You know the scenario – Insert name of a big chain here – announces they are moving into an area. All the local independent traders are immediately on the offence trying to stop the move. “we can’t compete. It will drive us out of business” they will cry. In other words for them, competition is a bad thing.
It may seem harsh, but to them, I would say:
If you can't offer something that the market values over to the competition, you should not be in business!
Food retail is a good case study when we look at the competition. Over the last 40 years, large supermarkets have come to dominate the market. They have done this because they do the job of food distribution extremely well. They offered the market price and convenience. That’s what the market wanted, and so they thrived. At the same time, small independents could not compete, they didn’t have the buying power so were more expensive, and because customers had to visit multiple shops, they could not offer the convenience of the big out of town supermarkets. Sadly resulting in the demise of many small independent retailers
The big supermarkets raised the bar in these areas.
What about the present
Roll forward to 2018, and now convenience is taken for granted, and with online shopping now commonplace, smaller retailers can compete more readily. Furthermore, whilst price is still a factor, there is now a growing interest in quality & provenience where food is concerned. There is also a recognition that the high street needs to offer more than simply a place to buy your groceries, and are innovating new ways to do retail, focusing on the experience as much as the product.
As a result, it is the high streets that now have the upper hand and big supermarkets that are having to adapt in order to compete. At the same time, improved choice and quality benefit the consumer.
The fact is that competition drives innovation, and in the long term, raises the bar. Without healthy competition, markets stagnate and become open to businesses exploiting their customers.
But I’m not a supermarket
We are using the example of the big supermarkets to illustrate the point. However, the power of competition to drive innovation operates across all sectors, in all sizes and types of business. Sure, it is a pain if another company muscles in on your patch and starts taking business away from you but if they are doing it in a way that is attractive to customers then you need to sit up and take notice.
If they are simply undercutting you then remember, you know your marketplace (at least you should!) so if they can offer lower prices then either they are buying the business at a loss to try to get a foothold in the market, or they know something about the supply chain that you don’t! As an established local business you will hopefully be able to hang on through an aggressive price-cutting attack but if your market is changing, you need to know about it.