This Is Why Retailers Have To Differentiate Or Die

I read a blog the other day that said: “Retail is not dead but boring retail is.” These days’ customers have so much choice, so what are you doing differently so your customers will come back to you? Differentiating from the competition is crucial not just for survival but for long-term growth.

Differentiating is not a new term or requirement, the best retailers have been doing this for years. Tom O’Toole the famous Beechworth Baker always says these immortal words during his motivational talks – “If you are not prepared, utterly prepared to stand out you are history. There’s too many, me too, me too, businesses out there.” And Tom’s been saying this for years.

However it’ easy to talk about differentiating, it’s a lot harder to actually do it! And this has been reinforced by some recent data shared by the Commonwealth Bank in their retail insights survey. Despite the fact that most retailers believe having a unique proposition is important far fewer say they’ve managed to actually differentiate themselves. Here are some of their data:

• Only 1 in 5 (20%) retailers believe they have highly differentiated
• 59% believe they only managed to moderately stand out
• 86% of local retailers feel that having a unique proposition is important.

The data is even worse when customers are asked about how well retailers have differentiated. Only 8% thought retailers had highly differentiated and half the survey group though there was no differentiation at all. No wonder some retailers are struggling, there’s no compelling reason to bring the customers back.

The small portion of retailers who have managed to find a unique proposition was more positive with their sales forecasting as well. Over half expected to increase their sales by at least 6% over the next 12 months. Certainly an aggressive number with most retail sales flatlining over the past couple of years.

So if differentiation is so important what can retailers do that is different from their competition? Here are some thoughts:

• Product range. If a retailer can offer unique products that no one else can, that will certainly provide an edge.
• Product quality. Once again offering a quality product is what some customers are looking for. The tradeoff here is going great quality and higher price or lower quality and lower price.
• Product availability. Giving the customer the ability to check stock levels at the store is a big winner here along with varied options to purchase and pick up/delivery.
• Product returns. With the need to provide the customers with sales online and in store, the need to provide seamless and economical returns is critical.
• Price. This one is always going to be a challenge as only certain retailers can own this space and trying to compete on price can be a race to the bottom and out of business.
• Delivery. This is one that retailers have to get right. Offering varying delivery/pick up options to suit the customer is critical, so it suits their busy lifestyle.
• Experience. There’s a big battle being played out here, with retailers going to great lengths to provide unique experiences. Embracing technology has to be on every retailer’s agenda here.
• Service. One of my favourites of course. Offering a consistently high level of service in store is a key differentiator and one that most retailers struggle to do.
• Location. Hard to do for some, but physical stores have to be where the customers are, hence the reasons for a number of big players cutting back on their new store formats.

There are numerous options available for retailers to differentiate, they just need to pick one or two and own that space before their competitor does. The price of doing nothing and standing for nothing is way too high.