Retail-ification occurs when the equipment you produce and sell begins to be built and sold more cheaply by retail outlets. This phenomenon often leads to products being viewed as “throw-away” purchases with minimal after-sales support. If this is happening in your industry, there are strategies you can adopt to defend your brand and business. Differentiation is key—and often, it needs to go beyond the product itself. Here’s how to defend against retail-ification and avoid becoming a commodity:
Tactics to Defend Against Retail-ification
- Heritage
Lean into your origin story. Customers value spending money with organizations they feel good supporting. Highlight your history, values, and commitment to quality. Ensure your employees, dealers, and customers understand your roots and how they influence your business practices today. A strong heritage fosters loyalty and creates an emotional connection with your brand.
- Service & Parts Availability
It’s easier to build equipment than it is to support it. A critical first step is evaluating whether you’re adequately taking care of your dealers and customers. Often, retail-ification results when OEMs fail to deliver on their promise of support. Ensuring exceptional service and readily available parts can set you apart and reinforce the value of choosing your brand.
- Dealer Partnerships
Your dealers are your frontline defense against retail-ification. They interact directly with your customers, so it’s essential they understand and can articulate your value proposition. Equip them with the tools, training, and resources they need to convey your differentiation and deliver on your promise. Strong dealer relationships are among your best weapons in maintaining market position.
- Consumer Image
Consumers don’t always choose the most affordable option; they often value owning and being associated with high-quality, desirable products. Look at how car manufacturers differentiate based on image and perception. Similarly, invest in marketing that enhances the perception of your brand as aspirational and worth the investment.
- People
Your people can be your ultimate competitive advantage. In a market where products are viewed as commodities and price becomes the main factor, the quality of your team can make or break your success. Hire for culture and train for proficiency. Build a strong team, invest in their development, and empower them to represent your brand effectively. Great people will ensure your strategies and differentiation resonate with customers.
Pitfalls to Avoid When Confronted with Retail-ification
- Delay
If you sense retail-ification is creeping into your industry, act immediately. Don’t underestimate the potential damage or assume customers will see through lower-cost offerings. Consumers may not fully understand your value proposition and could be swayed by cheaper alternatives. Take proactive steps to reinforce your position before it’s too late.
- Attacking
As the established manufacturer or brand, avoid being seen as attacking new entrants. Negative tactics can tarnish your reputation and make you appear insecure. Instead, focus on showcasing your strengths and delivering value.
- Chasing to the Bottom
Your initial reaction may be to lower prices to match or beat the competition. Resist this urge. As the saying goes, “Never argue with a fool. They will drag you down to their level and beat you with experience.” Matching low prices reinforces the perception that your product lacks value and sets a precedent that’s hard to reverse. Lower prices often lead to cost-cutting measures, which can compromise quality and support—key differentiators that set you apart from retail competitors.
Summary
When retail-ification begins to impact your industry, don’t delay. Act swiftly to prove your differentiation and rally all your stakeholders—employees, dealers, and customers—to advocate for your brand. By leveraging your heritage, enhancing service and parts support, building strong dealer partnerships, cultivating a premium consumer image, and empowering your people, you can successfully defend against retail-ification.
If retail-ification is threatening your industry, Connect can help. Contact us to develop and execute a strategy tailored to your unique challenges.
