NEW YORK (MainStreet) -- Urban Outfitters (URBN) - Get Report is having trouble connecting with consumers and investors. The stock is down 25% this year as the retailer finds itself in the middle of a competitive industry dominated by discount retailers with consumers increasingly disconnected to the merchandise.

"This is a fashion issue, plain and simple,"


reported Urban Outfitters CEO Glen Senk saying during an earnings investor call last month. "We need more compelling product."

DeCicco's food stores are an example of a retailer that aims to listen to and adapt to the needs of its customers.

Problems like this can put a small retailer out of business quickly.

That's why it is important that small businesses keep on top of what their customers want and are able to adjust their strategies, merchandise or services fast. Figuring out just what those wants and needs are shouldn't be difficult; there are a host of tools to help small businesses crack customer trends.

Listen to your customers

John DeCicco Jr., director of operations for

DeCicco Family Markets

says maintaining customer relevancy is paramount. The specialty food store, started by John DeCicco's father and two uncles, has eight stores in Westchester county and Rockland county, N.Y., with a ninth opening next year.

DeCicco's opened its first store in 1972 in an Irish area in the Bronx, but the focus has changed since then.

As C-Town stores, they catered toward the middle-income consumer. As the company expanded north into more affluent areas, customers were naturally looking for different, higher-quality foods. DeCicco's decided to rebrand and hone its niche, offering gourmet natural foods and prioritizing customer service. It's not unusual for a customer to ask for an item that's not on the shelves to be ordered. The product is brought in within a few days and sometimes kept on the shelves, he says.

"Every store is merchandised a little differently based on customers' wants and needs," he says. "That's one thing we do that's really different than the chains. It's obviously appreciated by customers."

There is a lesson in DeCicco's strategy: Be sure to listen to what your customers are asking for and respond to them as quick as you can. Customers will appreciate the quick turnaround and hospitality.

Know your customer

While listening to customers is a necessity, first ake sure you know who your target customer is and if there is enough demand for your product or service.

Bern Lefson, a SCORE mentor in Santa Rosa, Calif., used an example of a new Greek restaurant that he counseled that was losing customers.

"For a few months everything was fine and then all of a sudden they've noticed they've moved down in terms of volume of business and couldn't figure out why," Lefson recalls. "I took the owner on a jaunt around the neighborhood and what we discovered was he moved into a neighborhood that was in transition and a lot of his potential clients were actually leaving."

"It's really important for any small business to keep tabs on their customers and what's happening with their customers' habits. Just about any major store or corporation that sells things on a retail basis keeps tabs of what's selling, when it's selling, what time of the day they do this, to see patterns and trends," he adds.

Business owners should be


neighboring businesses, competitors, vendors and suppliers, and, of course, customers to take note of changing trends. Lefson suggested becoming a member of an association specific to one's industry to keep up with trends.

"If a small business is just focused on their own little capsule of the world they're going to miss the changing trends, and when that happens the odds go up that they're going to be left behind," he says.

Provide value to customers

In today's economy, customers still want to acquire the best goods and services, but they are much more price conscientious than ever before. Providing value will keep customers coming back.

Miro Copic, a branding expert and marketing professor at San Diego State University and a principal at the consulting firm

BottomLine Marketing

, says a big question for struggling stores such as Urban Outfitters and

The Gap

(GPS) - Get Report

, is to find out where consumers are going instead.

"The Gap struggled over the last decade at trying to add fashion versus basics as a driver. Back in the '80s and mid- to late '90s they didn't have a lot of competition and a lot of locations," Copic says. Consumers are still looking for fashionable items, but now they're finding them cheaper.

Where they're going to find that merchandise is the discount retailers, specialty retailers or mass merchants that have done a "very good of job of sourcing their target audience," Copic says.

Today the price differential between Gap and its sister company,

Old Navy

, is between 40% and 70%. "In the new normal where people are concerned about the value they are paying, all of a sudden Gap by itself becomes less relevant," he says.

Price aside, stores such as


(TGT) - Get Report

have been able to partner with designers to come up with their own lines. At


, "they're very fashion forward," Copic notes. "They're seeing what the celebrities are wearing, what the trends are in different

areas and getting those products to market in an extraordinarily short life cycle."

"When you're thinking of a small or midsize business, a single retailer or a small chain that's in a regional market, the question becomes how are you tapped in to your customer base? How are you

watching the trends of your geography? Tastes differ, so you have to be in tune with your market," he says.

Experts say that today's explosion of social media makes it easier than ever to tap into customers' preferences.

"Offer them something special or first crack at a new fall line. Maybe it's giving them the opportunity for feedback -- you may get feedback you may not like. There are a lot of ways you can gauge online, and that can help you build loyalty," Copic says.

-- Written by Laurie Kulikowski in New York.

To follow Laurie Kulikowski on Twitter, go to:!/LKulikowski

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