What’s Your Competitive Advantage? Focus on these 5 Categories to Beat out Your Competition!
Driven by discriminating customers and increasing competition, independent retailers of all sizes are searching for new formulas to achieve a competitive advantage.
Some retailers perform their daily activities in only an “adequate” manner. Successful retailers, however, possess certain capabilities that allow them to perform certain key activities exceptionally well. These capabilities are a retailer’s “unique value propositions” (UVPs) or “distinctive competencies”. It is these capabilities that give a retailer his or her competitive advantage.
Retailers who have strategy with respect to the delivery of their UVP’s outperform companies with a less clearly defined focus. Delivery of your UVP’s generally comes in one or more of the following categories:
- Existing customer base
PRICE: Being the low cost provider of a product can be a quick path to gaining more business or market share than your competitors. But this strategy has serious risks. Even if you plan to drive out your competitors, you might find that your competitors will just cut their prices too and drive you out! You’d better make sure you really can sell the products at the lowest price and still survive!
SERVICE: This can be a serious differentiator and competitive advantage, if you are truly giving better service by responding quicker, getting it done quicker, getting it there sooner, or providing value by helping your customers before, during and after the sale. However, if you add a huge percentage to the price of your products (in some industries 20%), you may find that customers don’t care about your speed and will turn to your competitors for a slower, but cheaper, alternative.
QUALITY: This is important in most industries and people will pay for quality. However, people don’t like to pay good money for products that fail prematurely or for products that are supposed to wear out rapidly anyway. Of course, quality is very important for certain products such as safety and medical equipment. The best retailers will purchase goods that are the highest quality, while still being within the price point of what his customers will pay. This demonstrates how important it is to know your customers, to know what they want, what they like, and how much quality they will and won’t pay for.
LOCATION: This can be a competitive advantage if you’re the only game in town. People will buy from you as opposed to traveling far and wide to find the product elsewhere. For example, if you sell concessions at a ballpark or other special event, people don’t want to leave the premises, so they are willing to pay more for your snacks. However, here again, you don’t want to end up making your customers mad, or they will just come to the ballpark with food in their pockets. Don’t force your customers to use your competitors.
EXISTING CUSTOMER BASE: If you already have a solid group of customers, they are more likely to continue to buy from you, even if your products are a little more costly, or your service is a little slower. They know you and most people hate change. They hate the idea of having to invest time and energy into finding another vendor, not to mention, will the new retailer be trustworthy? This brings up the idea that you really must go out of your way to satisfy your existing customers. Really get to know them, give them what they want, make it easy for them to buy from you. Give them special “deals” for their loyalty.
Unfortunately we live in a fast changing world. New competitors with better products or service arrive on the scene almost daily. Today’s Internet extends the reach of many retailers. When demand for your product or service slacks or increases, it’s in your interest to try to find out why. Find out why your old customers are not buying from you. If they are switching or thinking of switching find out why and figure out which of the above factors you can do something about, and get moving.
If you like this information, you’ll really like this SPECIAL REPORT “Top 5 Strategies for Retail Store Growth in Difficult Economic Times”.
About the author; Elias Amash is the President of GRIP. Located just south of Grand Rapids, Michigan, GRIP features a 200,000 sq. ft. state of the art warehouse facility including a 2,000 sq. ft. product showroom. GRIP carries a product line of over 1,500 specialty hand tools, household items, automotive, air tools, wood working, and general merchandise. With its proven track record of excellence in supplying retail clients with innovative products, timely fulfillment, and world class customer support, the ideal solution to your retail needs in GRIP.