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6 suggestions to help deal with competition
Looking at businesses in your district, you will find they fall into one of two groups. The first group will be those with businesses located in communities that are small. Most likely, these businesses haves the benefit of drawing from a customer base that is too small for the chain-store competition to attempt to reach. The answer given by these businesses will probably explain how they have lost some customers to catalogs or the Internet, as well as losing some to the business that is located at the county seat or over in the next big town.
Let's move to the second group. Ask these businesses who is the competition, and the names will include every mass merchant you have ever heard. Each of these businesses is a "category killer," able to dominate the market for the products they sell.
Then ask these businesses to tell you how business has been since one of the competitors has arrived in their town. Their answers usually fall into three groups, one of which will tell you about their desire to sell their business to someone or how they are considering closing their business.
The second group of businesses will tell you that after the competition arrived, they managed to survive with fewer sales by cutting expenses and doing with less—both as a business and as the owner.
It is the third group that has the answer we want to hear. This is the group that contains the true merchant. These are the people who have the experience, the answers, and who are thriving in the face of competition. You will find most of these businesses felt the initial impact of competition and now have sales that are equal to or more than their sales of previous years. What is it they have done to counteract this competition? From their comments, we offer their experiences and a collection of SIX suggestions.
IDENTIFY THE COMPETITION AND THEIR TACTICS. Many will tell you when they first heard there would be a new competitor on the scene, they made a point to visit one of these stores and see how they operate. They watched the category killer's advertising, merchandising, hiring practices and pricing. They also located their counterparts who were already competing against these businesses and asked what their experiences had been. When the competition finally came to their market, they already had a year or more experience available to them.
IDENTIFY THE DIFFERENCES AND TAKE ADVANTAGE OF THEM. One business owner performed an exercise of listing 20 advantages the competitor had over his business. Then he listed 20 advantages he had over the new category killer. Utilizing the two lists, he promoted all of the advantages he was able to offer. At the same time, he began looking for ways to counteract the advantages the category killer had.
For example, if your competition is open 12 hours a day (or worse yet, 24 hours a day), you probably can't match their hours. However, a business having hours of 8:30 a.m. to 5:30 p.m. is available to only four groups of people: those working second- and third-shift jobs, retirees, the unemployed, and the sick person who is missing a day from work. Expanding your hours—and even offering after hours delivery—can go a long way to negating this advantage.
Most of these businesses stated that one of the advantages of the competitor was location. What can you do to counteract this?
Promoting services and goods that will be exclusive to your business, and make your business a community center of activity. One business accomplished this by frequently hosting the bloodmobile, allowing the antique auto club to utilize his parking lot, and inviting other charitable groups to have a sidewalk sale in front of his business.
GIVE YOUR BUSINESS A CLEAN IMAGE. Several of the businesses in our "thriving" group redesigned their stores. If your business has not had a facelift in three or more years, it is time for at least a fresh coat of paint, some changes in lighting, and moving some of the inventory to new locations.
PROMOTE YOUR PEOPLE ADVANTAGE. One business outfitted her entire staff with shirts that had their names embroidered above the pockets. This touch added a degree of professionalism the competition cannot match. Hold 1-hour bi-weekly meetings with all of your staff.
As your staff can eliminate the "I don't know" phrases and add the "Let me tell you about this new…" statements, you have tremendously differentiated your business from the category-killer competition.
HAVE A PRICING STRATEGY. Most businesses made a point to review their pricing of products and services. They found the competition had a list of about 100 items they advertised on a regular basis. There are three ways to respond to this competitively priced image.
One is to go head to head with these 100 items. You will make little to no money in this situation, but you can make up for this elsewhere. The second strategy is to change brands so as to eliminate the direct comparison. And the third strategy is to eliminate the product completely. There is no advantage here to having products and services that your competition has priced so low that your prices look out of line—especially as the competition has advertised the item so frequently.
IDENTIFY YOUR CUSTOMERS. Noted business speaker Jack Rice stated, "Never forget a customer; never let a customer forget you."
Using your store records, as well as the driver's licenses you may use for check-identification purposes, begin to create a mailing list of all your customers. One business has weekly door prizes as a means to gather this information about his customers.
Creating a monthly newsletter that is sent to all those who have shopped in your business is an ideal way to maintain this contact. Financially, it is not only affordable, but it adds credence to the formula that states it costs $20 to gain a new customer, but only $4 to keep a current customer.
Your newsletter should include information about new products and services, your employees, as well as information that ties your store to your community; talk about the Little League team you sponsor, remind your customers about the bake sale by the ladies club or the pancake breakfast at the Kiwanis club.
Competing with the category-killer competition is not easy. They are, however, here to stay. Let's work to make sure you are, too.
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|This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.|
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