From Our Print Edition

You may beat price if you have top-notch unique products, services, personalization, convenience and clean stores. But it won’t be easy.

It seems to me that for many years now, everyone has agreed that true competitive differentiation comes not from price but from unique products, services, personalization, convenience, clean stores and what-have-you. But consistently, nearly all retail promotion focuses on price. There are outliers that do well, such as Trader Joe’s but they are few and far between. Why do so many retailers make their public face almost solely about price? Is it just too risky to step outside the box?

WHAT CUSTOMER SERVICE?

While I agree that customer service has always been important to me in the past, nowadays with self-checkouts and drive-through pickups, I can scratch that one off my list. Don’t get me wrong, a few years ago I went through a “normal” staffed checkout, I put my order on the belt and stood at the other end waiting for my purchases and be set up as online only. This would allow them to still offer the products, while at the same time increasing these items’ rates of sale and enhancing profit. And if the item still didn’t meet the desired goals, they could just let a third party come in and offer it, letting the retailers order to be rung out without even a hi, hello or any type of acknowledgement. When it was finished, the checker turned and said “that will be X dollars.”

I was a bit taken aback as this retailer was known for its customer service, so I said to the checker, “What, I don’t even get a thank you?” The reply was shocking: “Sir, it’s on the bottom of your receipt.” It was then that I realized that customer service — or the lack thereof — was something that the retailer didn’t think was an important part of the shopping experience. And perhaps they were right. Even today when I buy something on most online sites, I don’t even get a hello or thank you, just a tracking number.

So, let’s address unique items and assortments. That too has changed, and you can thank (or hate) the internet and Amazon for that. It didn’t take long for customers to realize that they didn’t need to get off the couch and drive all over town in search of that unique product. Nope, just type it into Google or go to the Amazon website and — presto! — you get a listing of everyone on planet Earth that carries it.

Retailers just loved this new way of shopping, and why not? It instantly allowed them to cut their in-store assortments down to the 20% of the items that do 80% of the business. It also allowed their in-stock levels to instantly improve as those nasty, slow-moving items that were harder to order and took longer lead-times were now gone, and replaced with faster-selling stuff.

If retailers chose, their slow-moving items could now be removed from in-store purchases and be set up as online only. This would allow them to still offer the same products, while at the same time increasing these items’ rates of sale and enhancing profit. And if the item still didn’t meet the desired goals, they could just let a third party come in and offer it, letting retailers tell their customers that they now carry everything their hearts desire.

But what about the dollar format stores, and their unique items and selections? They pose little problem to the big chains, who like all good retailers don’t want to lose any shopper regardless of income level. To attract the dollar customer, they established a small area as you walked in, with signage calling out special items at dollar price points. This showed their customers that they, too, had a value offering.

Retailers just loved this new way of shopping, and why not? It instantly allowed them to cut their in-store assortments down to the 20% of the items that do 80% of the business.

There’s a good way to compete with Aldi’s, too. Aldi’s has been known for its private label. So, promote your own brand as companies like Target are doing in ads and on TV. And in efforts to beat the big food guys, Aldi’s has added a new strategy — limiting the food basics and offering more upscale, specialty “Trader Joe’s” type items. Meanwhile, Aldi has also been stocking more national brand items than it ever did.

Retailers of all stripes have many ways of adapting to competition, whether it’s due to economic timers or a new competitor such as the internet or Amazon. But to be fair, the two years of the pandemic changed retail forever. Supply chain issues, transportation shortages and labor issues opened the door, and in some cases, forced these changes.

Ah, clean stores. I worked for a retailer whose founder’s wife was constantly reminding management from her husband down to the store manager that every mother wanted a clean safe bathroom they could use with the children while shopping. In fact, in her opinion it was more important than anything else a retailer could offer. She went on to prove her point by telling them that McDonald’s was known by moms to be the place to stop when traveling due to the focus on clean bathrooms (too bad it’s not that now).

But let’s give credit where credit is due. Today some stores are actually cleaner than a few years ago, thanks to the robot driven floor cleaning machines that beeps at you while you’re trying to navigate the aisles between them and the associates picking up the online orders.

Let’s step back and see what’s missing. I’ve covered why customer service is no longer a compelling reason to pick most retailers. How retailers have responded to the customers who do actually shop in the stores and want to have a clean store. Thanks to the internet and Amazon the unique, one-of-a-kind, specialty items have been taken care of. So, what’s left? As one of the TC commercials we see all the time says, “It’s the three P’s, price, price, price.” And even that is changing. You can get one price in store and another online by the same retailer, one price for buying it once or a cheaper one for opting in on a subscription, one price for “free” delivery (and other “perks”) with a membership and let’s not forget the semi-annual Black Friday ads that will soon be coming to you quarterly.

CHECK THE SMITHSONIAN

Let’s be honest: Price sells. Quality and service now come in a distant second. The days of trying to decide whether to turn left into one retailer or right into another is gone. Now you just turn into the one that has your online order ready for you to pick up. In time, you’ll only find coupons and ads at the Smithsonian.

The magic of being able to scan the internet for everything you need (or thought you did), and being able to get it within days or even hours at the “best” price, is their best face forward.