How Do You Conduct a Competitive Analysis in Retail?

Retail businesses face tough competition in their market, which is why conducting a competitive analysis is crucial. This analysis helps retailers gain an in-depth understanding of their competition and the market environment, leading to informed decisions and profitability. In this article, we explore the steps required to conduct a comprehensive competitive analysis in retail and its importance.

Step 1: Identify Competitors

The first step in conducting a competitive analysis is identifying competitors. Retailers can conduct market research, observe customer preferences, and check industry directories to identify their competition. Identifying competitors who operate in the same geography, sell similar products or services, and target the same customers is crucial.

Step 2: Analyze Competitors

After identifying competitors, the next step is to analyze them. Retailers need to examine products, pricing strategies, promotional activities, marketing tactics, and customer service to gain an in-depth understanding of their competition. By analyzing these aspects, retailers can identify areas of improvement, remain competitive, and attract customers.

Product Analysis

Retailers need to identify the products their competitors sell, including quality, packaging, and pricing strategies. This analysis helps identify product gaps, improve product offerings, and remain relevant in the market.

Pricing Analysis

Pricing analysis involves studying competitors’ pricing strategies, discounts, and promotions. Understanding competitors’ pricing strategies allows retailers to remain competitive and devise pricing strategies that attract customers.

Promotional Analysis

Through promotional analyses, retailers identify effective marketing channels, promotional techniques, and seasonal trends to attract customers and improve their brand image.

Marketing Tactics Analysis

By analyzing competitors’ advertising of products and services, retailers can assess effective marketing strategies, messaging, and positioning to improve their marketing campaigns.

Customer Service Analysis

Retailers need to analyze their competitors’ customer service offerings, including speed of response, returns policies, and customer satisfaction levels. This analysis helps offer better customer service experiences, resulting in repeat business and customer loyalty.

Step 3: Benchmark Yourself

The third step involves benchmarking oneself against the competition. Benchmarking helps understand business operations’ strengths, weaknesses, opportunities, and threats and make informed decisions on improvement. Retailers should ask themselves questions such as:

• What are the competition’s strengths, and how do they compare to ours?
• What are the competition’s weaknesses, and how can we capitalize on them?
• What opportunities exist for us, and how can we leverage them?
• What threats exist, and how can we mitigate them?

The answers to these questions provide insight required to improve operations and remain competitive.

Step 4: Analyze Market Trends

Retailers must understand the latest market trends, including industry reports, market data, seasonal trends, and customer behavior, to predict market changes and customer behavior. Understanding market trends enables retailers to offer products and services aligned with customer needs. Trends to consider:

• Industry trends
• Customer trends
• Seasonal trends

Step 5: Implement Improvements

The final step involves implementing improvements learned from the analysis. Retailers can apply the gained insight to their operations, offer new products, improve pricing strategies, enhance customer services, align sales with seasonal trends, and revamp marketing campaigns. These improvements must align with the business strategy and the retail business’s overall vision.

Conclusion

Retailers that conduct a comprehensive competitive analysis can gain an edge over their competition in the market. Conducting a competitive analysis is crucial to identify opportunities for growth, mitigate risks, and achieve long-term success in retail. Following the steps outlined in this article, retailers can conduct effective competitive analysis, remain competitive, and attract customers.