Strategy

Lessons from Eagle Boys and Dick Smith: How to stay ahead of the competition

Patrick Stafford /

Dick Smith closing down sale

Source: AAP Image/Mick Tsikas

It’s harder than ever, but more important than ever, to be competitive.

One of the by-products of the startup culture of business now is the rush to remain active. Agile methodology, lean business strategy, low-cost equipment – all of this leads to a road in which more businesses are fighting over the same slice of pie, always acting fast and attempting to one-up each other.

Of course, competition has always existed, and it continues to claim victims. In the past six months, two large Australian brands – Eagle Boy’s Pizza and Dick Smith – have hit tough times and been put in the hands of external managers. In each case, the business arguably suffered at the hands of another major competitor. For Eagle Boys, it’s Domino’s. For Dick Smith, it was JB Hi-Fi.

What exactly went wrong? How did these businesses get so far behind, and what can other businesses do to ensure their competition strategy remains ahead of the game?

It can be as simple as watching and learning. But according to Fi Bendall, chief executive of The Bendalls Group, even that isn’t happening.

“I don’t understand why it seems so hard for businesses to learn what’s gone before them,” she says. “This is best practice – it’s all done overseas.”

“I find that quite astounding.” 

The downfall

When considering Eagle Boys Pizza and Dick Smith, you don’t have to go far to see what caused either collapse: unsubstantiated expansion, changing customer preferences, and market leaders that had spent more time in establishing key technological dominance.

In the case of electronics retailer Dick Smith, administrator Joe Hayes of McGrath Nicol wrote in a statement that management was “very focused on increasing revenue and generating profitability” but “this ultimately came at the expense of sustainable growth”.

Meanwhile Eagle Boys, the head office of which is in voluntary administration, seemingly suffered at the hands of market leader Domino’s. Neither offering attempted to walk down the “healthy pizza” angle cornered by brands like Crust, but Eagle Boys was left in the wake of Domino’s move to convenience and its ongoing investment in technology.

Paul Greenberg, chief executive of the National Online Retailers Association, says it was clear for some time Dick Smith was struggling. He points to advertising that even imitated successful strategies adopted by rival JB Hi-Fi.

“You can’t imitate your way to success,” he says. “It didn’t make sense to me.”

“Eagle Boys and Domino’s started going into a price war, but Domino’s was also focusing on innovation.

“That’s the key. Innovation, not imitation.”

But if such a fate can befall even some of the country’s largest brands, what are other SMEs to do when it comes to staying one step ahead of your next competitor?

Simply pay attention

Firstly, Bendall says, you need to start paying attention.

Although we decry Australia as one of the laggards in international technology expansion, she says, one of the key benefits is that we can see what happens to other businesses when they try different strategies. Adopting their lessons, she says, is key.

“For me, it seems so obvious,” she says. You’ve got all these amazing examples overseas.”

Australia is no stranger to watching offshore trends and adopting them locally. In 2010 the group-buying craze arose after founders carefully watched the success of Groupon. But Bendall says few chief executives in existing businesses are watching what’s happening overseas when it comes to even smaller businesses and case studies.

For instance, she points to electrical retailer Dixons in the UK, which has continued to shut down stores even though sales are rising due to the changing retail environment.

“I just find it astounding that businesses are not learning,” she says. With regard to Eagle Boys, Bendall questions why the tech-savvy strategy adopted by Domino’s wasn’t adopted by others.

“Why wouldn’t you be following what they’re doing? What stops you from doing what clearly works, and then improving on it and doing better?”

Be unique in a crowded space

While there may only be a handful of major pizza brands operating in Australia, wine is a different question – and the competition runs hot.

But when it comes to staying ahead, Andre Eikmeier, co-founder of online wine seller Vinomofo, says when the same product is sold by multiple different companies, it becomes crucial for businesses to start developing an emotional connection with their customers.

“When we started, we had a differentiated model that people understand,” he says.

“It was the group buying model, and that led to sharp product price proposition so it was easy to differentiate. As we’ve matured, and our model has grown, we’re less unique in a way but we’ve also broadened out our proposition.”

“Create a relationship with each customer, and you have to mean something more than just a wine to them,” he says.

“Whether that’s trust, or just being part of the tribe and the member base.”

In this case, Eikmeier says, investing in technology shouldn’t become an end unto itself but should have a dedicated goal in mind. For Domino’s, that goal became emphasising convenience over everything else. For other businesses, Eikmeier says, the goal may be investing in targeted data strategies to ensure that emotional connection ensures

“Technology just allows you to be relevant, and for us it’s about personalising that experience,” he says.

“Using tech to tell us on scale what wine someone is going to like, and not wasting their time with stuff, it allows us to be noticed and make the entire interaction seamless and smooth.”

Using data, Eikmeier says, should make the entire user experience seamless.

“Sure, there are people who are going to shop from both Dan Murphy’s and from Vinomofo, but they are not really the same core audience separated by differentiation in product. It’s also about how they interact with the business – and that becomes so important,” he says.

Bendall believes too many businesses aren’t relying enough on “emotional data”.

“The audience is very narcissistic online,” she says.

“People want to keep up with the Joneses, and that feeds a narcissism purchasing trend which is driven by emotion. One of the pieces of work I’ve done has shown that 76% of purchases come from an emotional decision, and there is really little effort to understand that trigger point.

“What’s the value of buying from Domino’s, as opposed to Eagle Boys? You need to capture that and track it.”

Finally, Paul Greenberg says businesses need to confront a hard truth – they may have come to the end of their product cycle. If you’re sticking around longer than you’re needed, he says, you may have come to the end of the road.

“You really have to look yourself in the mirror and ask whether you’ve come to the end of your lifecycle,” he says.

“If the answer is yes, then you need to start reimagining, or re-engineering, or think about getting out with the least amount of damage.

“If you look at companies like JB HI-Fi or Domino’s, they had the courage to say they have to change, and have a go at changing. Look at Kmart – it’s turned around now as well.

“You have to be honest with yourself, and with your business.”

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Patrick Stafford

Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.