Question

Topic: Strategy

Is Price The Only Way To Compete?

Posted by Anonymous on 5/6/2010 at 10:00 AM ET 25 Points
My cousin has a clothing retail store. She told me if I would like to partner with her. There are a lot of clothing stores in the area. They compete with each other in terms of pricing. There seems to be a price war. Is price the only way to compete? Especially if they have similar products being sold?
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  • Posted by Inbox_Interactive on 5/6/2010 at 10:07 AM Accepted
    Price is one way to compete (think Walmart), but it's by no means the only way (think Nordstrom).

    You can compete on quality, service, variety, by catering to a certain niche, etc. There are many, MANY ways to compete.

    Is your cousin asking you to become a financial partner because she's losing a price war? I would be cautious.
  • Posted by CarolBlaha on 5/6/2010 at 10:09 AM Accepted
    Well if your products are similar, and you are just a "me too" store-- price will be an issue. First, she should look to finding a niche and bringing in unique products. That is how small businesses compete against big box retailers -- and win.

    But I bet it's not price and you need to dig deeper. Price is a biz owner's first "reason and excuse" -- that and the economy-- which is old and trite.

    There are a couple books I like Retail Succes and Why We Buy, both by George Whalen. When you search those on sites like Amazon, you'll see a lot of similar books on creating sales and profits without discounting.

    When I go shopping for clothes, I don't search one item and price it store to store. Clothing is such a subjective statement. I buy what grabs me, moves me. I have a price point where I think "that's more than I want to spend", and stores are sensitive to that and know their customers. Get into the psychology of buying.
  • Posted on 5/6/2010 at 10:11 AM Accepted
    Price is not the way you need to think if you want customers to think of you first instead of your competition.

    do market research in your area and ask the people what they want in terms of style, accessiories etc and relaunch your store.
    in other words, give the customer what they want and they will call.

    regards
    Denis Finnegan
    [website removed by staff]
  • Posted on 5/6/2010 at 11:11 AM Accepted
    There are 5 "P"s in marketing - Place, Product, Promotion, Price and People.

    Price is only one approach and there can generally be only one price leader in any market. The most successful companies strive to create a differentiated market position which is immune to competitive attack and deliver a value ratio of "1" where quality and price are equal.

    I blog on this topic as it relates to the housing industry at https://www.residentialmarketingblog.com/
  • Posted on 5/6/2010 at 12:42 PM Accepted
    if you are going to do the same thing with everyone (compete in pricing), you ought to ask yourself if you are confident outdoing everyone (earning the least margin) and still sustain your business. It seems like a very weak strategy and it's only a matter of time before the business go bust.

    In addition of 5P, you can take a look at 7P (another P havent mentioned is physical evidence and process) for example you can offer a better ambiance and better service e.g. style advisor or complimentary gift wrapping etc.
  • Posted by CarolBlaha on 5/7/2010 at 8:46 AM Member
    Your cousin thinks everyone buys on price. You need to research the psychology of buying. Clothing especially -- to a fashion conscious guy or gal-- is not about money. We all have an internal price point where we won't go and most retailers know this and market to us at those price points.

    A good book is 1001 Ways to Build Retail Excitement. Make it a destination, give me a reason to come in. While you amazon it, you'll find lots of books on similar topics -- how to compete without discounting.

    Co sponsor a wine tasting with a non profit, do a sculpture show with an artist, capture the women's info and birthday and market to her husband on that day and the holidays. (you know her size!) Bring in the local school to sing carols and do hot cider (and holiday gift buying). Feature a scarf designer. Change the shop with the holidays-- do red white and blue clothing for the 4th of July. Your Mary Kay lady would love to do makeovers! Do a bridal fair for the trousseau -- which has come to mean what she'll wear on the honeymoon.

    Does that get the wheels churning?
  • Posted by michael on 5/7/2010 at 2:03 PM Accepted
    If that were the case, Walmart would be the only clothing store. Wait, there might be thrift stores.

    For clothing you need fair prices but personal service and customer attention will win. Can you give that?

    Michael
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