July 5, 2024
iStock.com/Ralf Hahn
What’s the Best Way To Identify Competitor Threats?
Global customer data science company Dunnhumby partnered with location analytics platform Placer.ai to develop a tool to assess retailers’ competitive threats, joining a crowd of newer tech-driven solutions to competitor intelligence.
The “Competitive Threat Evaluator” tool combines geolocation data from Placer.ai — including cross-shopping behavior and proximity to competitors — with customer perception data from Dunnhumby’s annual Retailer Preference Index (RPI).
Matt O’Grady, president of the Americas at Dunnhumby, said the tool, currently available to grocers, offers “a single dataset that provides invaluable shopper insights and store preferences to make sure they stay on top of their competitive threats.”
According to an article in The Yale Ledger, methods used to gather competitor data may include:
- Conducting market research: Utilize focus groups, surveys, and customer interviews to gather insights on competitors’ reputations and pain points with customers.
- Monitoring online presence: Regularly monitor competitors’ websites, social media platforms, online content, customer reviews, and messaging strategies to gain insights into their strengths, weaknesses, and customer satisfaction.
- Attending industry events: Attend industry conferences and trade shows to interact with competitors directly, observe their presentations, and gain insights into their latest initiatives. Networking with industry professionals can also yield information on competitor strategies.
- Analyzing publicly available information: Scrutinize public sources such as annual reports, press releases, financial statements, and industry publications to gain insights into competitors’ performance, expansion plans, partnerships, and product launches.
- Utilizing competitor analysis tools: By aggregating and analyzing data from various sources, competitor analysis tools enable tracking of competitor performance, pricing, marketing strategies, and online visibility.
- Hiring competitor analysis experts: With an understanding of industry dynamics and intelligence-gathering techniques, competitor analysis experts go beyond surface-level observations and delve into deeper insights, identifying trends, patterns, and competitive strategies that may not be immediately apparent.
“Competitors have a way of sneaking up on you, especially in today’s market,” said Dana Colbert, vice president of Radius, in a blog entry. “The pressure is on as technology opens new supply channels, pricing becomes more efficient, and companies have greater direct access to customers via social media and other online platforms.”
She explained that simply staying close to customers can help retailers avoid being blindsided by changing market dynamics. Colbert said, “Existing customers are your strongest allies for gaining insight to product and service weaknesses and to gaps that can increase your vulnerability.”
According to Shopify, there are six pitfalls of competitive analysis:
- Competitive analysis is not a one-and-done exercise: With businesses constantly evolving, competitor analysis must be considered as an ongoing process.
- Confirmation bias is real: Avoid the tendency to favor initial assumptions, including preconceived ideas about competitors.
- Data without action is useless: Adjustments should be made based on findings on competitors’ strengths and weaknesses.
- Working harder instead of smarter: Take advantage of the latest data collection tools that can significantly speed up competitor research.
- Starting without a direction: Before researching, it’s important to define goals regarding what you want to learn about the competition.
- Not accounting for market timing: Study competitors and how they’ve grown and progressed over time rather than only assessing their approach at a single fixed point.
BrainTrust
Cathy Hotka
Principal, Cathy Hotka & Associates
Gary Sankary
Retail Industry Strategy, Esri
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Recent Discussions
Discussion Questions
What advice do you have about detecting and evaluating competitive threats for retailers?
Which web-based competitive intelligence tools pack strong value?
Which old-school methods can particularly provide early warning signs of an emerging competitor?
Poll
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One of the best, and easiest, ways to identify competitive threats in retail is to get out into the field. Walk stores and observe what retailers are doing, talk to customers, chat with associates. A lot can be learned this way. The other way is to conduct traditional market research. We monitor a lot of things for our clients: market shares, customer views, retailer pricing, underlying corporate strategies, web and store traffic, financial analysis, new range launches, and so forth. It helps people keep on top of the competitive environment and take action before threats become too serious. However, this is only one part of retail success: the other part is understanding customers and innovating to serve them better. This is arguably more important and is a strategy employed by some of the great brands like Amazon and Apple, which both tend to place way more emphasis on this than on competitors.
Amen. Your best source of information about your business is your customers. They will tell you the truth. Consider employing tools like TruRating to get continuous feedback.
Although advanced technology solutions are extremely valuable to have in your arsenal, you should not fall into the trap of using competitive intelligence to determine your own actions and strategies, as your brand is unique.
