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SMALL BUSINESS

November 12, 2024

 

An Appalachian town with a digital edge

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Christine Gibson

Contributor

Cloistered between two of the Applachian ridges that pleat the northern border of Virginia, the town of Blacksburg was just a remote backwater when, in 1872, the state legislature chose it to be the site of its new land grant college. In the next century and a half, that college, now called Virginia Tech, grew from a clutch of buildings on a hilltop into a 2,600-acre campus with a $556 million research portfolio. The town evolved in tandem, gradually swelling into the surrounding farmland.

Over the years, the university has brought cosmopolitan trappings - a performing arts center, a corporate research park, nationally competitive college sports teams, Nobel Prize winners. But Blacksburg still holds on to its rural attitude. Beyond meadows grazed by sheep and horses, mountains cradle the townon three sides, a watercolor-blue stripe that underlines the sky. what might seem like a paradox - a country town on the cutting edge - defines life here, the high-tech and the pastoral weaving through the local identity.

By the mid-20th century, the university had become Blacksburg's largest employer, and the tan yards and tinsmiths that once crowded the creek bansk have way to restaurants, movie theaters, general stores and booksellers to support the growing faculty and student body. Today, when school is in session, the more than 38,000 undergrads and graduate students account for 45% of the town's residents.

As a result, commerce pulses in rhythm with the university calendar, waxing and waning according tot he annual cadence of orientations, breaks, parents' weekends and - most prominently - sports. Even if you don't follow college football, Hokie game days are unmistakable: the expectant hum in the air, perfumed by woodsmoke and propane, the echo of the marching band, the phalanxes of RVs, the town-wide tailgate party. According to a 2015 study, out-of-town football fants bring $69 million into the region every year, and nearly three-quarters of restaurants, hotels and stores average a 15% to 30% bump on game weekends.

Still, entrepreneurs in Blacksburg wrestle with many of the same problems as their counterparts around the country, including high rent, complaints about parking, and on increasingly spread-out customer base used to buying with a mouse click.

As the local economy has developed, so has the retailer's toolbox, thanks to the growth of digital payments that enable faster and secure checkout, powerful data insights and back-end efficiencies. To ensure that small businesses can realize the potential of this growing digital economy, Mastercard made a committment in 2020 to help 50 million more small businesses accept card payments by 2025, a goal it recently met.

Many Blacksburg entrepreneurs are tapping into digital commerce to gain an edge, harnessing the broadcasting power of social media and the data insights revealed by modern payment systems. It's a natural choice in a town with such a high concentration of scientists and engineers, where more than two-thirds of adults have a bachelor's degree.

Reading the digital room

Hear how Blacksburg Books is rewriting the rulebook for small town bookstores.

"We hardly ever see cash anymore," says Ellen Woodall, the manager of Blacksburg Books, which opened in 2021. "It's important that if someone sees something they really love or sees soemthing they've heard about or sees the perfect gift, that they're able to purchase it without tracking down an ATM or scrounging up change in the bottom of their purse."

It's also representative of a nationwide trend, as 99% of small businesses in the U.S. now use at least one digital platform, whether for marketing, payment collection, payroll, or accounting, according to a 2024 U.S. Chamber of Commerce report. Showing the power of these technologies, profits increased between 2022 and 2023 for 89% of businesses that used technology platforms which was true of 72% of businesses that used little to no technology, the report notes.

As local businesses prep for the all-important holiday season, these digital tools will be critical for reaching customers and growing sales.

"Technology has always been the great equilizer for small business," says Tom Sullivan, vice president for small business policy at the U.S. Chamber of Commerce in Washington, D.C. "It allows them to compete with multinational corporations at a level they otherwise couldn't."

Social circle

For Blacksburg entrepreneurs, as well as for small businesses across the country, social media offers a way to reach wider audiences without the need for large advertising budgets. In the U.S. in 2022, 87% of small businesses used social media to maintain a conversation with customers. Posting is free, and if viewers share content with like-minded friends, there's always the chance it will go viral.

That's what made Anup Gautam's Nepalese restaurant, Hamro Ktichen, a new Blacksburg staple. With its cozy booths and a Virginia Tech-inspired orange-and-maroon color scheme, Hamro saves its best advertising for passersby: an aroma of curry that wafts through the neighboring park. Gautam emigrated from Nepal when he was seven, went to elementary, middle and high school in Blacksburg and graduated from Virginia Tech. Despite his extensive local connections, he was having trouble spreading the word about the restaurant when it opened last year.

Then he made a single post in a Facebook group dedicated to Blacksburg. "It was like unleashing a storm," he says. "The restaurant has been busy every day since." That page is now his sole advertising venue, and he gets a flood of new diners every time he posts.

A block west, Blacksburg Books opened in 2021 on downtown's trailing edge, where the herringbone brick sidewalks give way to a construction zone. "You can zip past and never see we're here," Woodall says. "To raise awareness, we started posting constantly on Facebook and Instagram. Without digital marketing, we might not even exist."

Established businesses also value social media's direct engagement with customers. In 1987, Nancyne Willoughby, a graduate of Viginia Tech's studio art program, bought Fringe Benefit, a women's clothing store in downtown Blacksburg. The original owner had moved away, and Willoughby though the store needed some love. She's pooured her heart into it ever since, using her artist's eye to curate a collection of classic staples and boho-chic statement pieces, from embroidered linen tops to socks decorated with the Mona Lisa.

