How do retailers stay ahead in today's competitive market? By performing ongoing competitor analyses, that's how! In this comprehensive guide, we'll walk you through the benefits and steps to conduct an effective retail competitive analysis.
The Importance of a Retail Competitive Analysis
In a market where consumer preferences are constantly shifting and new technologies emerge, staying informed is key. A timely and accurate retail competitive analysis can give companies a competitive edge and a clear understanding of their position in the market. With valuable insights about their competitors, retailers can identify market opportunities, conquer anticipated threats, and grab more market share.
Surviving in a Competitive Retail Market
The retail market is filled with companies vying to be the best. Gathering competitive intelligence on relevant ones is key to staying informed and coming ahead of the rest. This due diligence keeps businesses abreast of consumer sentiment, the latest market trends, technological advancements in the industry, and more so they can make profitable and proactive decisions.
Fostering Growth and Adaptability
Keeping tabs on the competitive landscape—including direct and indirect competitors—can also spur company growth. For example, observing a competitor's successful advertising campaign might ignite a retailer's creativity. So rather than stagnate, the business keeps adapting its strategies and preparing to meet challenges.
To identify new market trends and forecast potential disruptions, a retailer should note shifts in consumer behavior, the implementation of new technologies, and emerging market players. Anticipating changes in the market can help companies remain proactive instead of reactive.
Components of a Retail Competitive Analysis
While retail competitor analyses can vary somewhat between companies, there are several core elements most of them usually have in common. We've listed a few of them below.
Identifying Key Retail Competitors
Where else to start by identifying one's competitors? It makes sense, but it's necessary to be mindful that this should include direct competitors (who offer similar products or services to the same audience) and indirect competitors (whose offerings overlap but target a different audience). Some companies also examine their tertiary competitors (brands that market to the same customer group but sell different products or services).
Once a company has listed and categorized its competitors, a good next step is determining their market positioning. In other words, how do they portray themselves to their customers? What messaging do they use? What differentiates their products and services? What are their unique value propositions?
Assessing Competitor Strengths and Weaknesses
Another integral part of gathering and analyzing competitive intelligence involves assessing the competition's strengths and weaknesses. Conducting a SWOT analysis—technically outside the realm of a retail competitor analysis, yet complementary—for each competitor enables a retailer to define areas where it can personally improve, including its reputation, products/services, market share, partnerships, and so on—all items within its control to change.
SWOT analyses can also highlight potential opportunities and threats on the horizon, which can't necessarily be controlled but can be prepared for and anticipated.
How to Conduct a Retail Competitive Analysis
Identifying competitors is the first step most companies take as they move forward with retail competition mapping (also known as retail competitive analysis). From there, it's advisable to follow these steps:
Step 1: Gathering Data for Competitor Analysis
The foundation of any successful competitor analysis is correct and timely information. After all, analyzing wrong, outdated data or outside the specific industry will only lead to wrong conclusions and misguided strategic planning.
Accomplishing this is an ongoing process on behalf of the retailer that typically requires utilizing both online and offline data collection methods, including customer surveys, social media listening, web scraping, SEO analysis, competitor website analysis, and more.
Industry reports like G & Co.'s Retail Industry Analysis, market research, and publicly available data can also supplement this retail market intelligence.
Step 2: Pinpointing the Market Leaders
After categorizing specific competitors, it's time to determine their market share, growth rate, and earnings. Essentially, evaluate
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