The 10 retail insider-tricks you can implement when new retail competition moves into your neighbourhood.
The retail sector is more dynamic than ever. It’s a knock ‘em out, dog eat dog world, part-Mad Max, part Braveheart (freedom!) – where every retailer is fighting for their space in shoppers’ minds; and wallets.
The way that consumers make their buying decisions has shifted dramatically: they stand in your aisle, using their smartphones to compare prices and product reviews; family and friends instantly weigh in on shopping choices via social media; and when they’re ready to buy, an ever-growing list of online retailers deliver products directly to them, sometimes on the same day.
Historically, market shifts have created winners and losers – from local corner stores to department stores; shopping malls to discounters and big-box chains; to online, the trends stops for no one. As an existing and successful retailer, you’ve always got to be on the lookout (and plan for) the new kid on your block.
So what do you do when that new player knocks on your door, ready to take your market share?
1. Keep your eyes open.
Although it might seem that newbies burst on the scene, trends actually unfold over longer periods, giving you a chance to examine what you’re doing well and what to refresh (ie. new floor plan, a light reno, better service, new graphics or window displays?).
So stay on top of current trends and keep your ear to the ground. Those that stand still fall behind.
2. Focus on what works.
Despite the e-commerce boom, trends suggest that bricks-and-mortar retailers will retain 85% of sales in the US through 2025 (McKinsey & Co) so there’s time to tackle what they’re naming the 5 big trends: demographic changes, rising multichannel and mobile commerce, increased personalized marketing, a distribution revolution, and emerging retail business models (think: mattresses bought online).
TIP: Don’t just watch and borrow from your own industry. By visiting your favourite retailer; someone who’s doing it really well (preferably in a different sector, so you’re not the ‘follower’) and adapting those learnings, you’ll be able to mix it up, create a stir, maybe even disrupt a bit.
3. Create tighter bonds.
Strengthen your bond with existing customers by personalizing their shopping and service experience (think: tracking their favourites and surprising them when new orders come in, seasonal reminders, what’s-new tips, or private shopping experiences). Perhaps creating in-store events (for kids, women, couples, hipsters, etc) or allowing for online purchasing to be picked up in-store or delivered will warm the relationship. Throw a party, if it serves to expand your demographic or purchaser catchment. Don’t forget to try leveraging peer recommendations via social networks or user reviews and the like.
4. Bulk up.
Consider adding to your current product line. Just as many conventional retailers like warehouse clubs, pharmacies and even dollar stores have added fresh food to their lineup, you may be able to augment your current product base to attract customers. You never know what may work unless you research try. Start small with a simple pilot, measure, and then take it from there.
5. Knowledge is everything.
Simply offering a product, any product, is not enough. Competitive retailers need to possess transferrable, deep product expertise to help consumers decide on their purchases and explain the rationale behind their choices. Think of the sommelier at your local restaurant, the barista at your local coffee shop, the curator at your local bookstore, or the personal stylist at your local tailor. Each one of these offers a unique experience tied to product knowledge. Again, your environment will want to be increasingly experiential.
6. It’s not just the price.
With the boom in discounters, margins are always under pressure. And all retailers have to be vigilant when it comes to three cost levers: direct product costs, the indirect costs of goods not for resale, and labour costs. Retailers who tackle these intensively can curb expenses and come out on top in a competitive market. In the product cost area, some retailers strip back costs by going ‘private-label’, thereby also giving customers exactly the features they’re most looking for. Some retailers examine their ‘should cost’ models in order to reset their pricing. And increased technology in-store can reduce infrastructure spending. It all adds up!
7. Reconfigure your footprint.
Many retailers are already ‘rebalancing’ their real estate. Bricks-and-mortar locations can’t simply be places where products happen to be sold. Grocery outlets haven’t been as greatly affected, but witness what’s happening in toys and consumer electronics sectors. Often a footprint can be downsized by half. Reconfiguration, of not just within each individual space, but perhaps considering the complexion of your multi-store portfolio can make all the difference in the world.
8. Tech is king.
Forward-thinking retailers examine their use of data and build an analytical muscle to enable targeted marketing, the tailoring of product assortments as well as more effective pricing and promotions. Gathering and analyzing data to understand the needs, preferences, and attitudes of your expanding consumer segments, such as focusing on under-served groups like Hispanics, the LGBTQ community, and centennials will be just as important as understanding individual customers and customizing their shopping experience on a one-on-one basis.
9. Don’t wait.
Instead, embrace the challenge of continuous evolution. Perhaps this means continuously experimenting to develop with a proprietary line of products, fresh technologies or a new business model. This kind of pre-emptive ‘global think’ isn’t easy, but it’s a good line of defence.
10. GET COMFORTABLE WITH THE RIGHT AMOUNT OF RISK.
It’s very Canadian to be shy and polite, but some of our most powerful success stories (Aldo, Lululemon, Frank + Oak, Indochino) have been bold and willing to challenge US or outsider brands. It’s easy to forget when embarking on an ambitious expansion plan and staring down a few significant setbacks along the way, to keep your eye on the prize. Don’t be afraid to break a few eggs in your quest for success.
Perhaps that means making a secret shopping trip to your nearest and dearest competitor and scoping out some of the things they’re doing right? More often than not, you’ll want to surround yourself and your venture with the finest expertise possible.
If you’re facing a challenging local market, or new US competition and need some help our door is always open.