Who's Your Competition, Really?

By Mark Ledbetter, Global Vice President, Retail Strategy, SAP

Have you ever stopped to think about what a competitor is? On the surface, it’s simply another company that offers an alternative product to yours. In other words, it’s something that has the potential to redirect dollars from your cash register.

Looked at in this fundamental way, your competitor isn’t only the store at the other end of the mall or the e-tailer that just expanded into your market. Competition can come from many sources.

Today retailers are competing with three forces aside from their retail counterparts: first, an ongoing soft economy; second, a proliferating number of channels; and third, consumers themselves. To succeed, retailers will have to figure out how to manage all three.

It’s The Economy, Retailer

A weak economy is among a retailer’s staunchest competitors. Why? Because when the economy isn’t growing, the pie isn’t getting any bigger. The only way to expand your business is to find ways to grab a larger slice of the pie.

Beating this competitor requires an understanding of today’s three types of consumers: the Everyday Low Pricers, the Moving Targets, and the Aspirationals.

The Everyday Low Pricers are focused on commodity items like food and  basics. They’re not making aspirational purchases. They’re highly price-sensitive, and they’ll continue to be.

The Aspirationals are at the other end of the spectrum. If they see something they like, they buy it. They’re unconcerned about price, and they’re not worried about the economy.

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