Time for a Reality Check
Your customers' shopping in other stores
The newspaper photo showed the
store owner standing in front of his store. The photo caption
mentioned the distinctive neon lettering. In the last fifteen
years, this news article was the largest about an independent
hardware dealer that we had seen in our local newspaper. When
one of the big box stores moved their store to a new location
a couple of years ago, their regional president was the subject
of a cover photo and four page article in the business section.
If there is a tropical storm
heading our way, you can expect to see a photo in the newspaper.
It will show folks in line at the big box store waiting to make
their purchase. There is also the occasional article that calls
for a quote from someone in our industry. You can anticipate where
the reporter goes to get the interview.
The question today deals
with the perception that the public has of the big box store, and
of the independent hardware dealer in the market. In the article
about the local store, the owner was announcing the closing of the
store. He remarked about the customers that told him that they check
his store when they find the big box does not have the item desired.
He also made a comment about the smaller hardware store being relegated
to providing the inexpensive accessory sale.
The description of "friendly
and knowledgeable help", "they have the unusual items",
or "it is a neat store to visit" may be compliments,
but they do not make major contributions to the bottom line.
In
a discussion one day, a dealer told us of a customer that had gone
to the big box store to purchase a faucet and copper fittings, but
went to the hardware store for directions of how to solve a problem,
and a lesson in the art of soldering pipe fittings.
Many times we
can find the article, or industry expert, that says the smart retailer
will take excellent care of this customer and expect that he will
return. Do you really think so? When the customer decides to paint
his house, do you expect that the customer will remember the previous
experience and will come running to purchase all of his paint and
sundries from your store? The independent store can't sit back and
rest on his reputation. Not even after having provided the customer
with the knowledge of how to solder pipe fittings, can you expect
that you now have a loyal customer. For you can never shame a person
into shopping in your store.
Ask 100 businesses about their
position in the market, and 97 out of the 100 will tell you that
they are the number one or two business. This is the major problem
with businesses as few, if any, are willing to acknowledge that
they are not the leading business within their market. This report
is according to "Marketing
Warfare" a book written in 1986 by Al Ries and Jack Trout,
two gentlemen that own an advertising agency in New York.
The
authors explain that there are one of four directions you can
take in an effort to increase your market share. This book is
an excellent resource book for any hardware retailer for there
are stores that fit into each of these categories.
The first "warfare
strategy" is for the business that truly is the leader. Not
someone that is "holding their own", but the retailer
that is truly the number one store in the mind of the customers.
The thrust of the number one
position is to work to make your current position outdated so that
your competition is always one or more steps behind you. Your competition
is trying to copy the business techniques that you are preparing
to abandon.
The second strategy is for the
business that is the second or third position retailer. In this
scenario the suggested direction for a retailer is to determine
the strengths of the number one business and then make number one's
strengths work against him.
If you are not one of the top
three businesses then there are the third and fourth strategies
that you can utilize. The example given in the book for the third
strategy, "flanker
strategy", was that
of the soft drink, 7 Up. If you let the traditional colas (big
boxes) hammer away at each other, then you can take a flanking
approach. Remember the upside down glasses and the "never
had it, never will" approach of 7 Up?
Perhaps in your store,
you could use a "voice mail - never had it, never will",
or a "friendly greeting at the door, and throughout the store" approach.
The fourth warfare strategy
is entitled "guerilla warfare".
With this market position, you have to first remember that you are
not the number one store, nor should ever try to act like the number
one store. But you should concentrate on a unique niche of the market.
Utilizing the soldering example,
perhaps your store could specialize in having Thursday night pizza
parties. Invite your customers to come in for an evening where they
are provided with hands on training on how to perform various repairs
about their home. Have them bring the entire family and have movies
for the kids. The important thing is that you find something unique
about your business and promote that position. The side note is
that as soon as the position loses its uniqueness, you have to have
a new idea ready.
This brief article is by no
means meant to be a review of "Marketing Warfare".
Instead, the purpose is to suggest that you read this, and other
management books, to find a strong position in the market for your
store. The big box store is not going away, and hopefully neither
are you.