Lockdown has resulted in more intense competition in that companies that have managed to survive have done so because they were able to act/react faster, make fundamental change in meeting new needs by being very cost-conscious, are 100% financially aware, and almost entirely output focused. But still, they are simply our traditional competition, only sharper, with much to lose, but above all, financially astute, like never before…
On a far more subtle level, given that Lockdown has accelerated 20 years growth of online into one year, and having made a breakthrough in terms of a direct dialogue with our consumers via DTC, we are now competing with ourselves in two of the fastest-growing and exciting channels available.
In other words, given the differing needs of consumers shopping in each of our O+O channels, we have developed different offering mixes to suit each. Those suppliers offering a standard offering across all channels are in danger of missing an even bigger trick.
Given that different channels have different cost-to-serve profiles, it follows that our profitability by channel will reflect these differences. In practice, this means that the more energy we apply to optimising the two fastest-growing post-Lockdown channels, Online and DTC, the more there is a risk we will dilute overall company profitability.
Also, by working on DTC, not only ourselves but also through third parties, especially Amazon, we are in fact competing with our own brand as well as adding a new complexity to our traditional supplier-retailer relationships i.e. the brand reaches its consumer via many routes, some addressing that consumer’s needs better than others i.e. speed with 15 minutes delivery, and thus syphoning off some of your normal sales to that consumer via traditional channels.
In other words, in chasing growth via leading-edge channels with the same brand in different offerings, it could be said that we are in fact competing with ourselves…
And the more we tailor to individual consumer needs in different routes to the consumer, the more we compete with ourselves. Our brand becomes more attractive to the consumer in one channel, possibly at the expense of the same brand in another route to that consumer…
So, in other words, in assessing our relative competitive appeal to our consumer, we need to include the different channel versions of our brand with those brands with which we traditionally compete. In practice, this means factoring in DTC and Online into our analysis of relative competitive appeal.
When it comes to our traditional competition, we need to reassess them in terms of their post-Lockdown condition. Those that have survived the past 15 months of market disruption are different and represent far more threatening competition than pre-Lockdown. But fundamentally, they are simply attempting to meet a combination of consumer and retailer needs like ourselves.
It is now vital that we understand the new needs of our post-Lockdown consumers and retail customers and our ability to meet them at least as effectively as our traditional competition.
It can help to think through how our consumer’s relationship with our categories has changed during Lockdown. In many cases, they have become closer and more familiar with the brands they use, along with having more time to reflect on what they really need, how well those needs are being met, and at what cost. They are also increasingly aware of superfluous attributes in our brands, for which they are paying… This has to affect their overall assessment of the extent to which the brand represents value for money, compared with available alternatives.
This closer proximity with products-in-use, makes it obvious that 15 months lockdown has helped consumers understand more about their hitherto outsourced goods and services. For instance, over a year of more intensive home cooking has helped many consumers to become more appreciative and discerning re what goes into hospitality in pubs and restaurants. They are more discerning and critical re the quality of raw ingredients and how they are optimised in the cooking process.
Even the relatively simple act of homebrewing coffee from fresh-roasted beans, for 10p a cup, can cause a diner to query not only the quality but also the street price of a cup at £3.50…
Our consumers are emerging from Lockdown super-savvy, determined to settle for nothing less than demonstrable value for money.
It is now time to treat them appropriately by making them an offering that is better than alternatives available, and hopefully one they cannot refuse…
