What Are the Key Factors in Conducting a Successful Competitive Analysis for Retailers?

Retailers operate in a highly competitive environment where customers have access to endless options to choose from. Therefore, retailers must keep a close eye on their competitors and identify what makes them successful through a process known as competitive analysis. Conducting a successful competitive analysis can help retailers create a winning strategy and stay ahead of the competition.

Here are some essential factors that retailers should consider when conducting a successful competitive analysis:

1. Identify the competition:

The first step for retailers is to identify both direct and indirect competition. Direct competitors offer similar products or services and target the same customer base. Indirect competitors may not offer the same products or services but compete for the same customer’s money. For instance, a coffee shop may consider a bakery as an indirect competitor as they both strive for the customer’s breakfast dollars.

2. Define the competitive landscape:

After identifying the competition, retailers should define the competitive landscape which includes the market players, suppliers, and customers. The analysis should cover the size, market share, and business model of each competitor. Retailers should also determine the supplier’s influence and customer’s purchasing behavior. A clear understanding of the competitive landscape can help retailers identify their strengths and weaknesses and develop a sustainable competitive advantage.

3. Analyze the competitor’s strengths and weaknesses:

Retailers must study their competitors’ strengths and weaknesses to understand what makes them successful. This analysis should focus on products, services offered, price points, marketing strategies, and customer service policies. Retailers can also use SWOT analysis which stands for strengths, weaknesses, opportunities, and threats. This analysis provides a comprehensive view of the competitor’s internal factors such as strengths and weaknesses and external factors such as opportunities and threats.

4. Evaluate customer perceptions:

Customer perceptions can significantly influence a business. Retailers should evaluate their competitor’s customer perception to understand their strengths and weaknesses. Retailers can use online reviews and social media comments to gauge customer perception of a particular brand. They can also conduct surveys or focus groups to get customer insights into what they like or dislike about a particular brand.

5. Find unmet customer needs:

Retailers can beat the competition by identifying unfulfilled customer needs that competitors are not fulfilling. Retailers should analyze their competition’s products and services to determine what they are missing. They can then create a unique value proposition to meet that unmet need and attract more customers.

6. Calculate pricing strategy:

Pricing is a critical component of a retailer’s strategy. Retailers should analyze their competitor’s pricing strategy to understand how they position themselves in the market. Retailers should focus on the value proposition offered by competitors and determine if they offer a higher value at the same price point. Retailers can also analyze the competitor’s pricing strategy for any indications of price discrimination or price skimming.

7. Observe market trends:

Retailers should observe industry trends to stay ahead of the competition. They should analyze their competitor’s strategies for any indications that suggest new trends. Retailers should also monitor external factors such as technology advancements, economic conditions, and consumer preferences that may impact the industry. By using this information, retailers can create a strategy that aligns with market trends and sets them apart from the competition.

8. Determine marketing tactics:

Marketing is a critical component of a retail strategy. Retailers should analyze their competitor’s marketing tactics to understand their approach to customer acquisition and retention. Retailers should focus on the messaging, targeting, and channels used by their competitors. Retailers should also evaluate their competitor’s store layout, signage, and visual merchandising to understand how they engage with customers. By analyzing their competitor’s marketing tactics, retailers can create a marketing strategy that stands out and delivers value to their customers.

In conclusion, a successful competitive analysis is essential for retailers who want to stay ahead of the competition. By identifying the competition, defining the competitive landscape, analyzing the competitor’s strengths and weaknesses, evaluating customer perceptions, finding unmet customer needs, calculating pricing strategy, observing market trends, and determining marketing tactics, retailers can develop a sustainable competitive advantage that sets them apart from the competition. A thorough competitive analysis can help retailers create a winning strategy that delivers value to their customers and growth to their business.