December is an excellent time for those looking at developing their business to do 2 things:
- Take time to think about the future plans for their business
- Look at the hyper competitive retail market for clues as to what strategy works and what doesn’t
When you have done both the key result should be a New Year’s resolution not to get ‘stuck in the middle’.
So, what does that mean?
Be clear about your capability and who it appeals to
When you are taking time to reflect over a mince pie or two, first of all think do we appeal to a broad cross section of the market, or are we focused on a specific group. Then, think are you better because you focus on a specific service or product range, or cost-efficiency.
You also need to be clear how you are achieving the strategy. So, if you are a grocer like Aldi or Lidl, your competitive advantage may be price-based, but your way of achieving that is the supply chain management and contracting approach adopted.
Don’t assume also that an advantage and strategy you currently have will last. Again, in retail the Tesco business model worked because it’s level of quality for the price was perceived as high. Then following 2008 and the credit crunch, customers re-evaluated and decided may be the quality wasn’t worth the price. They also got confused about Tesco product range as it continued to extend its reach further and further away from the core. The results – a company unwittingly ‘Stuck in the Middle’ and customers who voted with their wallet.
Decisiveness will produce results
The consequences sometimes take a while. In autumn 2016 Marks and Spencer announced a re-structuring of their property portfolio in another bid to define who and what they are: specialist food retailer, general grocer, department store, financial services company? All of the above? They still haven’t resolved it with the result being a painfully long process of being stuck in the middle. They are in good company, Debenhams, Sainsbury’s, Morrisons and now arguably Asda are re-thinking old assumptions.
And then there’s Argos, written off by many until recently. Took a while to reinvent a strategy that serves a broad market with a decent service level, but the signs are looking good with 50% of turnover now being on-line.
2017 could be the start of something big!
Enough armchair strategy. When the first week of January comes remember:
- Avoid your business trying to be all things to all customers
- If you are positioning on quality be really clear it’s in areas customers value
- If is low price-based, ensure you know how you deliver this in the long term once competitors react
- If you are trying to combine low prices with product quality/range, make sure you have lots of new product ideas to come on stream
Even multi-nationals lose focus on the above essentials, you don’t have to!
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