This is not my story. It is a story about an other newsagent family and how a competitor targeted them, leveraging their marketing in what I think was an unfair action.
The newsagents, with whom I am friends, determined to host an event in their shop for a high-profile brand of products they sell. While they are not the only retailer in their shopping centre with the brand, their approach is unique and bold and goes beyond what is traditional for the brand.
They promoted the event in-store with professional posters as well as online, through boosted Facebook posts. They spent money.
For the party, they organised prizes, specially made tasty treats themed to the product they were promoting, activities and more. It was set up as a terrific and fun family event that aimed to also sell plenty of stock but to also give people an opportunity to engage with the products, to learn and have fun beyond plain shopping.
They were exhausted by the start of the day of the event, having put in plenty of work to dress the shop and create an experience that matched their proactive marketing, but excited for what was to come.
On the morning of the event they discovered a small business competitor in the centre had cut prices of the same products to close to cost, for one day only. They announced this with a hand written sign at the store entrance, capturing traffic heading to the newsagency with the promotion.
While I accept competition is real, this promotion by the competitor to cut prices to almost cost price on the day a fellow retailer in the centre in running a value-add promotion in which they have invested considerably is, in my view, poor form. It goes beyond regular competition.
I think what the other store did is lazy marketing, disrespectful to the competitor and disrespectful to customers who love the brand being promoted.
A smart retailer would have countered with their own event, at a different time, adding value in a variety of ways. Instead, this retailer ran a spoiler sale designed solely to mute the success of the in-store party run by my friends.
There were shoppers who saw the activity for what it was, and said so. Others were happy to get the discount.
Long term, the better retailer will win as this is what shoppers will appreciate – the retailer who understands the brands they sell, who services the collectors of the brands, who offers experiences that are enjoyable beyond price based shopping.
In the meantime, sure, the almost cost price sale had an impact. But no one won. My friends had the success of their event dulled by the competitor’s actions. Any boost the competitor got was money through the register but little in the way of gross profit.
People who shop solely on price are not loyal. For the competitor to keep anyone they won through the almost cost price sale they will have to keep discounting. I can’t see the upside in that.
Retailers in local shopping precincts and in shopping malls have to walk a fine line in handling competition. While I get that all is fair in competition, there are ethical lines one should not cross. I think what the competitor did in this instance is a crossing of an ethical line.
Mark. This post reminder me on one discussion on Supplier’s management in retail channels in last week’s C&I Expo. Some suppliers are very clear that they supply supermarket channel, discount department store channel, and other channels with different lines or package size, and they also supply different lines in the same size range to Coles and Woolworths to avoid a tough competition over the same SKUs.
What is your stance on commenting as a business on other retail competitors social media profiles to gain traction for yourself?
Woolworths and Coles do it every day. Get over it
Chris is all depends on where the post is. Context is everything. I don’t see it relating to this post.
Chris. I fully support Mark’s points in his story. I might cause confusion that the suppliers in my post are major fast moving consumer products, and have nothing to do with Mark’s post.
I initially think from a different view point, that fighting among small business, is not a pleasure experience. Should supplier be responsible for the fight? Then I recall that in C&I Expo, many suppliers has declaring that they are not funding the half-price promotion from retail giants, and each channel share the same discount. Supermarkets are using their own margin to gain their market shares, and start thrown independent distributors out of business. Suppliers try to comfort small retailers that they are trying their best to manage different channels by supplying different SKUs to different channels.
Sunny I think the bigger supplier risk coming is the direct suppler to consumer model. We see this already in jewellery, fashion, personal grooming, diaries and more categories. The first to be impacted by these moves will be wholesalers, followed some retailers.
However, my post here is about none of this.
We have worked with suppliers to promote brands. But would not do it for a brand that is represented in nearby competitors. I have no loyalty to the scatter gun brands as their model inevitably leads to discounting. I will stock these brands if customer base demands whilst recognising the need to shift and exit. Not surprised at the outcome in this case. As Andrew pointed out, some are masters of exploiting other’s efforts.
In small shopping centres it is beneficial to all retail outlets if one has a promotion that will increase foot traffic. The business undercutting the price in this instance would have benefited themselves more if they ran a different promotion for the day to get passing traffic in their door. This is where business sense kicks in.
I agree Peter.