How to differentiate yourself from competitors and earn more?

Online shoe sales are increasingly competing with offline stores every year, but they still cannot count on even a 20-30% share of sales on the Russian market. With rare exceptions, the cost of shoes on marketplaces is lower than in retail stores; for some reason, most buyers prefer to purchase a new pair, albeit more expensive, but personally choosing from the assortment presented on store windows and shelves. This illogical behavior of buyers can only be explained by the fact that each of them has individual characteristics when choosing purchases. SR expert on increasing sales in fashion Evgeny Danchev talks in detail about three options for a marketing strategy for positioning retail in the market, their advantages and benefits.

Evgeny Danchev -

business coach, consultant, expert in increasing sales of the fashion market. Author of the book "A Practical Guide to Increasing Sales of Shoes and Accessories". Author of sales scripts "60 responses to customer objections in a retail shoe store" and "Standards for retail shoe sales." Creator of an online school for fashion market leaders.

@evgenydanchev, www.wconsulting.su

In marketing, there is such a thing as positioning - this is the creation in the minds of consumers of clear distinctive properties of a product (and company) that distinguishes him/her from competitors. Moreover, according to the marketing strategy, you need to focus on target customers who will respond in the same way to the company's advertising and marketing activities.

What does this mean, speaking in simple language that any leader can understand? That not all buyers are focused on discounts and cost savings when making a purchase. Some of them are characterized by other selection criteria based on the realization of life values.

Buyers have four main motives for making a purchase:

1. Buy at the lowest price. 

2. Buy and receive added value (service, emotions, confirmation of the correctness of your choice during the purchasing process, get more goods for less money).

3. Buy quickly and get results now.

4. Personal communication and brand loyalty (purchase from a specific seller or company).

To provide evidence that this gradation works and is not just a theory on paper, I will give you a few examples.

During sales training, I almost always ask sellers two questions. First: “Please raise your hands, those who have regular customers coming to them every month to buy shoes and bags?” (not just to the company, but to you, as the seller). All salespeople who are not new raise their hands. You can conduct an experiment and ask your sellers, I’m sure the result will be the same. Moreover, I myself have witnessed many times that regular customers brought gifts to sellers (chocolate, cake, candy) and even money!

The next question that is asked to sellers is: “Tell me, there are customers who have chosen a model, but the store doesn’t have the right size now, and you offer to order it from another store or from a warehouse and buy it back in 1-2 days, coming back to store, but the buyer refuses, citing that he does not want to wait? And again I see many raised hands.

This means that this is proof that there is a considerable part of buyers for whom time is more important than other selection criteria, and they are less susceptible to prices in stores; it is more important for them to get results here and now.

Another proof that low price is not the dominant factor in sales is sales statistics to regular customers. If you track sales through discount cards and bonus programs, then you probably know that at least 30-40% of all sales in the store every month are made by regular customers. In some businesses this percentage reaches 60-70%. What is important: yes, they receive an additional discount when purchasing, but this does not mean that they buy the cheapest product, as a rule, the opposite is true, they are the buyers with the highest average bill.

A generalization of these statistics leads to the following conclusion: of course, no one wants to overpay, and price was and is, perhaps, the only understandable measure in society when comparing goods with each other. But let's face it: for a significant portion of buyers, a discount is just a nice bonus, and not the main and only incentive to purchase.

It is for this reason that marketplaces will never be able to displace offline retail from the market, but will only occupy their own niche in it, which will stabilize at a certain level in the coming years.

Instead of copying competitors' promotions and rewriting their price tags, making the cost of similar models a little cheaper, I suggest you think about how your business positions itself in the market. From a marketing strategy point of view, there are three options for its implementation.

If we take the strategy as a basis "Cost leadership", then we will see that there are now very few companies left on the market that can provide real competition to marketplaces. The company's cost leadership implies the purchase of goods in large quantities, due to which it is possible to reduce its cost; in such stores, boxes of shoes are most often located in the hall, and the number of sellers in the stores is minimal. Rather, this format fits the phrase “self-service store.”

This method of differentiation from competitors implies the presence of a wide range of shoes at the lowest price category, high turnover and low trade margins, aggressive advertising and constant promotions and discounts.

This strategy can only be implemented in medium and large businesses. A small business with only a few stores will not be able to ensure low costs, and will always be forced to compete on price with more powerful chain companies that can maintain low prices and, at the same time, operate on a minimum margin due to large revenues. The exception is the mini-outlet format, where you can sell the latest sizes and past collections purchased from the manufacturer at a stock price.

I never recommend my clients to follow this strategy, because sooner or later it simply leads to loss of business. There is always someone who starts price and marketing wars, and, as you understand, the one who wins is the one who has more resources, who can wait out the agony of competitors for years and does not care much about profits and the reduction of working capital.

