Determining where the real battles are
"The chain stores drove him out of business". Perhaps you too have heard that statement as the reason why a neighborhood retailer has closed his doors. A retailer expects that he will lose customers, hopefully only temporarily, when a new competitor opens in his area. After all, when a new store opens, those dollars surely come, in part, from existing retailers. And with the various Internet and catalog retailers, the challenge increases.
For the stores that remain after a competitor arrives, some have merely survived, while others have rebounded to experience record sales. Even after one competitor opens, there are occasions where even another competitor opens.
What is it that makes the difference? One reason given often is, "they are just lucky". It would be our contention that this comment has the same questionable validity as the one made at the opening of this article.
After all, if you were to go into a store that has a large staff which operated very efficiently and provided quality assistance to their customers, would you say that the owner was lucky to have such a staff? If there were 10 employees, would you say that he was lucky 10 times as each individual was hired? What is the secret this owner has?
We would offer an idea that says the answer lies in two words - minefields and mindfields.
Let's first look at a minefield. Just like we would see in an old war movie, taking a store today and attempting to be a profitable store 5 years from now, there can be a lot of possible "mines" in the way. In the movie, after someone had safely crossed the minefield, the one sure way to make it to the other side of the field alive was to walk only in the footprints of the first individual.
For each of us there are several of these individuals that have safely crossed the minefield. You may buy from a wholesaler that has someone on their staff that has made a point to study the chain stores and other forms of retailing. There are also in-depth reports that will detail strengths and weaknesses of these new competitors.
When most of us attend a trade show or convention, there are often seminars that specifically cover this topic. You will find a number of retailers, all in different stages of competitiveness with other retailers. We have never met a retailer that was not willing to share his or her experiences with another dealer.
If we decide not to follow this leadership, there is a good chance that we will step on one of the mines as we cross the next several years. Hopefully, we will not step on so many mines that our business will be fatally wounded. The one sure fatal step is to do nothing, and expect that all of our customers will be back after the newness of the new competition has worn off. The list of potential mines is endless: close early every day, do not price shop the competitor, permanently discontinue advertising, do not do anything different, or wait until the competition opens to make any changes.
The key is to recognize that the minefield does exist. We have never met the retailer that said a new competitor, especially a chain store or discount store opened in his trade area, and he never felt any impact on his business. The suggestion is for every retailer to decide to take advantage of those that offer their previous experiences to assist us.
The mindfield appears to occur on an individual basis. This means that the mindfield is actually a mental block that we have. It may come from making a one-time trip to the competition and deciding that if we were not spoken to in their store, we do not need to make any effort to wait on customers in our store. After all, with one visit we have proven to ourselves that they do not offer any help.
While we might be hard pressed to give a definition of a store struggling with a mindfield, there are many signs that may be obvious to another retailer. One retailer told me he knew he had found a way to gauge a store when he checked shelves to see how many models of a certain product were stocked.
Another retailer has watched for the customer service level, while another looks for store cleanliness as a marker to success. We have all heard the experience of stores that experienced a sales drop when the new competitor opened, and have unfortunately accepted the decreased sales as being their designated position. Fortunately, most stores have said that they would rather keep trying new promotional ideas to rebuild their business, than to have closed their store just accepting their fate.
Sure, some changes will take money. But an owner staying late at night to build displays, clean floors, or change burnt out light bulbs can show that he is determined to be the master of his fate. Mindfields seem to be terminal only if they are allowed to continue for too long of a period of time. But, they have shown a trait of growing larger and larger if left unchecked.
In the old war movies, there were always casualties. If the movie had a large cast of well known actors, it was difficult to determine who was going to still be alive at the end.
Generally, the bigger name actor was the survivor. The same is for retailers, as we make a better and bigger name for ourselves with our customers, then the better the chance that we will survive the minefields and mindfields.