How Can You Identify Competitors In Your Area?
On the surface, it sounds pretty easy to identify your competitors.
For instance, if you run a general clothing store, then any other store in your area could be considered a competitor.
If you run a shoe store that specialises in athletic shoes, than any similar store in town is a competitor.
Right? Well, it might not be that simple.
Why Your Competitors Might Not Be Who You Think They Are
Too many business owners open their doors and start selling, thinking that they know exactly who they’re competing with, only to find out too late that they were wrong.
Here’s the thing – just because a company sells a similar product to you does not mean that they’re a competitor.
Let’s look at the footwear industry.
Famous Footwear sells a lot of different shoe styles, from flats and pumps to cross trainers and work boots.
Payless Shoe Source carries a similar selection.
You’d think they would be competitors.
They are to at least some extent, but they’re not really on an even playing field.
Why is that?
Take a look at the shoes carried by each company.
At Famous Footwear, you’ll find names that you know, like Nike and Rebook.
At Payless, that’s not the case.
The price points between the two chains are also radically different.
In reality, while both are shoe stores, they could operate side-by-side and not compete with one another for customers in most instances.
So, how do you find out who your competitors really are?
Grouping Your Competitors
First, you need to size things up.
You’ll need to research the area and find companies that seem to compete with you, and then break them into three different groups.
The first will be direct competitors.
These are businesses that sell very similar products (or the same products) at pretty much the same price point.
The next group will consist of indirect competitors.
These are businesses that offer slightly different products or services (Payless to Famous Footwear, for instance).
Finally, your third group will consist of new entrants to the industry or substitutes might be available.
A good example here is that Netflix is a good substitute for a DVD rental machine like Redbox.
Another example would be the competition from a grocery store for a pizza restaurant.
You get the picture.
Who Would Fill Your Shoes
At the end of the day, the most important question to answer would be this – who would serve your customers if you weren’t around?
Think long and hard here, because some of the answers aren’t all that obvious.
Would your customers turn to an online retailer?
Would they drive a town over to another business?
Once you’ve established who your competitors are, you can dig down into determining their competitive edge, and whether they have something that you lack that would ultimately attract more customers.
Based on this information, you can tailor your product or service offerings, construct effective marketing campaigns and run a successful business.
The Retail Sales Academy Team