This strategy is for large companies, which can compete with marketplaces through a combination of providing minimal service and keeping prices low.

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The next marketing strategy is called "Narrow specialization". It is characterized by concentration on one (narrow) market segment. For example, you want to open a sneaker store, or children's shoes, or orthopedic shoes.

Opening a franchise store for a specific brand is suitable for this strategy. In this way, you differentiate yourself from competitors due to a wide range of product offerings in a narrow segment.

Sneakers and children's shoes can be presented in many stores, but their range is very limited, and yours will be quite wide and with good depth in styles (sneakers for running, walking, specific sports, trekking, etc.). In children's shoes, usually stores that do not specialize in this group of products do not purchase sizes for babies (from zero to one year) for sale, and this reduces their sales.

Working in the format of a mono-brand store in itself clearly distinguishes shoes in a competitive environment, and customers will no longer say that they saw a similar model in a nearby store for less. In this case, you can compete directly only with a store that sells shoes of the same brand, and then, depending on the size of the city, there will be 2-3 or several dozen such competitors. And when working as a franchise, you have to focus on the permitted retail prices (RRP), and the issue of dumping from competitors rarely arises, because you can always “complain” about an unscrupulous competitor to the supplier, and besides, he himself periodically checks his customers for compliance with price tags RRC.

The strategy of narrow specialization, on the one hand, neutralizes competition and allows you to work calmly with a stable trading margin, without thinking too much about price wars, but on the other hand, it limits demand by working in a small segment of the market. It’s up to you to decide how suitable this strategy is for your company, but what exactly it gives is the opportunity to differentiate yourself from competitors and offer a product to the buyer that you won’t find in every store on the market.

The final marketing strategy that retail stores can follow is called “Detuning from competitors, or differentiation strategy." Above, I have already given you the sellers’ answers to the question about regular customers, which proves the company’s development in terms of such an indicator as the company’s personnel. And the staff is service. For this reason, focusing on selling added value to customers, of which the service is a part, is the main feature of this marketing strategy.

While Cost Leadership is focused on low-price strategies, differentiation involves setting yourself apart from competitors by adding value.

What can be added value in a shoe store:

• seller, as a person from whom you want to buy a product;

• special, unique properties of shoes that distinguish them from other models;

• atmosphere in the store (light, cleanliness, competent merchandising);

• marketing promotions (bonus program, personal offers).

This is far from a complete list of values, but I think that even if you can implement these four in your store, sales will begin to grow, and you won’t have to think about competition so often.

A trustworthy salesperson will always sell more than just a salesman taking a pair of shoes out of the warehouse. How to be able to connect with different types of buyers is taught in sales training, and companies must have retail sales standards in the form of a corporate document issued to each salesperson upon hire.

To sell shoes at a higher price than the competition, your salespeople must know the answer to the question: “How are our shoes different from our competitors, and why should they be bought from us, even if their price is slightly higher?” Managers need to first answer this question for themselves, and only then broadcast the answer to their sellers. If buyers are very careful when purchasing goods when choosing each model, then why shouldn’t sellers know about all the nuances and features of the models? The solution to this problem is only possible through the presentation of a new collection by buyers to sellers. Carry them out every season after a new collection arrives in stores.

Remember that proper display of goods and the formation of sets (shoes + bag + accessory) always adds sales due to their more effective visual perception by customers. Evaluate your store merchandising overall and compare it to your competitors.

If your business has an active bonus program, then you need to use it regularly. Some managers confuse different concepts regarding discounts. If, with the Cost Leadership strategy, the company provides the maximum possible discounts to everyone who comes to the store, then with the added value selling strategy, it is necessary to approach the provision of discounts more personally. Award bonus points with a limited validity period marked “Only for you”, apply a cumulative points system, stimulate the sale of the second product in the receipt with an additional discount, allowing customers to realize their need to buy more products for less money.

Working as a value-added company means focusing more on existing customers and working with their database. Particularly advanced companies have long been dividing their customer base into age groups, groups by frequency of purchases, average bill, and making personal offers (gifts, discounts, presentations, meetings with stylists) for each of the groups.

Now that you know what marketing strategies are, I think it won’t be difficult to determine which one your company follows. And then the important point is to convey to sellers the competitive advantages of your product and company, taking into account this strategy.

If you operate as a cost leader, then, of course, only aggressive marketing and constant discounts can retain customers and compete with marketplaces.

But if you choose a narrow specialization or selling added value, then you should not have direct intersections with marketplaces. Your competitive advantage will not be in price, but in the values ​​that you enable customers to realize. And for this they will pay you a little more than other companies, moreover, they will pay you themselves, giving gifts to your sellers and leaving positive reviews on social networks.