You shouldn’t be scared of the big wolf at the door


David v GoliathJohn Genge offers advice on what to do to avoid panic and pessimism when one of the ‘big box’ factors opens on your patch.

A big factor chain is opening a new branch on my doorstep and I’m really worried about the impact it will have on my business. What can I do to fend off the competition?

Any new competitor is a problem but, every problem is an opportunity and the thing that you must not do is panic nor be pessimistic. Reactive emotions will not help at all. The response needs to be balanced, considered and objective. The first step is to do your homework.
First, look at their website and then phone up and order a part. Next, visit one of their other branches and see how well they do. Analyse their ‘market statement’ – it will be on the website somewhere, what are their claims and what is their message? Look too at their product range and their pricing. Just because they are big, it doesn’t mean that they will out muscle you on every line. In short, undertake a SWOT analysis on them. You will begin to see what their motives might be, where their vulnerable areas are, what they might seek to exploit in your area.

SWOT yourself

Then take a look at your own business. Do the SWOT on yourselves and see how the two compare. Do you have strengths where they are weak, and vice versa, are there opportunities for you that they will fail to exploit? Be very critical and analytical, identify every aspect good or bad. This is the key to your building a business model that will compete and win.
Your business model must be based on your strengths. Every business can exist in a variety of business climates but to take it as its most simple you can lead the market or follow it. Those that follow are in what is called “perfect competition” and this means that the products that you and your competitors sell are regarded as much the same so the sale is on price with little loyalty from your customers. Think how often you buy this way, it has become so much more common since the emergence of internet buying.
The opposite to this is a monopolistic situation where no one else sells what you have and in theory at least, you can dictate your own terms. But most situations are between the two as every business tries to develop unique selling points, customer loyalty and reasons to buy from them in order to move away from “perfect competition”. So what are yours and how strong are they? This will dictate to what extent you can sell on reasons other than price. Building value in your service is subjective and depends on what customers perceive as valuable so ask them. Your SWOT may have identified where you think you are strong and weak but your customers might think differently.


Build relationships. Again think like a customer. Think of when you buy things is it always on price? Often yes but not always. What makes you forgo the last penny or two of discount? It is normally on quality, availability, reliability, expertise, loyalty, back up, returns facility, hassle and convenience. To move away from “perfect competition” you need therefore concentrate on those things. Of course you have to be competitive but look for ways to tie your customers in. Try to be a one-stop shop for them by sourcing and selling things that they need which the big factor is not interested in stocking. Even if you make no money on these lines, customers are coming to you for an order which gives you the chance to quote for other lines.
Rather than just discount, use loyalty bonuses, rebates and other rewards to tie customers in. Use your size to give added flexibility and a more personal service. Be prepared to go out of your way to satisfy a customer’s need even if it means dropping a part off on your way home or at lunchtime. Get to know your customers personally, what their hobbies are, what sports they watch etc. Be interested in them as people and not just as a sale. As your relationship with them develops they will often tell you where you need to be and give you the opportunity that wouldn’t be there to an impersonal supplier.
Obvious stuff? Of course. There is an old adage, people buy from people. Make sure your business has good people to buy from.
One last thing: Your staff might get the jitters, one or two might think about applying to the new factor for a job. Confidence and relationship building is equally important with your staff, so involve them in your SWOT, your plans and your strategies. Work together and use your team’s camaraderie to your advantage.

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