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A Race to the Bottom

How to survive in the new retail environment


The formula for retail success is changing. Survival will likely require retailers to determine the basis on which they compete over the next three to five years and develop a differentiated strategy to win in the market. By effectively executing on a core set of operating strategies, retailers are likely to avoid a race to the bottom and competing solely on price or service if that is not their business objective.

In today’s retail environment, competitive attributes including price, selection, and location are being reconsidered as noted competitive differentiators. Virtually any durable product and many consumables can be found online and competitively priced from anywhere, including the aisle. With the exception of private label or “exclusive” products, selection is no longer limited to the inventory within a traditional retail store, given the unlimited assortment available via the Internet. Also, with unprecedented growth in mobility, location is more about where the customer is physically than where the store is located.

The competitive frontier for retailers is shifting dramatically before our eyes. If retailers are to win in the marketplace over the next five to 10 years, they should determine the primary basis on which they will compete. This report includes several practical steps that retailers can take now to begin this journey.

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