How do I remain competitive against supermarket and online erosion of my USPs?
I run a small consumer electronics retailer and a rental/maintenance business. I have 10 stores located in nearby towns on semiprime high street locations but I’m being forced to compete against not only larger players (Dixons, Currys, Comet, etc) but also supermarkets which are increasingly selling nongrocery products. Additionally, I’m also finding that many customers are now using the internet to check prices of specific models, and this is limiting my ability to premium-price specific models and parts. I can’t compete on price, product range or location, so how can I maximise my competitive advantage?
A. Jim Rogers of Grant Thornton writes:
You’re already halfway there as you are well aware of the competitive advantages of your rivals and you are considering what you need to do to be successful. One overriding piece of advice is to compete in those areas that the ‘shed retailers’ do less successfully, namely customer service and knowing your customer base. That is where you have competitive advantage.
Your strategy should be to focus on customer relationship management. Who are your customers, what do they buy and how much do they spend? Ensure that the sales technique of your staff is excellent so that every customer who comes into the store not only purchases a product but is maximised in terms of their transaction value, through selling ‘add ons’. This doesn’t mean selling things they don’t want, but rather ensuring that the technical knowledge of your staff is top class so that the customers are guided to the right decision.
The quality of your staff can really make all the difference in the sector you operate in. Also ensure that highspending core customers are targeted (e.g. by mailshotting tailored offers or promotions) to get them into the store as often as possible. You should also think about specific product lines that a larger retailer would sell less well. Home cinema systems (and installation), for example.
While you do not need to precisely match the prices of your larger competitors, your prices do need to be close enough that customers will accept the premium given the added benefits of customer service. Again, you will not be able to match the larger retailers’ product ranges so you must really focus on stocking what your core customers want.
Other things you may want to consider include selling on your rental book in the near future to raise some cash. All rental books are declining as people tend to buy TVs nowadays, so it makes sense to exit this market sooner rather than later. You may also wish to consider some exposure on the web. This would churn some product, keep your purchasing levels up (and therefore allow you to make use of supplier discounts/rebates from the key manufacturers) and generate a small amount of incremental sales.