7 Oct 2016, 10:50 — 4 min read
In just about every sector, if you strip out inflation, the size of the pie is not growing. Moreover, you would be hard pressed to argue that this will change any time soon. With few exceptions, the brutal reality is that the capacity and willingness of most of your customers to increase their category spending is stuck in neutral. Get used to it.
And, yes, there is continued strong growth in e-commerce, but most of that is either channel shift or leakage to unprofitable pure-plays. Of course, if you are Amazon it’s a totally different story. But you are not Amazon.
Recently, Macy’s announced a quarterly sales decline of more than 7%. It’s yet another in a series of lackluster (and often frightening) reports from established retailers across just about every segment of the market. It certainly won’t be the last. Fasten your seat belts, it’s going to be a bumpy ride.
Perhaps you work at a handful of brands that offer something truly differentiated and highly relevant to a sizable part of the market. If so, you are grabbing a greater share of that pie. For the rest of us, that just means our share of the pie is shrinking. Unaddressed, that is almost certain to end badly.
Wake up to the reality
More and more, the vast majority of retailers are playing in a zero-sum game. More and more, the opportunity to drive top-line through store openings has evaporated. In fact, most retailers will be closing stores and shrinking the square footage of the one’s that they keep. Shrinking to prosperity is rarely a sustainable strategy.
The reality is that there are profound shifts in consumer behaviour and the underlying economics of omni-channel retail that go way beyond Amazon’s impact or what’s rapidly becoming a digital-first retail world. In case you haven’t noticed, your customers now have the upper hand. More and more, consumers are valuing experiences over products, renting over buying, trading down instead of trading up, holding out for the best price and so on. None of this bodes well for an expanding pie or a rising tide that raises all ships.
Eye the pie
Your job then, plain and simple, is to gain share; to get more out of the same sized (or even shrinking) pie. And thus there are two things you need to be really, really good at: acquiring (and then retaining) customers at a disproportionate rate from your competitors and growing share of wallet among those existing customers that have the best potential for long-term profitability.
You can go on and on about bold omni-channel plans, your seamless shopping experience and your really cool Instagram strategy. But if you can’t articulate how you are going to be remarkable and relevant for your best customers and prospects at the point of acquisition and customer growth chances are you are focused on the wrong things.
And if you aren’t busting your hump to get those ideas into action, you had better step on the gas.
Driving real growth only happens by stealing market share, by growing share of wallet. And that means being more relevant and more remarkable than the competition. It demands developing actionable customer insight as a basis for competitive advantage. It requires abandoning much of what you got you to where you are and embracing strategies and tactics that will get you to where you need to be. It means taking on more risk than you are used to.
Sure it can be scary. But quite frankly you have no alternative. Oh, and I’d hurry if I were you.
Article source: STOrai Magazine
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
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