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Meeting the competition: don't waste any time getting to know the new neighbors.

NEW COMPETITION IS A FACT OF LIFE IN THE SUPERMARKET INDUSTRY. Even in a recessionary economy, acquisitions and the increased availability of re-use retail property will ensure continued competitive turmoil. In addition, the current economic environment is obviously a happy hunting time for price-sensitive formats such as Aldi, Costco and Wal-Mart and will encourage their further expansion.


So does your firm have a plan for dealing with new competition, whether at the single-store or market-wide level? That is, a strategy with supporting tactics? If not, here are some pointers:

First, think positively. You are defending your own turf and have the home field advantage. You know your own local market better that the new entrant does.

Second, be proactive. Don't give the new competitor the opportunity to claim that they "liberated" your market from high prices, or brought innovative products and services to it. This means planning a response ahead of their entry, not four weeks after they have opened.

Third, develop competitive intelligence on the new entrant. Visit their latest and best stores in their existing markets and evaluate their service, product selection, and pricing. What are their strengths and weaknesses? What can you win on, and therefore promote? Conversely, what do you need to fix or improve in your own store, or stores?

Since we all tend to engage in wishful thinking about how we stack up against our competitors, it is crucial to conduct geographically targeted consumer research around one, or more, of the competitor's latest and best stores. What do grocery shoppers see to be the competitor's strengths and weaknesses? This research usually produces surprises.

Fourth, research on the new competitor is even more effective--and easier to draw conclusions from--if you carry out identical consumer research within the relevant geographies around your own store or stores.

Fifth, survey your own. Ask them what they like and dislike about your store. Which other supermarkets do they shop and why? Which products or brands can't they find? Which media do they consult before shopping for groceries, if any? Responses to these questions will help develop an action-plan of changes and improvements that should be put into effect before the competitive environment intensifies.

Sixth, prepare, brief, and involve your staff in planning your defenses. Team meetings and in-store media are key elements in building and maintaining the morale that will be crucial in winning the imminent war.

Seventh, adjust targets and communicate these to your staff. Ideally, a professional competitive impact analysis should be carried out to provide accurate sales targets. Gravity models are excellent tools for this objective. For example, based on the distance and size of the new competitor, the gravity model may project a 15% sales loss. This can be used to develop realistic weekly sales targets which, if exceeded, can be presented to employees as major victories.

Eighth, ramp up community involvement well before the new competitor opens. Tactfully remind area consumers about how long you have served them, what you "give back" to the community, and encourage favorable local media coverage by hosting or arranging events.

Ninth, plan extra promotions to "greet" the new competitor when it opens. These should reflect the insights gained from consumer and in-store research. For example, what shoppers say you are good at, i.e. be believable. In addition, the promotions should be "targeted" to the characteristics of the new competitor.

Tenth, make life hard for the new competitor once they have opened! Guerilla marketing tactics can include weekly cash backs or coupons during the first six to eight weeks following the competitor's opening. These may be particularly effective in persuading your best customers to remain loyal if they are integrated within a Frequent Shopper program.

Finally, continue to research the local market--both in-store and within your store's trading areas. They are bound to make mistakes and these need to be identified and exploited. Information is power.

A commitment to use tactics such as those outlined above usually results in the pleasant surprise that the new competitor fails to have the expected impact on your store. This is frequently assisted by the fact that one, or more, of your pre-existing competitors is "asleep at the switch" and suffers accordingly.

By Dr. David Rogers

Dr. David Rogers is president of DSR Marketing Systems, based in Northbrook, Ill. He can be reached at 847-412-4677 or at
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Title Annotation:FOOD FORUM
Author:Rogers, David
Publication:Grocery Headquarters
Date:Apr 1, 2009
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