Back in the early 80’s my dad encountered a customer in our LEGO aisle. She had a notebook and was writing down prices on some of the LEGO sets we carried.
“I’m taking notes because my son’s birthday is coming up.”
Apparently that birthday never happened because every week she was in the LEGO aisle writing down prices.
Eventually we learned that she worked for Kmart and was paid to go around town checking prices on certain items. She was their scout, checking out the competition. We never banned her. In fact, we kinda felt sorry for her. Our LEGO prices didn’t change over the course of the year, so she was paid to come in every week to write down the same information. At least she had a job. Oh, and every now and then she would buy something (other than LEGO).
Today you can price check your competition without having to leave your house. You can do it in the evening lying in bed. You can do it in the morning over your cup of coffee. When I talk about scouting your competition, however, I’m not so worried about prices. I can pretty much guarantee that with enough digging you will ALWAYS find someone selling the same product cheaper than you. That shouldn’t be your biggest concern.
Your biggest concern with your competition should be the strategic moves they are making to outflank you or destroy your competitive advantage. Are they offering new services? Are they moving into new product categories? Are they adding new training programs for their staff? Are they opening new store concepts? Are they rolling out new marketing and advertising campaigns? Are they moving to new locations?
Here are some concrete steps you should take to work “on” your business by keeping an eye on your competition.
- Subscribe to your competitor’s newsletter. Pretty much every retailer has some sort of email communication. Get on their list so that you hear firsthand from them when they are rolling out anything new. Not only will you get the news, you’ll see how effective (or ineffective) their email campaign might be.
- Subscribe to news channel outlets for your industry. I get emails daily with a compilation of news stories from Chain Store Age. I also get emails from Toybook Magazine, The All Baby & Child Conference, The Bloom Report and many more that give me headlines and links to stories that may be of interest. I went into work early and spent the first part of every morning reading those stories.
- Visit your competitors. You can learn a lot in just one visit to your competition. You can learn about their scheduling and staffing. You can learn about how well the staff is trained. You can learn what new products or categories they are showcasing. You can also get tips and ideas that might work in your own store. (Note: If you are not comfortable visiting your competitors in your town, go to stores the next town over. But make sure you make at least one visit to the chain store in your town each year. Chain stores are only as good as their managers. You need to know if you have a formidable foe or not.)
- Be their CEO for a day. When you visit a store or read an article about your competition, put on their CEO hat and think about what you would do if you were in their shoes. Brainstorm ideas to make their stores better. Think about the resources they have and how you would allocate them differently. Then think about how those moves would impact your business. This exercise prepares you in advance for moves they might make. (Don’t think they haven’t had the same ideas you just had about their business.) It also helps you discover strategic moves you can make to position yourself better to counter any moves they make.
In football, every defensive coach will tell you that if they know which play the offense is going to run in advance they will always be able to stop it. The offensive coach, at the same time, will tell you that if he knows which defense the opponent is going to run he can call a play that will beat it every time.
You cannot control what your competition will do, but you can control how you will react. The more in advance you know their moves, the better your reaction will be.
PS Playing CEO for the day is one of my favorite exercises. Not only does it help you understand your competition better, it puts you in the right frame of mind for strategic thinking for your own business. Do this enough and you’ll find you’re spending way more time “on” than “in” (and that’s a good thing.)
PPS Price is important, but not as important as you think. The public perception is firmly entrenched in people’s minds that you will be more expensive than the big chains, big-box discounters, and online predators. No matter how cheap your pricing, you will not overcome that perception. Yet even with that overwhelming perception people still choose to shop with you. Work on your competitive advantage to the point that price is no longer an issue and it won’t be an issue.