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When it comes to product mix, your competitor can be your best teacher

“That’s interesting.”

BinocularsHave you ever walked into your main competitor’s shop and had that reaction? As you look around the store, you see a product you had not heard of, a promotion you had not thought of, or a new price for products that you both sell. These are incredibly important pieces of information and they are there for you to take back to your own store and make your own.

We all have competitors. They may be good competitors or they may be lousy competitors. But they are competitors and every customer that goes into their store is probably a customer that won’t come into your store. It is a zero-sum game.

The eternal question is: Why did the customer choose one store over the other?

It could be a question of location — one store is better situated in the traffic flow, making egress easier. It could be that one store has a better physical presence than the other. Both of these advantages are very difficult to overcome on a day-to-day basis without investing a lot of capital, or moving your store.

However, if neither of those points are a factor, then it must have something to do with the inside of the store. It can only come down to one of three things: appearance, product mix or customer service.

Let’s focus on product mix (including pricing and promotions).

Customers are always on the lookout for new products and new ideas. We, as store operators, need to be on the lookout as well. Unfortunately, most of us do not have a large marketing department that can be constantly scouring the industry for new products. Of course, we will hear about new items at trade shows and when our vendors come to the store but, on a day-to-day basis, it’s very difficult to keep up with new offerings and promotions.

This is where your competitor becomes your teacher. By keeping an eye on your competition, you are effectively increasing your marketing and new product development capabilities. More likely than not, if your competitor has a new product, it will not be on an exclusive basis or, if it is, the exclusivity will be short-term. If it looks like the product is being a success in one store and you don’t have it in your store, then you need to try it out.

The bottom line is: You need to have successful products in your store.

The tactics of using a competitor as a benchmark fall into three categories:

  1. When you allow the competitor to stay ahead of you and you do nothing to meet or beat what they do. Your competition will always have the advantage and, I’m afraid, you will eventually run out of customers. End of business. Goodbye.
  2. Keeping up with your competitor. You need to see what your competitor is doing and have the same things in your store. Check out their pricing on a regular basis to make sure you are offering an equal or better value. Find products that will appeal to your core customer base. Using ideas from your competitor does not have to be limited to products and pricing. It can also include loyalty programs, customer service initiatives or the reallocation of space within your store.
  3. Surpass what your competitor is doing. In my opinion, this is the best way to learn from your competitor. Always stay one step ahead. If your competitor is doing something new, take that idea, modify it so that it becomes yours, and implement it quickly and effectively. Every time your competitor makes a move, you make a countermove so that you stay ahead in the game.

This is not as difficult as it sounds. You can find new products and good ideas by reading industry publications, asking your vendors questions, and visiting other stores that are not in your immediate neighbourhood or market. Do it once or twice a month. The idea is to find and experiment with things before your competitor finds out.

The great thing about competition is that it can raise the level of everyone’s game. If it’s an active competition, it can provide you with an ongoing stream of new ideas and products. The more stores that you can visit, the more ideas you will discover.

Perhaps it goes without saying, but the other thing you can learn from your competitor is what mistakes to avoid. Not everything works when it’s introduced into the marketplace. The product may be inappropriate for the customer base, it may be priced incorrectly, or it may just be a bad idea. It’s important to recognize the bad as well as the good.

By keeping your eye on your competitor, you’re not only using them as a marketing department, but also as a test laboratory. Let them go through the trials and tribulations to see whether the product is successful. You may lose the first-mover advantage, but you may avoid wasted time and resources with a product or promotion that doesn’t work.

Please don’t take this as suggesting you should not be the first try new products and ideas. I strongly think you should be the first whenever possible. However, when you do see a new product or program in your competitor’s store, keep an eye on it to see whether it’s going to work. If the competitor has placed the product in his/her store, you’ve already lost the first-mover advantage, so make sure it is going to be a successful product before you place it on your sales floor.

Having said that, watch out for fads. We all know the products that come out and are hot for a month or two and then disappear. (Anyone have any spinners left on their shelf?) It is very difficult to determine what is a fad and what product will have the staying power to be profitable over the next year or two. Our rule of thumb: If it comes in a box from Asia, it’s a fad. Buy early and don’t over-purchase. If you find out the item has legs, you can always order more.

One final piece of advice is to keep your definition of a competitor very broad. Your competitor may be the next convenience store down the street, but it also can be the local pharmacy, grocery store or dollar store. All of these retailers are trying to take your customer from you, and you need to have a strategy to keep your customers in your store(s). This is a daily consideration and you must focus on it consistently. Once you lose a customer to a competitor, it is very difficult — and usually expensive — to get them to come back into your store.

The best strategy is to not lose the customer in the first place. Give your regular customers a reason to come back to your business trip after trip, and new customers a reason to return.

As the lines that separate retailers continue to blur, it matters less and less to the customer where they pick up their bottle of water or candy bar. The sign on the door or the type of business you run isn’t the overriding concern. The customer is interested in convenience, selection, price and customer service. That’s it. You can compete on all of these points and who better to learn from than your competitor?

Roy Strasburger is president of Strasburger Retail (previously Convenience Management Services Inc.), a privately held retail consulting, operations and management provider serving the small-format retail industry. Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News Canada.