Finding success in retail has never been an easy task. Success breeds competition, which drives innovation and so on through the cycle. It seems that as the world has become more connected things are tougher than ever.
For example, price has always been a major component in consumers’ decision process. In the world of food retail, just about every chain has touted its low price message to varying degrees. Terms like "low price leader" and "low prices everyday" were always empty promises to shoppers, but couldn't really be proven one way or the other.
Today's world is a transparent one. Shoppers can search for price information while in-store and find another price locally or order online — all with nothing more than a smartphone and the appropriate app. Clearly competing on price, while only partially effective 20 years ago, is an exercise in futility today.
This necessitates a change in strategy, but to what? For retailers who have focused almost exclusively on price, what are the steps to creating a differentiated offering that allows them to compete effectively in this new world?
There are three basic steps to creating a new go-to-market strategy. Consider this a "three-step program to success":
- Find yourself. What's your unique or hard-to-copy offering? This may take a little detective work; you might have to go back to the early days and figure it out. The point is that few companies were started with the intent of competing solely on price. Therefore, some ability to deliver "more, better, faster" is in your company's DNA somewhere.
- Develop your differentiators. Once you've determined what your unique value is to consumers, focus on making those the best they can be. If it's service, then make that the focal point for every associate, from the CEO to the newest hire. Your differentiator must be valuable to your target audience.
- Deliver. Every day. No matter what. And when you don't, own up to the error, make it right and fix the problem. These sound like simple ideas, and they are. But bringing these simple ideas to life to build a path to success is anything but easy. Getting there takes commitment, focus and a resistance to reverting back to old habits.
The greatest challenge to making large-scale changes, especially in the area of strategy, is inertia. Old habits are hard to break, and when the benefit of changing those habits isn't immediate — as in the case of building a new strategy — it's all too easy to revert to that comfortable process that you don't have to think too hard about.
J.C. Penney is a good, if extreme, example of a company in the midst of reinvention, shifting its focus from price only (via coupons and sales) to a more transparent pricing policy. CEO Ron Johnson, who has gotten a lot of press as the guy who made the Apple retail stores what they are, has a lot more work to do. Right now there are lots of eyes on Johnson and his "Fair and Square" pricing program. Changing the go-to-market, while risky, was the easy part.
Next comes the hard part: getting the 156,000 employees at the chain's 1,100 stores to buy into the new strategy and live it with customers. It's clear that Johnson has a vision. What isn't clear is how accepting current employees will be of the changes coming, and how long it will take to truly transform J.C. Penney.
While the J.C. Penney example may be an extreme one, it's readily apparent that shifting from a "low price" strategy to anything else takes vision, tenacity and commitment over the long term. In short, it's not easy, but in the new world of price transparency, not changing really isn't an option.
Jeff Weidauer is vice president of marketing and strategy for Vestcom International, a Little Rock, Ark.-based provider of integrated shopper marketing solutions. Jeff can be reached at email@example.com.