Facing the challenge of a “new kid on the block”

Gavin Masters
Gavin MastersEcommerce Industry Principal
13 Jun 2018


How to combat an established retailer’s worst nightmare – a new, agile competitor gaining significant market share.


It’s a frequent observation when an established High Street retailer goes into administration nowadays – “they simply failed to adapt to the modern retail landscape”. Many retailers are running at fine margins (and even finer profits), and the slightest change to the competitive line-up can tip them over the edge and once the decline begins, negativity and reticence can set in. More often than not, this leads to a lingering decline and the possibility of downsizing, or even administration.

Whilst it’s impossible to predict the future, a well-established retailer can be geared up to respond quickly to opportunity (and threat). This can be achieved by having a culture that embraces change and constant improvement to give a retailer the best possible opportunity to succeed. Many retailers rely on history and brand providence, believing these things hold stronger than change and modern approaches (I know, I’ve worked in a few…) and by the time they find out the truth, it’s often too late.

Time after time, the brands that fail to succeed are the ones who, in hindsight, had the best opportunities to capitalise on the changing market – Blockbuster, HMV, Maplin, Game, Borders. All were leaders in their sector that could have acquired start-up competitors in their nascent state to take them into the digital space, but all refused to accept that change was coming, and paid the ultimate price.

The most important factor in building a climate that embraces change comes from the top. There must be a willingness within the senior management team to foster an environment in which change is celebrated, not avoided, and where constant introspective evaluation is used to understand the vulnerabilities, which may be present within the business and its operations.

There are a number of simple measurements, which a retailer can use to ensure it is organised to be responsive to change:

  • Are there people within your business who are responsible for understanding changes in the competition landscape, and do they feed back to the rest of the business when things do change?

  • Does the company have defined KPIs for identifying threats to business performance (as well as the traditional “success” KPIs)? KPI’s such as Customer Attrition Rate, Market Share of Key Competitors, Non-converting footfall/email rates, Acquisition Costs

  • Does your business strategy have a “Plan B” in the event of a new competitor or product entering your market?

  • Is your IT infrastructure set up to accommodate rapid or significant changes in process, systems or product?

  • Do you frequently review customer satisfaction, and do you take on board customer feedback on what they expect from your business?

  • Are you aware of what barriers and frustrations your customers face when dealing with you, and what would happen if a competitor removed those barriers?

If your business can’t confidently answer these questions, then there is a very real risk you won’t identify changes to your sector until it’s too late. New start-ups – especially those with a digital focus – can often go to market with significant investment, an experienced management team and a slick operational setup. This allows them to grow and adapt quickly, and establish a reputation (and a brand identity) within a matter of weeks using social media.

It’s true that not every new competitor is going to be a threat, and a lot of start-ups will fail quickly (or at least fail to grow). However, retailers, such as Toys R Us and HMV, have learnt to their peril the dangers of ignoring upstart competitors for too long, or assuming that the brand will win out against all adversity in the medium to long term.

A culture of communication and a meritocratic approach to feedback and information can allow things to come to light, which may not be flagged in companies with a strict hierarchy and a lack of open communication.

It is very often the case that employees on the shop floor, or dealing with low-value accounts in customer service are the first people exposed to insight into a competitor’s growing reputation, but they will not pass this information on if they feel it won’t be listened to or acted upon.

Change is a hard thing to instigate in a company which is not used to it, but the dangers of avoiding change or (worse still) actively pushing against it are too great to ignore. I have seen first-hand the impact of refusing to change – watching helplessly as a competitor grabs an opportunity and corners the market as your company belligerently pushes ahead with its 5-year strategy.

In conclusion, one must never underestimate the effect a company’s leadership and culture has on its ability to adapt to a changing market. Arrogance and a blinkered approach from a company’s directors will inevitably be reflected throughout the wider business. A misplaced sense of invincibility has led to the downfall of some of the UK’s biggest retail brands in recent years. Nevertheless, established brands can succeed by identifying change, listening to customers (and fellow employees) and responding quickly.



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