Sharpening the Sword is a regular column by retailer John Riley of Grasshopper's Comics, a 1300 square foot comic and game store in
For the next week or two we're going to be talking about competition. Honestly, this isn't a topic I usually think about too much in the traditional way. My thoughts on competition really focus more on how to compete with online role-playing than with other stores. But in coming out of my cocoon and speaking with retailers this past year and a half, I was kind of astounded by how many retailers spend a great deal of time and energy focusing on competing stores, so I thought I'd address the topic.
My view of competition can best be summed up by an old martial arts story.
A student was sparring against another student he was very intimidated by. The student he was fighting was a very skilled fighter with a lot of experience. So, feeling that his own skills weren't up to the task, the first student tried numerous tricks and fancy techniques in order to win the fight. But no matter what he did, the other student easily parried his attacks and responded, scoring point after point.
His sensei watched this and when the fight was over he told the first student to accompany him outside the school. Outside he drew two lines in the dirt, one short and one slightly longer, and asked the student to make the longer line shorter than the first. The student quickly went to erase part of the line, but the sensei stopped him, informing him that he was not allowed to touch the longer line. The student stared at it for some time and responded that he couldn't make the longer line shorter.
'Of course you can,' the sensei replied. And with that he took a stick and extended the shorter line until it was longer than the other. 'Now, that line is shorter than the other. Don't worry about cutting down your opponent's skills. Worry about improving your own.'
The point of this story rings true in many areas of life, and certainly in the realm of business competition. But lest you think this is me going off into the realm of idealism again, I believe that this is about efficient practicality.
There are basically two reasons that stores in our industry fail: mismanagement and/or changing market conditions. In the past fourteen years I've seen many stores in my regional market close. One store decided to go to a 'pogs only' format. Another ordered a few hundred boxes too many of Fallen Empires. One retailer decided to stop carrying comics because the comic customers were interfering with his Magic games. My favorite is the guy who bought out another store's CCG inventory, and brought it back to his own store where he sold it for less to 'undercut the competition'. None of these were good management moves, and none of these were influenced by anyone else.
Because when it comes down to it, you have very little ability to influence the decisions of another store owner. And that's what makes putting a lot of mental energy into 'competing' with another store inefficient. You have very little power to influence.
But the biggest drawback is that even when another store goes out of business the payoff to the remaining stores is insignificant. From my experience and that of other retailers I've spoken with, the generally accepted amount of business you'll get from a competing store going out of business is about 5%. The rest of it just seems to disappear. I know one retailer who opened in the middle of four gigantic stores. Each one of these huge stores imploded within a few years leaving him the last man standing. If he really did pick up all their business he should be doing over two million a year, instead of working two jobs. While I know there may be some instances that are exceptions to this rule (like two stores across the street from each other) generally speaking, it seems to hold true.
In our industry it is easier to grow the pie than to try to steal someone else's piece. And should you be successful in stealing that piece, you'll be lucky if it's little more than a nibble. Because let's face it, if those customers wanted to shop at your store then they already would be.
Another drawback to working against your competition is that you make decisions for your own business based not on what is best for your own store, but rather what would most hurt another. This is similar to our martial artist above preparing for a match by training only on the things that he knows will work against one specific opponent. He's in trouble if he has to face anyone else because his training has been focused not on building his own skills, but in cutting someone else down.
There is one other reason why competing in our current market is detrimental to all involved. And that is that at our current market size we need all the stores we can get. The retail base is so small that we've stopped mentioning the numbers. The loss of any store is yet one more pillar pulled out of the small platform we're all standing on.
OK, with that said, the reality of our world is that we do have to compete with other stores. So how do we do that productively? The answer is by refining your store to the point where it is the standard by which all other stores in your market are judged. The great thing about competition is that it can drag everyone involved up. When all your competitors are being compared to you, you've done your job.
We'll look at that process next week.
Next time: Thinking Like a Glacier.