What are you going to do? Do you punt? Close up shop? Or are there ways to evolve? Well, of course you can’t close up shop, right? We are retailers! We are merchants! Fight on! Here are a few ways to bring the fight back to the street.
Take it from someone else. In this environment, you lock out opponents, you target their weaknesses, you march on their turf. It’s a free market economy. The brilliance of a free market economy is that instability makes it stronger. Look around, target a weaker opponent and take it. If the population is not growing and prices are deflating, standing still means you are falling behind. Be greedy about every dollar. If you have a weak opponent, attack. Attack with vigor! Figure out their differentiators and be better. Figure out your differentiators and play them up. What makes you stand out?
Go where the customers are going. If you are McDonald’s and Taco Bell wants everyone to “run for the border” at 2AM, then you had better be prepared to either give up those customers or stay open 24 hours (which most have done). If you are Kroger and you have noticed diapers and coffee are being delivered to the door by Amazon, you need to adjust. Amazon figured out that women with babies would rather not carry big boxes to their car while juggling a six month old. The customers found a better alternative. The neat thing about customers is that they do not stand still. Loyalty is to themselves and their families first. Sorry, loyalty for the sake of loyalty died about four years ago.
Adjust your go-to-market strategy. In the past, you could be an “everyday low price” operator and that was it. You could tell the customers you offer “great everyday pricing” and they should be happy. Until, of course, that’s not very exciting anymore. The guys with weekly specials offer a more compelling reason to come in this week. Now what? Well, you need some weekly specials. But, your infrastructure is not built for offering anything other than low prices? Change it. Walmart figured it out that everyday low prices are not enough. They brought back “Action Alley”, with discounts on top of their discounts. Likewise, if you are a traditional “high low” operator, why do you think a customer wants to pay a higher price at your store for the same commodity available at an edlp operator, or even online? That can of tuna tastes the same. You don’t deserve any more of a premium for it just because you have a better quality cut of meat. That doesn’t compute anymore. Not today.
Offer a “self-select” format. No, this suggestion does not fly in the face of the last idea. By “self-select”, I mean your format has one target customer and that works for your cost structure and profit needs. The Fresh Market, Whole Foods, Trader Joe’s are all examples of formats that fit into their own niche. The customers know it coming in and are not looking for the best price on milk, or the best price on Frosted Flakes. They are there because that format works for them. They have the money and would rather shop where natural, organic, and sustainable (Whole Foods) are more important, or treasure hunt and cool (Trader Joe’s) are more important. They self-selected and are content. It’s the guys that try to cater to everybody that set themselves up for the cognitive dissonance that happens when you try to offer the “best quality and the lowest prices”. You can’t do it profitably. You end up in the middle of the road. The middle of the road is a buzzard feeding-trough.
Be the experts. Go back to the 2007 announcement by Circuit City that they were laying off all the long-term employees and replacing them with part-timers. That was it. The fate of Circuit City was sealed that day. People came in Circuit City because they were experts. Without expertise, they became a commodity. Look at Home Depot. When Frank Blake took over, he made it clear he wanted to put the experts back into the stores. Walk in a Home Depot today and try to make it down even one aisle without seeing an orange apron. Add “Pro Customer Parking” and “Pro Customer Checkouts” and you have identified a customer base that leads to a much higher sale, and now made it easier for them to interact with experts, get in, and get out. Home Depot returned to being the place for expert advice. They’re back!
Understand the preferred platform by your customers. If you are a dry cleaner, you may not need a digital strategy. If you are a book-seller, you might not even need a store. Understand where you fit in the digital/ social evolution and make sure your game is up to par. You sell milk, and the store across the street sells it but also offers online delivery? You lose. You don’t want to offer “pay at the pump” and the gas station across the street does? You lose. Your customers will tell you what they want. You just have to listen.
No, this list is not a total solution, but it’s a start. Look around your operation, look at your merchandising plans, review your real estate strategy, look at your customer strategy (do you have a customer strategy?), do you have category managers or customer managers? The best retailers understand how to adapt, evolve, and even get ahead of the customers. Welcome to the “New Normal”.
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