Q: We will have a business opening in direct competition with us very soon. They contacted all our suppliers. Is there anything we can do to protect ourselves? They are going to be 100 yards away and stocking exactly the same goods.
Mar 06 2012
Answered by: Ed Percival Ask a question
Your business has a position in the market – it’ll be what you are known for, your niche, the gap you fill.
In this situation you have a choice; you either let the market tell your story, or you declare your own story. If you are making a play for a stronger position, you primarily have four aspects to make a distinction between you and your new competitor – product, price, service and market.
So from your question, we know your new competitor is going to stock the same product range, so there’s no distinction there. Price is not a favourite leading differentiator for me. Chasing price down simply collapses margins – remember pound shops finding 99p shops opening nearby? Market doesn’t help in this instance either, you’re in the same town and the same market.
So your best choice would appear to lead your story with a great service proposition. If you are established, perhaps you can train your people to deliver the most delightful service in town to win clients over and then keep them. I would also start looking for a niche product that would give you exclusivity in your area.
Providing good service brings to mind a recent answer I gave to a reader who was preparing for their first retail Christmas. In it, I talk about interesting statistics on loyalty which can be used to your advantage:
If a customer buys one product from you, they are 50 per cent likely to return for another. When they have bought two different products on two occasions, they are 70 per cent likely to return.
So if you have a deliberate strategy to get people coming back to become loyal clients, you’ll build revenues faster
and more reliably than if you’re going out to win a new client every time.
I hope this provides direction and I wish you every success.
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