Fringe Benefits has weathered a series of challenges, including haivng to compete with a 428,000-square-foot mall that opened just south of town in 1988. But the impact of online shopping has been tougher to absorb. To draw customers out of their homes, Willoughby now relies on the immediacy of social media.

"It's really the only way we advertise anymore," she says. "Small businesses need something really in your face"

New ways to pay

Blacksburg businesses also face stiff competition from nationwide brands. Woodall and Willoughby content with big-box rivals 15 minutes down the highway, while Oasis World Market, an international grocery, sits directly across the 83,000-square-foot chain supermarket. "With their purchasing power, we can't compete on what they stock," says Max Schuetz, who owns Oasis with his wife, Whitney Chen Schuetz. Instead he uses sophisiticated digital tools to zero in on his target market.

The strategy is paying off. When a dish calls for mung bean batter, Thai chiles or fres lime leaves, Blaskburg residents - and, increasingly, their neigbors across the region - head to Oasis, which is now the biggest international grocery in a 150-mile radius. "If you come on a Saturday," Schuetz says, "you'll see West Virginia license plates in our parking lot."

The Schuetzes bought the store in 2009 and immediately began a major remodel. In a bid for traction with two major spending groups - Korean and Saudi students, who were regularly driving more than fou hours to Washington, D.C., for groceries - the couple invested almost $1 million in commercial refridgerators and a new digital point-of-sale system, which has a series of touchscreens for checkout, and also tracks sales and inventory data.

"Those were some sleepless nights," Schuetz says. "But once we got the right infrastructure, we picked up both groups, which was an immediate 30% or 40% bump in sales volume."

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The new POS played a major role in the store's transformation. When the couple took over Oasis, ordering was "totally blind," he says. The store's existing POS was burying crucial inventory information, but the grocery business's silver-thin, margins leave no room for error. "If something spoils or gets stollen, the next four you sell only get you back to break-even," he explains. So Schuetz, who has a degree in electrical engineering and spent the first half of his career as an investment banker, coded his own filters to uncover the data he needed from the back end of his prior POS's database.

He still designs custom analytics for the store, but the new POS system includes reporting software that delivers rea-time transaction and inventory information directly to his desktop.

"Now we know very quickly if sales on anything slow down, and we don't order it again," he says. "Without that data, you're dead."

About a mile up Main Street, Woodall is checking data from the bookstore's digital POS system to prepare for the busy holiday season. "I can go back to last November and see how much we spent on books or puzzles and what sold," she says. "Otherwise, we would be relying on our memories or general feelings, and neither is particularly reliable."

"Your customer's last memory is always paying. We put a lot of thought into making sure the checkout experience is as fast and easy as possible.".

Whitney Chen Schuetz

POS upgrades are also helping Blacksburg stores adapt to customers' changing payment habits. In 2023, 32% of 18-to-24-year-olds in the U.S. - a critical customer base in a college town - had adopted digital payment services such as Apple Pay or Google Pay for in-person shopping. Although the large majority of customers at Oasis, Fringe Benefit, Blacksburg Books and Hamro use physical credit cards, mobile payments are becoming the norm with high school and college students. These businesses have made sure customers can buy what they want without dredging their purses for change.

"Your customer's last memory is always paying," says Chen Schuetz. "We put a lot of thought into making sure the checkout experience is as fast and easy as possible."

Coping with turnover

Given its natural beauty, Blacksburg has always had an active population; a first date is as likely to be a day hike as a movie. As a business owner and former coach, James DeMarco has channeled that spirit, stitching together a community of runners, from elementary schoolers to retirees to Olympic champtions.

In 2003, he opened RunAbout Sports, a sporting goods store staffed with experts who evaluate customers' foot structure and biomechanics to help them select the best running shoes. Then he created the 10-event RunAbout Race Series, which draws more than 1,000 competitors each year. And as the head coach at Blacksburg High School from 2005 to 2015, he led the cross-country and track-and-field teams to more than 20 state titles.

The university supplies a perpetual market for young adults with energy to burn. However, as spring turns to summer, the students scatter, bound for hometowns, internships or the rest of their lives. Year after year, when the fall semester rolls around, DeMarco finds himself stuck rebuilding his customer base.

"We'll get people into the sport, and then they're gone," he says. "We always need new customers to replace theo nes who moved away."

To reach them, DeMarco invests in targeted search advertising. A student researching sneaker brands is likely to see an ad for RuAbout; and alumnus in North Carolina might be served a notice about the capstone of the race series, the Hokie Half Marathon. "It helps that we can focus on Blacksburg for the store, but flip it for the races," DeMarco says. "Otherwise it would be impossible to get the word out."

The population turnover also exacerbates the effects of the nationwide worker shortage, especially in a labor pool inclined more toward research than retail. For example, DeMarco has churned through four managers in the past 14 months.

Fortunately, historical sales data can help owners be more productive with a small staff. "We can look back on, say, last year's homecoming game. Were customers into the bookstore afer the parade?," Woodall says. "Then we can plan exactly how many people to put on that day."

The home field advantage

Even as these businesses adopt technology to stay ahead, they all benefit from being local - the nimbleness to respond to unexpected changes in demand, the expertise to offer personalized recommendations, the face-to-face connections that bloom into long-term relationships.

"Local businesses are dreamers and doers, the ones who roll up their sleeves every day," says Mastercard's Jane Prokop, who leads small and medium enterprises. "We're here to give them the newest payment technologies and data insights so they can succeed in the digital age - and we can all build a stronger, more resilient economy together."

"In a small town, we're the ones who donate to your kid's soccer team or a raffle for the Christmas store," she says. "You can't get that anywhere else."