Thursday, January 6, 2011

Know the competition.

     It's easy to think of the other jeweler down the street as the competition. Also easy to consider the other guy offering jewelry for sale on Esty or Art Fire as the competition. Are the other pieces in the display case with yours in the gallery that sells your jewelery the competition?  Let me attempt to change your perception for a moment
     When Mc Donalds, Burger King, Pizza Hut, and Kentucky Fried Chicken look to locate their stores they would prefer to locate near other successful chains. The theory being they intend to offer hungry people a different dining experience than the others. They may share the same customer base, they might not. The concept is; offering the customer more variety is beneficial to each of the establishments. Food courts in malls are a good example of the power of offering diversity to the customer.
    I once opened a new jewelry store in a town of about 15,000 people. My store made the third jewelery store in the community. There was an unexpected result to my opening that 3rd store in town.  I would have expected to achieve my 1/3 of the possible jewelry sales, in other words my slice of the existing pie. What actually happened was that total jewelery sales for all three stores went up, the pie expanded. Both of the other existing stores reported increased sales! I gave this considerable thought as I purchased inventory for the next year. I came to this conclusion. The collection of retailers in the community was suffering from a considerable leak in retail sales to other communities. By increasing the selection of jewelry available and by increasing the awareness of the jewelry and services provided within the community we had begun to hold our customer base. My goal then became to increase the holding and drawing power of the community of retailers.  Realizing it would be to my benefit to be beside the best little book store and the best bakery in town would begin to occupy my thoughts. Somewhere along the journey I stopped thinking about the other jewelers and retailers in town as competition and began to think of them as colleagues.
     It was kinda of funny really when people discovered the three of us were friends. This shouldn't have beena surprise, after all we had more in common with each other than we did nearly anyone else. We faced similar problems, had the same expectations of the products we sold and knew many of the same people in the industry. There are humorous stories of us interacting. I once supported one of them running for Mayor of the city. Each of them did things I didn't do, each of them had a specialty, and an area of expertise. I would always make time to talk to either of them and they for me.
     I once wrote an article comparing the numbers of vacuum cleaners given as Christmas presents and the rise in the divorce rate across the country. My tongue in cheek article pointed out expectations of the receiver of the gift. Though I've never seen a time when vacuum cleaners were in hot demand, as this years must have item,  I'd be among the last to suggest you shouldn't have one. Nor would I suggest giving the newest phone on the market is a bad idea. I remember when vcrs or Ninetendo games blew off retailers shelves. I remember when digital watches were a hot item in the jewelry store. I suspect Amazon sold many a Kindle this year. Those seasonal must have items are the competition for the public's disposable income. Imaging the difference in the reception when she opens the package containing her new Blackberry and the next present is the diamond ring she's bee drooling over. Suppose your card says "This year I thought I'd get you things that ring." We don't have to back away from the major competition for the customers disposable income, we can embrace it. We do after all have wonderful things to sell.
    There is an almost unseen competitor for your customers disposable income. Let's look at the daily expenses of lots of people across the country. They go to work five days a week and average $7.00 a day in gas to get to and from work. Their yearly fuel bill for the commute is about $2,600. If gas prices rise a little per gallon, it wouldn't take long for the daily commute to cost $10.00 a day. What that means is that your customer would have $800.00 less disposable income annually. If that's not insulting enough consider the fact that they would have pumped the gas themselves, cleaned their own windshield, checked their own oil and purchased air for their own tires. Don't mention they conduct these transactions after waiting for the Lotto ticket purchasers to get out of the way. Of course they could conveniently purchase an over priced gallon of milk during the process.Gone are the service stations, welcome to convenience stores. But sadly gone is a share of the disposable income you and I prosper from.


1 comment:

  1. Incredibly timely, Brad, when the sellers on both Artfire and Etsy are agonizing over resellers and the threat they deem them.
    I have a convenience store in a rural area and find that people will not do without their cell packages, cable, cigarettes or unlimited driving, but around the end of the month they're looking for milk and bread on credit. No gas served here, just the best prices I can manage and an owner who has a 19" TV and rabbit ears.