Before launching a retail business, it’s essential to define where you’ll fit in the marketplace and what you want to achieve. Success in retail usually relies on one of three competitive strategies: offering the widest selection, the lowest prices, or the best service. In this article, we explore the value of each strategy and how you can stay competitive in all three areas.
1. Greatest Assortment
This strategy involves dominating the market for specific products. To adopt the greatest-assortment strategy, you would need to be among the largest in your industry, able to purchase huge quantities of the product, and introduce efficiencies that the majority of retailers can only dream about.
This allows you to meet the diverse needs of customers and make your business the top choice for certain products. Whether you want to sell toys, office supplies, furniture, or anything in between, this can be a great strategy to attract and keep customers.
2. Lowest Price
This strategy involves minimizing expenses to be able to offer the lowest possible prices to your customers. The lowest-price strategy relies on economies of scale, which are the cost advantages when you produce or buy products in large quantities.
Minimizing expenses might look like reducing staff or automating processes. But, you want to be able to keep prices low without sacrificing customer experience or profits. To adopt this strategy, you would also need to be among the largest in your industry, able to purchase mass quantities, and streamline operations.
For more ideas on reducing costs, check out BDC’s article, How to control costs in your retail business.
3. Best Service
This strategy involves making service the heart and soul of your business. While it can be very successful and profitable, it takes time to perfect. Every aspect of your business – strategy, merchandising, HR, customer service, in-store experiences, and more – should be focused on delivering exceptional service.
But, as you build your business, don’t forget about assortment and price. Even with great service, customers won’t be satisfied if you don’t have what they want or if your prices are higher than competitors. You need to understand your customers’ needs and price products competitively.
Most importantly, you’ll have to think carefully about your commitment to service. For example, on a slow day, will you staff based on cost or prioritize the level of service you’ve promised your customers?
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