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Any successful business must discover a niche that is not being satisfied by others.
Any successful business must discover a niche that is not being satisfied by others.

How to build a competitive advantage

Standing out from the crowd in the retail world can be difficult. DAVID BROWN shares a straightforward formula for building a successful business.

One of my favourite questions to ask storeowners when discussing business performance is “what is it that your business does that your competitors don’t or won’t?”

Inevitably, in more than half the responses, I hear some variation of praise for the quality of the customer service of the business in question, and how it is superior to that being offered by rival stores.

When I dive deeper, the answers tend to lack supporting evidence.

In most cases, these responses represent an ideal the storeowner has, however they have rarely conducted a survey of customer service standards between themselves and the competition.

In some cases, the retailers will recite an example of poor customer service that was presented to them by a customer who visited a rival jewellery store years earlier. This isolated incident will be used as a sweeping generalisation for the rival stores’ overall performance with customers.
Any similar such incidents that have occurred in their own store are, of course, ‘customer misunderstandings.’

I’ll often ask the owner what response their competition would give to the same question, and they will usually begrudgingly admit that they too would likely cite customer service as their store’s great strength.
It is in our natures to overlook any shortcomings that may reflect badly on us, and we tend to disregard our flaws if they reflect our own inabilities or defects.

Stand out

A genuine competitive advantage comes from tangibles that can be presented as factual.
If you can show consistently that you sell the same item as the competition for a lower price that is a fact. If you can show your trading hours are longer than a competitor down the road, that is a fact.

A social media page full of customers singing your praises is a fact, and the opinion of your customers and whether or not they choose to spend with you is a fact.

There are a number of steps you can take to develop a tangible competitive advantage in your business.

Attract talent, find your niche

The first thing to focus your attention on is attracting the best talent.

It stands to reason that those with the best staff will achieve the best results for their customers.

You need to ensure your business has an environment that attracts the best people in the industry and that once they’re on board, they’re allowed to get on with doing what they do best.

From there, any successful business must discover a niche that is not being satisfied by others.

We have a bad tendency in business to think bigger is better and to try and be all things to all people. And yet so often, when a business chooses to minimise and pursue specialist areas, that’s when success follows and quality connections with customers really begins.

I often give the example of sports stores. A generalist sports store selling a wide range of products may appeal to a golfer, but probably not as much as a golf goods store. If that golfer is left-handed, a store that only sells left-handed golf supplies will appeal to them most of all. An inch-wide niche that goes a mile deep is the key to profitability.

Understand and then satisfy

Know who your customer truly is.

Hand-in-hand with our second point about pursuing a niche is the need to not only recognise what the market wants, but to also discover who exactly they are. Your typical left-handed golfer will tick a lot of demographic boxes that will help you find and connect with them.

From there, we simply need to ensure that our business satisfies their needs. Once you know what your niche is and who inhabits that space you need to give them exactly what they want.

“We have a bad tendency in business to think bigger is better and to try and be all things to all people.”

Not sure what that is? Ask! Customers will gladly give you their advice and opinions. You only give them half a chance.

If you closed your doors tomorrow what would your customers be losing?

If you can’t answer that in 10 seconds, they may not be losing much at all. You may have a good business now offering good products at a good price with good service – but as Jim Collins, author of the book Good to Great teaches us “good is the enemy of great.”

Settling for ‘being good’ is an attitude we can’t afford to have around.

Attract the best talent the industry has to offer and then narrow down your business to serving a specific niche. Understand who it is that’s pursuing products from that area of the market, and then focus your attention on satisfying their desires.
That’s the simple recipe for a competitive advantage in any market.

 

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ABOUT THE AUTHOR
David Brown

Contributor • Retail Edge Consultants


David Brown is co-founder and business mentor with Retail Edge Consultants. Learn more: retailedgeconsultants.com

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