Food Fight: How local stores can bag the competition in the battle over turf
By Julius C. Dorsey Jr., [email protected] and Roy T. Bergold Jr. [email protected]
What retail chain owner or manager doesn’t want to build sales and profits? Aside from maybe the eccentric billionaire who on a whim decides to open a shop to sell hand-whittled tumbleweed sculptures, probably not many. For the rest of the owners and managers in the real world, sales and profits are the only reasons they’re in business.
Unfortunately, though, the consequence of such a broad and general goal, especially for a grocery player, is a lack of clearly defined targets -- targets that, if successfully engaged, will produce the desired results.
Poorly defined targets almost always result in wasteful spending and undefended (or worse, lost) customers. Properly defined targets yield the good stuff grocers want, such as loyal customers, increased market share and better household penetration.
The latter is what we call in the marketing world Trading Area Penetration: think TAP, like TAPping into your golden market. Consider the following illustration of the fundamental benefit of TAP, explained through an imaginary grocery chain we’ll call Friendliest Grocery.
Friendliest grocery is:
* A locally owned, 50-year old chain with 20 full-service grocery stores spread over a five-county major metropolitan market.
* The only chain inside the central city.
* Stocked with an extensive range of ethnic foods according to local store preference, which exceeds major chain competitors’ selection by thousands of SKU on a per store basis.
* Running an advertising campaign with the tag: Friends of the Hometown, Friends of Yours, carried via spot TV, cable TV, outdoor, and weekly sale papers distributed around store locations.
Friendliest’s competition is:
* A large chain, owned by an out-of-town firm that has over 80 stores in the five-county area.
* Running an advertising campaign via TV, cable, online, outdoor and weekly sale papers distributed around store locations with claims of low price and continuity sales promotions that earn shoppers discounted gasoline.
Friendliest is trying to figure out how to compete against this large chain’s location advantage, advertising dominance, and highly touted gas promotion. In addition, the competitor has recently added low-priced specials to its advertising.
The TAP rules of engagement
* Don’t enter fights you know you can’t win;
* Fight when you’re ready;
* Pick the place and terms of battle (You know your own territory better than the enemy does.); and
* Use your strength against the competitor’s weakness.
Common sense, yes, but the rules are especially appropriate in local retail situations. Unfortunately, far too often these rules are ignored.
Friendliest can’t win the advertising battle or compete successfully on classical convenience with a disadvantage in stores of 4 to 1.
For instance, every time Friendliest goes to TV, most radio, and market-wide daily newspapers, most of the advertising helps the competitors. First, for the most part all grocery stores have the same thing, and Friendliest’s advertising says nothing about all of the extra selection they have. Even if it did, this is a secondary benefit. Customers with certain tastes and preferences (i.e. ethnic) don’t just want selection; they want what they’re looking for. The Friendliest store in the largely Mexican-American neighborhood is going to be sure to carry tortillas and chorizo sausage. Why not say so?
Second, most reached by mass media advertising live closer to a competitive store than to a Friendliest. Customers who don’t know what Friendliest has over the large chain competitor will invariably visit the competitor’s store almost every time.
It gets worse. Remember Friends of the Hometown, Friends of Yours? Friendliest really delivers on its claim: locally owned, stocked to reflect the local neighborhood of each store, local management and staff. However, these messages are mostly landing on people who don’t live near a Friendliest location. The real advantage Friendliest has over the big-chain grocer is lost in the advertising. Friendliest is trying to imitate Big Grocer’s advertising when it already has the hearts and minds of its neighbors. Friendliest fails to deploy its most effective weapon: Local presence.
To take full advantage of its position in the market and create a new niche, Friendliest must follow these five rules:
1. Seek the path of least resistance. Weed out the best performing stores from the lowest performing stores. Nurture the former and solve the problems of the latter.
2. Map out your trading area. Mount a map of the area in the store and ask customers to stick a pin where they started out the day. You’ll get a picture of the store’s trading area and, for some reason, people love to stick pins in maps.
3. Cancel traditional media. It doesn’t work in this case anyway. Most viewers change channels when your commercial comes on, and a growing number can zap the commercials. Take this money and execute local store marketing.
4. Write a local store marketing plan. Ask yourself some simple questions: Do we deliver quality products? Are our stores clean? Is our service friendly? Do we offer special services and product combinations that perhaps the competitors don’t?
5. Market to your market. Speak to service clubs about the business. Become the best friend of the school in the trading area. Partner with other non competing businesses in the area. Do a local radio remote.
The key is to rule your own turf. Become truly the Friendliest, local grocer and the big chain can sell discounted gasoline all they want. You will have the hearts and minds of food shoppers -- and the sales and profits you seek.
Julius C. Dorsey, Jr. is president and founder of Dorsey & Company, Strategic Consultants to Management, Cleveland (dorsey-co.com). He can be reached at [email protected].
Roy T. Bergold, Jr. is managing director, communication & creative strategy for Dorsey & Co. He can be reached at [email protected].
Both authors have 35 years of executive marketing and advertising experience with some of the nation’s most well-known food service and hospitality corporations including McDonald’s Corp. and Holiday Inn, as well as with world-recognized ad agencies including J. Walter Thompson and Leo Burnett.