Any business school course on strategy will devote significant time to the importance of competitive differentiation. We attend marketing conferences where speakers pontificate on the need to have a unique value proposition. Excellent books like Seth Godin’s Purple Cow preach the benefits of being remarkable to separate yourself from the herd.
Yet any visit to the mall or surfing of the internet quickly reveals an often numbing “sea of sameness.”
This has long been true for many retailers. But I believe the recession has made it worse. As retailers have slashed inventory, desperate to demonstrate inventory productivity progress to investors, merchandise assortments have become less interesting, less differentiated, decidedly less remarkable.
By now it should be apparent that a full recovery is going to be slow in coming. That means revenue growth must come primarily from stealing market share.
Now is the time to go on the offensive. Now is the time to commit to deeply understanding your target customers’ needs, compromises and preferences and to find ways to innovate, to be truly remarkable.
For some companies, this means embracing the trusted agent role, going out into the market and curating a unique offering for a discerning clientele. This is what the best specialty boutiques do.
For others, it means finding more exclusive products in the market, leveraging existing vendor relationships to construct a unique offering and/or developing their own compelling private brands. This is happening across the price spectrum. Kohl’s recently reported that 47% of revenues now come from exclusive products. Saks Fifth Avenue is aggressively working to significantly increase its percentage of private label and national brand exclusives to differentiate itself in a challenging luxury market.
I think two basic principles are at work here. First, a willingness to move away from a product-centric, gross margin rate maximization mind-set to embrace customer-centricity and all that entails. Second, an acceptance that it is actually more risky to play it safe and swim in the sea of sameness.
Someone in your industry will decide to break away from the herd and gobble up share while the competition is on their heels. What’s your choice?
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