Posted: Aug. 27, 2012, 8:30 p.m. EDT
Identifying rival business and staying ahead of trends enables retailers to find their place and thrive.
By Lizett Bond
A retailer’s ability to stride ahead of business challengers can define success or failure. Often, it isn’t solely location and product mix that create strong sales and allow an enterprise to flourish, but a combination of tools creating that competitive edge over others in the marketplace. For this reason, competition must be identified, including tracking methods of operation and their effect on business.
To begin, it helps to consider rival pet businesses around a store’s immediate location. Dan Barton, owner of dog grooming salon Hollywood Premier Pets in Palm Desert, Calif., and author of “Stop Your Bitchin’ and Start Making Real Money,” noted that competition is generally located within the 5-mile radius that customers are comfortable driving in their day-to-day routines, including Big Box stores.
In-store events, such as this one at Two Bostons in Naperville, Ill., allow retailers to build a store’s reputation while offering an opportunity to query customers and gather information about competition. Courtesy of Two Bostons
“That changes slightly depending on where you are,” he said. “In New York City, for example, it might be a two-block radius, or in a rural area it might be more than 5 miles.”
Challenges to local pet stores are increasingly coming from larger national retailers. Adam Jacobson, executive vice president of Pet Pantry Warehouse in Greenwich, Conn., noted that Petco and Petsmart are considered major competitors primarily because of the price points they set. In particular, Petco’s new everyday low pricing model for key and select high-volume, high-target items must be taken into pricing consideration.
“They are, in our minds, indicators of what the competitive prices should be for products if you want to stay relevant,” he said.
An internal survey conducted with Pet Pantry Warehouse customers revealed that 50 percent of those polled also shop in a big box store for some of their pet needs, Jacobson reported.
“The more locations that are opened, the more saturated the market will become and the more convenient it is to the customer,” he said.
To combat this eventuality, Pet Pantry Warehouse is beginning to focus on its own brand portfolio, with more emphasis on the frozen, dehydrated and freeze-dried food products not yet found in the big box stores, Jacobson stated.
“We are building a model to decide how much of our percent sales we want to realize strictly from the independent pet specialty brands,” he said.
The Tools to Succeed
Knowing where competitors are located isn’t enough. Retailers actually have to be able to put up a fight. And when it comes to consumers, the battleground is often price. Alan Ronay, owner of Best Buddies Dog Boutique and Bakery in St. Pete Beach, Fla., offers a price matching feature allowing customers to purchase pet foods stocked at Best Buddies for the same prices offered by competitors, including the larger chain stores.
In addition to meeting those price points, 10 percent is also deducted off the initial purchase. Policy conditions are clearly noted on the Best Buddies website.
Price matching can be tough to achieve, and it may not be possible for every retailer in every situation. However, there are other tools store owners can use to stay competitive. And some proprietors reported a benefit to facing competition from a big box retailer.
Because of demographic research conducted by a larger chain prior to opening in a geographic area, close proximity can be a plus, providing the independent retailer with an opportunity to set themselves apart by offering outstanding customer education and service, Barton noted.
“At your shop, you should be carrying the 35-pound bag of dog food out to the customer’s car, where Petco or Petsmart would not,” he said.
Competition: The Long and Short of It
In today’s world of pet retail, competition is unlimited in scope, and everyone seems to be jumping on the pet supplies bandwagon, according to Lorin Grow, owner of Furry Face in Redlands, Calif.
“This Includes stores you would not readily think of,” she added.
Fresh rivals climb aboard every day, and even the most unlikely concerns seem to be offering pet items. These new entries into the marketplace can be very frustrating and discouraging to independent retailers. Grow added that in order to truly identify a competitor, retailers must first look at how they categorize themselves.
“Who are you?” she said. “What do you do best? What is your focus? Within that, are you specialized or more general?”
Once that information is determined, take some time to investigate similar businesses in the area to compare and assess their why’s and how’s, Grow advised.
“This is your immediate competition, your short-term competition,” she said.
Next, Grow suggested observing area businesses outside of the short-term competition parameters calling this “long term-competition.”
“You don’t need to worry about them right now, but you might have to down the road,” she noted. —LB
Moreover, independent retailers can conduct their own demographic investigations by periodically compiling and checking key statistics, thus identifying marketplace opportunities based on attributes such as age, income levels, marital status, and ethnic and family life cycle, according to Lynn Switanowski, president and founder of Creative Business Consulting Group located in Boston.
