See why inflation figures heighten your need to compete on things other than price

The latest inflation figures were announced this week and it's not good reading for retailers-

http://www.bbc.co.uk/news/business-34514135

The figures show a fall in the inflation rate to it actually showing a negative. This means that prices are falling.

Why is this bad news for retailers?

This is particularly bad news for retailers of high price items. The fact is, that if consumers see prices falling they will put off their large purchases in the expectation that prices will continue to fall and they can save money. This effect really starts to kick in when prices fall consistently over a longer period of time. It works more on high ticket products - televisions, cars, gadgets and computers. So if you're a retailer of these items what can you do? The first thought when looking for customers is often price but that seems like the wrong idea on this occasion. Further price cuts can only deepen the feeling that prices will continue to fall. And increasing prices at this point will put you at a disadvantage to your competition.

So the best thing to focus on is the quality of what you sell. Having a quality product can sell no matter what the market is doing. Look at Apple - their products sell in times of inflation or deflation. Now, we can't all come up with an ipod, iPhone or iPad idea to help our retail business but you can focus on the quality in your own business.

Finding what makes you different

As a retailer you will probably already have an idea what it is that makes you different. It's what sets you apart from other retailers and it could be one of many things-

• Your loyalty scheme
• Your products
• Your customer service
• Your special offers
• Your events

I've written many, many times in this blog about understanding what you do better than others. And this is what you need to concentrate on. I'll give you a few examples-

Waitrose have high prices but their customers love their absolute quality and great customer service.

Boots are very pricey but focus on their loyalty card and customers return.

Aldi mixes price with availability and customers have loved this balance.

So what is your USP? What can you do better than your competition? What are you capable of that nobody else in your town is? These are the things that will drive you forward.

Communicate this with your team, communicate it with your customers and look away from just dropping your price to compete - there are other, better ways to differentiate yourself.

Looking back at 100 blog posts - part 1 - The High Street

As I look back at the blog, and the 100 posts that have come before, I will take the next five blog entries to look at the themes that have emerged during my time writing this.

One of the main motivations for writing this blog was the decline in the UK High Street, and what could be done about it. Although the blog hasn't focused on that completely, I have returned to that subject time and time again. I think that some of my blogs have been about comparisons, some have been moans and some have been looking at ways of stimulating the High Street again - not to it's former glory, but to a modern-day vibrant place to shop, eat, park and spend leisure time.

I looked in an early blog about how to make the most of the customers you have through your door when on the High Street. The key to your customers that are against the clock is speed of service. On the High Street, as a pose to those shoppers at out of town retailers, there is the pressure of time. This typically comes from parking charges and the fact that a lot of your customers will be on their lunch break. The blog below looks at preparing for this and being ready.

http://mytimeinretail.blogspot.com/2014/02/speed-of-service-is-key-for-most-high.html

I have tried to tread a fine line on this blog between protecting the High Street, but not at all costs. I think that retail has to adapt to it's surroundings and move with the times. Modern retailing has embraced the online offering, often matching it with the ability to Click and Collect. In this blog, I looked at the modern High Street embracing the advantages technology could offer.

http://mytimeinretail.blogspot.com/2015/01/you-can-have-online-offering-and-not.html

And I wondered in the blog below if there is a major retailer that would take up the plight of the High Street and become a true champion. I think that a big retailer should look after the smaller independent retailers around it. A vibrant High Street or town centre is a benefit for all who live near, shop there and have an outlet there.

http://mytimeinretail.blogspot.com/2014/05/is-it-time-for-major-retailer-to.html

After a visit to Italy, I briefly looked at the differences between the two shopping cultures and the two shopping areas created and used by us and the Italians-

http://mytimeinretail.blogspot.com/2014/02/comparisons-of-uk-high-street-to-that.html

NOT EVERYTHING CAN BE BOUGHT ON THE HIGH STREET

What type of retailer do you want to be?

In terms of retail, there are many shapes and sizes, many categories, many markets and target customers.

Some attempt to specialise, others want to be all things to all people. Some want the multi-site outlets, whilst other are happy to have one store, or even no stores and just to operate online.

However, I believe that it is possible to split retailers into 2 categories- those that compete on price, and those that don't. This may seem absurd at first sight - of course all retailers have to establish a competitive price, don't they?

Well, what I'm saying is-

 Some retailers provide goods at the lowest possible price and use price as their marketing edge - Aldi, Poundland, Home Bargains, Tesco.

Some retailers provide a service or something else that goes above and beyond just a product for the lowest price, and subsequently can offer things at a higher price and still have a flow of customers - Boots, Waitrose, Marks & Spencer.

So back to the original question - what type of retailer do you want to be?

Price

I think that this is the tougher way to distinguish yourself. I think that there is always someone who can undercut you, or attempt to undercut you. There are some massive competitors out there that can run lost-leaders or price promotions to drive you put of business, should they want to.

Service

In my view, this is the way forward. If you can offer something to your customers that they can't get elsewhere, if they can't get it locally. I was once told that the definition of competitive advantage is -

"Doing something that your competition can't or won't do."

Now, to me, this isn't price - it's service. Build A Bear and the teddies that your kids have made themselves, Marks & Spencer and their superior quality food and service, or your local craft store that  offers lessons for children.

As a successful retailer, or a potential succesful retailer, you need to find whatever this is for you and your business. We used to call it a USP, it's the reason your customers come back to  you.

If you don't already know what this is, then work with your team, your customers and establish exactly what it is. Then accentuate it, run with it, use it on your marketing, talk about it ceaselessly. It's your future.