Friday 21 February 2014

Why Your Competitor Should be Next Door.

We appear to have a fixation at QVM (at least in the top end) that competition is bad for business. And yet that is totally at odds with outside experience and even with a large part of QVM itself.

Last week I observed a trader getting upset because a competitor in the next aisle had created a walk through in the adjacent empty stall. This said two things to me - firstly the complaining trader didn't believe he was competitive with the trader in the next aisle and secondly he felt that by creating a one aisle (or 7 stall) barrier he was somehow going to convince the customer that he was the only seller in his category at QVM. In this age of retail transparency do we really believe customers are fooled?

Shopping centres group like-retailers together for good reason. It is convenient for customers and it stimulates business. Customers want to go to one area, compare the offers, and make their choice. Traders often say "Yes - but retailers in shopping centres are differentiated by brand. We don't have that." Well, we may not have the same brand differentiation but we can show real difference. Not every stall in the same category has exactly the same products. Every category has its niches. Every category has different sources of supply, different merchandising possibilities, and different ways of dealing with the customer. Once again, do we really think we are fooling our customers by putting 7 stalls between competitors.

Take our fresh food areas as an example. In the fruit & vegetable, meat & fish, and the deli hall, competitors are side by side and openly competing with each other. Often they are selling very similar products. A trader has to be on his/her game, making sure that quality and price are competitive, making sure that they differentiate themselves with specialty items and offering the best possible customer service. Competition enhances all those aspects of business. And who is the winner? Well, there are two actually. Firstly, the customer, because his/her choices are made easier by the location of like traders, and secondly, the trader who benefits from customer satisfaction and the stimulus that competition provides.

This is a very sensitive issue. I understand the arguments that having competitors side by side may create friction. Of course you don't have to have competitors actually side by side but you would have them in the same area. I am often reminded of a cheeky comment made by a contributor to Participate Melbourne back in November. The comment published on the CoM website went something like this - "QVM has plenty of variety. In one aisle you have hoodies, t-shirts and socks, while in the next aisle you have socks, hoodies and t-shirts." It was a cheeky comment but it had some truth. By spreading our stalls across 8 or so aisles and putting a smattering of each category in each aisle we are creating a sameness, because every aisle has the same mix. That is largely being driven by the 7 stall rule. In a sense we are hiding the incredible depth that we can offer.

This sameness of each aisle is a regular criticism from our customers and it is a criticism we seriously need to address if we are to improve business. Creating precincts or "stories" of related offers makes a lot more sense to our customers. It is what they embrace in our fresh food areas and what they expect in most shopping precincts. This is the age of the customer. Ultimately, they strongly influence how we do things. Our attitude to competition in the top end needs review.

P.S. – If we had customer counting facilities at QVM (see our article - we could actually test this precinct concept. Imagine counting the number of customers that visited a particular stall or group of stalls over a period of time and then counting again after a precinct had been created. The possibilities are very exciting.

Have Your Say – click here.

28/02/2014 16:11:34 Placing Traders with same goods near each other "This all sounds wonderful on paper BUT  WHO GETS THE PRIME SPOTS    do we throw out the Traders who have spent many long and hard years to acquire their spot to accommodate some new  style eclectic management favourite  in their spot  while they are placed in a lesser spot." JR   E shed
"It is true that moving stalls creates all sorts of unknowns and we will have to be brave. But, I think it is fair to say that favourites will only be selected  over the bodies of your QVMAC Representatives. That's not how we do things. It does raise the question however of whether selections are made on the basis of  contribution to the market or just years of service. Whatever happens, an open and transparent process with everyone having their say would be the way to go. This process presumes that traders will benefit from significantly improved business as a result of creating precincts so the old prime spots may become academic." - Ed