Sizing up the competition is something you’ve never really bothered with. Business is booming, at least for a little while. Customers are coming in buying clothes, accessories and other products offered in your retail store. Then over a very short period of time, they vanish. You try everything from new marketing strategies to drastically cutting your prices to bring back more of your customers. When complaining one day to the few loyal customers you have left, they inform you about a new retail store that opened up in a new retail complex on the other side of town.
Retail Competition is always Out There
You may wish to be the only retail business in the neighbourhood. Yet you have to be realistic that you aren’t alone out there in having the same business dream. The competition will eventually come into your territory, and you need to be prepared to size it up to keep your existing customers and attract new ones through your business doors. Performing this research should not be limited to when you first create a business plan and open your store. You need to periodically evaluate what other retail shops are doing throughout the life of your operations.
Reasons to Size up Your Competition
There are several reasons to perform competition analysis. If you are a new retail business, you want to determine how saturated the market is regarding the products you want to sell, the location of other stores in your area, and how you plan to differentiate your products to customers.
If you have been in business for some time, you may want to keep tabs on the competition to create industry benchmarks on how well they are doing and to find out what you could do to make your business more efficient while reducing costs. As a retail owner whose profits are becoming stagnant, you may want to see what the competition is doing marketing-wise to attract customers so you can develop better advertising strategies while avoiding the dreaded commodity trap.
How to Size up the Competition
There are several ways to research your competition. Selecting a variety of methods can allow you to dig deeper into the operations and objectives of these retail stores to gain the information you need to make better business decisions.
- Check the competition’s website to find out about their value proposition.
- Perform customer surveys and questionnaires to learn about purchasing habits.
- Evaluate industry news and social networks to see any changes to the competition, such as new store openings, increased profit margins, or mergers.
- Attend conferences and trade shows to learn more about the competition’s marketing tactics toward customers.
Remember that you are not only trying to find information about your competition to better brand yourself or to find out how well they are doing. It is also smart to find out about the competition’s mistakes and weaknesses so you can avoid the same issues when running your retail store. By gathering as much data as you can, you will have better knowledge about your market and how to carve out the best business niche to grow your retail operations.
People buy from people and it’s so important to remember this. Customers may well pay a premium if they feel and believe that they are getting a superior level of customer service. One of the greatest stories circulating about customer service is the story of how Netflix was created. Reed Hastings, the founder of Netflix, was returning a video to Blockbuster when the shop assistant charged him a late fee fine of over €35 on the Apollo 13 movie. Hastings, angry as hell, thought to himself that there has to be a better, more fairer way of watching a movie without being hit with a late penalty charge such as his one.
Had the shop assistant had the authority or if he was empowered to treat customers in a more customer-friendly way then he may well have reduced the fee to a late one night rental and Hastings may not have been irked or prompted to create Netflix. Blockbuster is dead and Netflix is going from strength to strength. The point being that customer service is a critical component of your retail strategy and sizing up the competition, all the research, promotions and detailed market research will count for little if you do not get the customer experience part spot on.