“Determine the ‘buying mindset’ of your customers,” she said. “These are the emotional connections retailers should tap into to get to the root of what makes customers spend money. These emotional connections are called psychographics.”
Such emotional connections include lifestyle, social class, opinion, activities and interests, attitudes and beliefs, she added. These characteristics can be used to determine product assortment.
In this way, many successful retailers have sized up their target markets and zeroed in on unique approaches to meeting customer needs while setting their store apart. Lorin Grow, owner of Furry Face in Redlands, Calif., noted the importance of observing industry and market trends overall, but cautioned that retailers must also focus on creating their special niche and concentrate on that strength.
“If you are constantly watching what the other guys are doing, you are going to be chasing your tail all the time,” she cautioned.
Keeping the Lead vs. Catching Up
Forward-looking retailers are continually assessing trends and new ideas to create the shopping environment their customers are looking for. Switanowski noted that this research includes taking advantage of social media networking opportunities such as those offered by LinkedIn and various discussion groups and forums.
Networking with other retailers is an educational opportunity and a valuable tool, and Berry Berman, founder of NexPet, a retailer co-op in New York, advised that retailers meet with other storeowners while attending tradeshows or during other travel. In addition, he agreed that joining groups with email forums provides an avenue for questions and concerns to be addressed and ideas shared by others in the trenches.
“I really believe that learning from other store owners is the best way,” he said.
In terms of identifying and keeping ahead of the competition, Berman noted that monitoring an assortment of nearby stores and checking prices can also be advantageous.
“They may be doing it to you,” he added.
Grow agreed, noting that she often visits retailers outside of her competition area and generally makes a purchase while there in support of that independent merchant. She said these visits also prove beneficial through offering another perspective on merchandising, promotions or layouts.
“Networking can be tough in this economy,” she added. “It seems most of the businesses are holding close to what is theirs and are fearful of negative impact.”
For this reason, Barton said that he has hired his own secret shoppers to visit competitors. These shoppers, often hired from Craigslist and paid $25 for their visit, interact with a competitor’s employees as a customer.
“Then they go out to their car and fill in the survey,” he said.
Competitive information can also come from different channels and Veronique Michalik, owner of Lofty Dog in Austin, Texas, noted that most of her information and feedback arrives in the form of customer comments. Gleaning that information and going a step further with outstanding customer service and product mix can create an important advantage.
“Customer service is first and foremost,” she said. “I want the best customer service in all of Austin.”
Best Buddies’ Ronay seconded that, adding that personalized customer service is often more important than good pricing and that a personal touch, such as employees greeting visiting pets by name, keeps customers coming back. He added that employee education and knowledge is a huge component to stellar customer service, putting the edge over other stores.
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need to know everything about everything,” he said. “They have to do their homework.”
Variety is the Spice of Retail
Innovative products and services boost sales, and Michalik noted that in addition to superb customer service, selection is equally important along with offering items that may not be available elsewhere.
Staying ahead of current trends requires foresight and experience, and by attending national trade shows, retailers have the opportunity to purchase cutting-edge products. By taking advantage of seminars offered, retailers are also able to obtain valuable advice and education with regards to trends and innovations.
“I think the No. 1 thing is to go to as many national trade shows as you can,” Berman said.
Trade show attendance is crucial, Michalik stated, as is reading industry journals and paying attention to e-newsletters, which can help retailers to stay ahead of the game.
Monitoring what’s on the horizon in the way of new competition can be difficult, and both Barton and Berman recommended forging relationships with local realtors. Staying in contact with these real estate agents will keep retailers in the loop regarding new shopping centers that might support another pet store, big box stores that might be going in, or redevelopment that may be slated for future development.
“You will have someone in the real estate community tell you, rather than being surprised,” Berman said.
While many retailers acknowledge larger chains as competitors, Internet stores are becoming equally strong contenders in the pet products space. Creative Business Consulting Group’s Switanowski noted that part of defining competition is to be aware that it’s not all brick-and-mortar; she noted that almost 50 percent of customers shop online.
“And this number will only get bigger as time goes on,” she added. “Competition is not just the store around the corner.”
While staying apprised of competition and current trends is advantageous and necessary in a successful retail business, Grow emphasized that retailers must maintain focus on their own establishment by offering products and creating the type of shopping experience that their customers desire and appreciate.
“Watch the industry and market trends, of course, but first and foremost listen to your customers and your business will thrive,” she said.<HOME>
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