Can you Change your Niche?

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You have your niche in the marketplace, but you decide that you want to head a different direction in order to capture a different part of the market. However, if a major corporation such as Wal-Mart and Nordstrom’s failed at changing their niche, is it possible for the small business owner to change their niche? Yes, it is possible but you have to do it very carefully.

First of all let’s take a look at what happened to Wal-Mart and Nordstrom’s.

As anyone who has been alive for the last 20 years knows, Wal-Mart’s niche has been the lowest common denominator, the lowest price shopper. Not the smartest shopper who wants value for the dollar but the customer who only looks at the price and not what is in the package.

The problem with having this niche is that there is not a lot of margin in this market. Realizing that they are quickly hitting market saturation in the United States, they knew that they would have to make more money off of their products in order to continue improving income.

Seeing the success that Target was having, they decided to move that direction. However, in the stores that they tried to upscale, they lost their core market and sales begin to flounder and the experiment was stopped. Wal-Mart is now moving more upscale but doing it much more slowly and not trying to alienate its existing market.

Nordstrom’s has always been known as the customer service retailer. You did not go into Nordstrom’s for low prices or the hippest fashions; you went in there if you wanted good service. Seeing that their core market was aging that they were not brining the younger market Nordstrom’s decided to change their focus by bring in the hip and trendy. Once again it failed as Nordstrom’s core market was alienated and sales went down not up.

The lesson to be learned is that you can change your niche but you cannot alienate your existing market. You can slowly bring in or start building new items, but you also want to keep your existing customers happy with the products they have been buying all along.

Take time if you want to move your niche and don’t alienate the people who have kept you in business.

What Niche?

One of things you will here me talk about all the time is how important it is for you to have a niche to drive your customers base. Wal-Mart has it’s low price niche (even if it really doesn’t have the lowest prices), Nordstrom is known for it’s customer service, and K-Mart is know for?

Now let’s look at one type of chain store that none of the competitors have set themselves apart and that is office supplies. There are three big stores when it comes to office supplies and that is OfficeMax, Office Depot, and Staples.

The problem is what sets these stores apart? I have to admit I used to work for OfficeMax, my wife worked for Office Depot at one time and her sister worked for Staples. So in other words we have all three covered.

If you ask a majority of their customers, they would say that they shop at the store that is most convenient for them. If there is a couple of stores close to each other people may choose one store over the other because of customer service but beyond that they have done little to set themselves apart. In fact I have never seen a market segment in which customers will when writing a check will not remember what store they are in and mistake it for a competitor.

While OfficeMax has tried to set itself apart by not having mail in rebates and Staples is pushing its Easy Button advertising, there is still little to set these stores of apart. They pretty much have the same product and services, at pretty much the same prices.

So what could these stores do to set themselves apart?

Is the Wal-Mart Price Really Lower?

Depending on what kind of products you sell in your retail store, at some point you will have some one come up to you and say..."Wal-Mart is cheaper". I am sure that every retailer in the country has heard this line one too many times. However, while Wal-Mart may have a lower price, does it have the best price for the money?

This is where knowing your competition comes in handing. No, you don't need to go into Wal-Mart or Best Buy or any of those big box stores every day to find out about prices and how they are doing things. What you do need to do is look at your important sellers, the ones that sell enough and make you enough money and make sure you know how your product competes against the competition whoever that may be in your store. You need to know how that products is a better value the competition and inform your customers about it.

Let give you one example from when I was managing an appliance department. Our biggest microwave oven at the time was 1.8 cubic feet. At the time it was selling from $179.99. Wal-Mart also had a 1.8 cubic feet microwave but it sold for $159.99. So Wal-Mart's price was lower. But was it a better value?

Our microwave had sensor cook, various quick select buttons including popcorn, sensor defrost, multiple reheat options, and keep warm.

On the other hand the Wal-Mart model had none of this. In fact what Wal-Mart did (and what it often does) is go to the manufacturer, tell them they wanted a microwave at this size, at this price, and to take out everything they could out of it to get a cheap price. In fact this the Wal-Mart model was not even in the manufacturers catalog which you will find in many of their products.

So what I did was have a side by side comparison of the two models and show how much of a better value it was (comparing it to Wal-Marts it was worth about $219.99).

Probably 20% of the people will still go over and buy the Wal-Mart model despite you showing your is a better value. However, your goal is to convince the 60% of buyers who are on the fence. By being professional and knowing your facts, you can show them that you have the best value for the dollar and the customer service to go with it.