Monday, August 12, 2013

Creating a Competitive Advantage in the Retail Space

No retailer wants to be “just another [your product] store.” But how can you stand out? Every business has at least competitive advantage, some positive quality that sets it apart in the marketplace. For example:

McDonald’s competitive advantage is convenience; a restaurant location
is never far away and the food is inexpensive.

Keens Steakhouse’s competitive advantage is quality; its single Manhattan location isn’t convenient, and the prices aren’t low, but it’s consistently ranked as one of the best restaurants in the city.

Outback Steakhouse’s competitive advantage is price; you can get a six-ounce sirloin steak there for $10.

So how do you determine your store’s competitive advantage?

First, you’ll need market intelligence. That includes discovering what your customers want, what they’re willing to pay, and what needs they have that aren’t being fulfilled. That information can be gathered from studies and trade magazines, or by directly surveying your customers.

Next comes competitive intelligence. What is the competition offering? What is attracting their customers to them instead of you? What are their strengths and weaknesses? These findings will help you determine what separates you from the rest of the marketplace; the positive differences can become your competitive advantages.

"Investigate" your competition to determine your competitive advantages.
The strongest competitive advantages have these qualities:

Whether it’s unique merchandise or a fun policy (like The Disney Store’s “You break it, you don’t have to buy it” rule), a true advantage must be uncommon among your competitors.

Small differences don’t matter. If your competitive advantage saves customers money or makes their visit more pleasant, they’ll definitely notice.

Hard to Copy
If your competitors can easily duplicate what you’re doing, it won’t remain an advantage for very long.

“Buy One, Get Three Free” would probably result in customers rushing to your store. But then what? An offer like that can’t last long. Make sure your advantage is a true change in policy, procedure, or philosophy, and not a short-term gimmick.

Even if you can’t provide the finest products or the lowest price, there’s one simple and effective way to stand out: the customer experience. That means making the customer feel valued while in the store, handling complaints and returns with ease, and reaching out to the customers afterwards to get their feedback or offer discounts. Studies have shown that
our happiest memories are tied to experiences, not possessions, so it’s possible that the experience of buying your products is more important than the products themselves.

The customer experience includes tech support and customer service, too!
“Simple” doesn’t mean “easy,” however. Creating a great customer experience means training employees differently and offering them incentives for great service. It may mean operational changes to make sure complaints and exchanges are made as hassle-free as possible. It might also mean expanding the job responsibilities of your HR or marketing teams to oversee all these improvements.

How will you when you’ve succeeded? Luckily, it’s easy to measure your store’s competitive advantage. Sales volume, same-store sales, and customer traffic are all straightforward metrics. You may also see more chatter – or at lest more positive chatter – on social networks, as customers share their experiences and write happy reviews.

Your retail store is unique, with advantages over your competitors. Once you discover those advantages, emphasize them, and make them part of your brand, you’ll reap the benefits.

1 comment:

  1. Excellent post, Jody. While these points are directed at retail brands, they can be applied to other industries, B2B, and non-profit too!


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