Director of business and management consultancy Strategic Professionals Sharon Southcott says retailers should explore and exploit competitive advantage for success

As we plunge headlong into 2024, which is potentially going to be a challenging year, now is a good time for independent showrooms to reflect and ensure they understand the competitive advantage they offer and how to maximise these advantages.

But what do we mean by competitive advantage?

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Competitive advantage can be simply delivering goods/services better than your competitors or demonstrating a greater comparative/differential value than your competitors and communicating that information to the desired clients. Embrace being different!

Discover your advantage

For retailers who want to explore and gain a competitive advantage, there are two distinct types:

• Cost – deliver same benefits as your competitors but at lower cost.
• Differentiation – deliver benefits which exceed those of competitors thus creating superior value for customers.

But where do we start? First, look at what is going on in the world around you – Mortgage rates, inflation, politics, social factors, advances in technology. How could these impact your business?

Next, consider the resources you have available. These include knowledge, staff, location, reputation. What are your strengths and weaknesses as a business?

Then look at your ability to utilise these resources effectively. Your resources plus your capabilities create distinctive competencies.

This enables innovation, efficiency, quality and customer responsiveness.

It is these distinctive competencies that can be leveraged to create competitive advantage.

Things to consider

1. Customer experience

Know your market – what type of customer do you attract? What are their needs? Get to know the customer and utilise that information to tailor recommendations, promotions, and communication to individual preferences.

Provide excellent customer service. People buy from people and the core principles of independent retail is to build trust and reputation.

Make the most out of being accessible and the expert advice you can offer. Consider why the customer came through your door.

2. Supply chain optimisation

Build relationships with the supply chain. Suppliers should be your partners not barriers. Seek market information from them.

3. Marketing and branding

Use digital marketing channels effectively, including social media, content marketing, and where possible targeted online advertising.

Develop a trusted reputation to encourage referrals.

Be a part of your community. Try to think of something to make your brand special to differentiate you from the rest.

Talk the same language as your customer. Engage them in conversation, build trust and get them interested in what you have to offer.

4. Innovation

Regularly introduce new products to attract customers and stay ahead of market trends.

Don’t fall into a ‘habit’ of always listing the same suppliers/same products and sticking with those you know. It’s fine to have consistency but keep an eye out for something new.

Embrace emerging technologies like AI to create unique and engaging shopping experiences.

5. Competitive pricing

Clearly communicate the value proposition to customers, whether it’s through quality, exclusivity, or service.

Higher pricing over  ‘sheds’ and volume movers can be achieved as long as it offers value for money with product or service.

6. Social and environmental responsibility

Embrace sustainable and eco-friendly practices in sourcing, production, and packaging, appealing to environmentally conscious consumers.Engage in socially responsible initiatives, contributing to the local community and developing trust.

7. Agility and adaptability

Develop an agile business model that allows for quick adaptation to changing market conditions.

Make sure processes and procedures can be adapted without using unnecessary additional costs.

Be responsive to customer feedback and market trends, adjusting strategies and offerings accordingly. Don’t resist change!

By combining these strategies and staying attuned to market dynamics, retailers can position themselves competitively and sustain long-term success in a dynamic and evolving retail landscape.

Remember don’t be a secret find. Communicate your competitive advantage to leverage the opportunities.