At the risk of showing my age, I recall a pop song when I was younger that was entitled Stuck in the Middle with You.
Perhaps that title could easily apply to the many retailers out there who, to varying degrees, are stuck in the middle of their market. That amorphous, undefined, unintelligible grey area where the offer is undifferentiated, easily copied, undefinable and generally attackable. More so than ever, being different and unique is paramount to success in a crowded retail market, so you don’t get stuck in the middle with all the others.
Rule 101 of any strategy conversation will include the stock standard ‘how is your business differentiated?’ as they pull out the market positioning maps to illustrate the point.
An ex-boss used to tell me that ‘retail is a brand game’ – build a brand that people want and you are halfway there and that has proven to be true.
Now we see two very apparent global retail trends emerging that emphasise the importance of a differentiated customer experience portrayed through a uniquely branded proposition.
Imagine a simple horizontal line with one end representing retailers whose offers are based on price, range, convenience, a ‘flight to value’ offer, if you will, where a perception of paying less for quality products is the driving motivation and differentiation. A great example of a value driven brand is Aldi, which prides itself on great value products and service, and has won many awards for this.
At the other end of the line we see the luxury premium brands that are differentiated by everything but price, from elegance, sophistication and aspiration through to sheer lust for the brand and all it represents. Louis Vuitton for example reported good business growth through the global financial crisis and they are the embodiment of the luxury brand offer.
Now go to the middle of your line and you will find the murky swamp of retailers who are price driven – they try to be all things and eventually suffer from margin degradation. This must be seen as the ‘no-go zone’ for retailers focused on growing sustainable business value. Aim for the top and be the best at something rather than average at everything.
There is a range of fitness KPIs for any business, and the starting point is the following:
- Specialist not generalist
- Strong value proposition
- Highly disciplined retail execution
- Established and trusted brand
- Understand target market
Are you fit in business or ‘stuck in the middle’?
Happy ‘fit’ retailing.
Brian Walker is the managing director of Australasia’s leading retail consultancy, Retail Doctor Group.