customer volumes in a way retailers operating on their own simply couldn’t achieve. While it seems counterintuitive, by encouraging customers to try competitors all businesses ultimately benefitted from increased custom.  Cities across the world from Adelaide to Singapore have since developed similar schemes.

These examples are promising when thinking about the success of small businesses in the UK economy. Research shows that small businesses are going to be a key player in rebuilding the UK’s economy, and the success of both cooperatives and disloyalty schemes show that, counter-intuitive though it may seem, working with competitors in your sector on joint marketing campaigns can pay off when it comes to securing increased market share.

If you and your competitors want some help with a joint marketing campaign, contact us.

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