As far as competition is concerned, I need to pay an equal amount of attention to indirect competition, accidental competition, unintentional competition, and changes and alterations in the landscape.
In spite of advancements in technology, it has never been easier to gain awareness, keep track, keep up with, or surpass the pace. The universe has no secrets anymore. With social media, e-commerce, web sites, and now, even artificial intelligence, the competitive landscape is becoming increasingly transparent.
Anyhow, take advantage of your shiny new technology and data, but rather than being reactionary, set trends rather than following them. – Db
To stay vigilant amid competitive threats, retailers can embrace the habit of constantly scanning market factors and consumer moves.
Combining new and old tools like AI and sales data can alert retailers to competitive risks and shopper patterns.
In 2020, Amazon invited select shoppers to provide non-Amazon receipts. This data revealed which retailers and store locations customers shopped at, what they bought and how much they paid. Overall, Amazon gained insights into lost sales opportunities, which could inform and optimize its pricing, promotion and assortment strategies.
The best way to identify competitive threats is to walk a mile in the customers shoes. Walk 10 miles. Walk 100 miles. And I mean that quite literally. Get out from behind the desk and walk the walk of the customer, be it on the website or the stores. Your stores, your competitors stores. I do it with one simple question always in mind. “WHY…???” Why did the competitor make the choices they did? What voids or opportunities did they spot that you didn’t spot? How does your newest product stand up to their newest product? Does your product have sufficient differentiation and distinction from the competition? Are you the leader being copied, or are you the one always playing catch-up?
I love the data that Placer.ai brings to the table. That data will provide the grim reality of real world shopping behavior. But that data won’t always answer the “WHY?” question. And that data may beg a whole host of questions about competitive threats that you didn’t even know existed. Learn from the data, and then start walking.
Jeff, when I started competitive analysis a few decades ago, this how we did competitive analysis-along with Excel spreadsheets and Access databases. We now have a lot more resources and tools to make it easier including things like webscraping , etc. Dunhumby and Placer.ai alone, are powerhouses by themselves. I have used the data from both very positively in the past along with other insights to determine the WHY . The partnership of both will provide more support when presenting to stakeholders on competition, promotions, and projects pertinent to the go to business strategies.
Tenser’s Law of Equivalent Experience states: “The best service standards anywhere are instantly expected everywhere.”
No more powerful reason exists for retailers to to invest continuously in competitive benchmarking and customer research. If you take your eye off this for more than a moment, the marketplace will run you over.
Benchmark by regularly visiting your competitors’ stores and studying their ads and loyalty programs. Web-scrape too, but don’t let the easy availability of that data fool you into thinking it provides a complete picture.
Use accepted qualitative research methods to learn what your customers truly think about you and want from you. Confirm those findings against your POS demand signals, because they won’t always know how to tell you the whole truth.
SWOT analysis is an excellent method, as others here mention. Of course you need to gather the data first to perform this with validity.
Competitive analytics have become far more sophisticated as markets become saturated and customers have more choices about where to shop. Retailers are great about looking at this data when they’re opening new stores. Still, few have the discipline to continuously analyze their market presence for existing stores. When they do, it’s often because a store has lost significant market share or experienced a decline in sales. We all know that trying to re-capture market share is difficult and expensive.
A better approach is to use geographic dashboards and analytics to monitor the subtle changes in a market that can indicate that there is a change happening. This not only includes new competitors, but it can also mean the slow changes in the population around a store that could mean your target customers are slowing leaving the area, or the impact of changes in the local job market it a simple change to the transportation network that can impact how your customers get to your stores, vs. the competition. Also critical, especially for fast-growing chains, is evaluating cannibalization when opening a new location and ensuring the sum of the result is worth the investment.
Best-in-class companies constantly evaluate their network of stores, fulfillment centers, and transportation assets to ensure they’re meeting the needs of their customers while also finding new opportunities for growth. The worst case is doing the due diligence and analysis to open a new store and then never revisiting that market until it’s too late.
One of the more effective “old school” tools I would use, which still has merit, is to create a dashboard based on a simple quadrant analysis. The axis is – “Store performing well/not performing well” vs. “Performing to plan/Not performing to plan.” That allows you to focus on the stores that were expected, based on store forecast, to do well but are not, which could indicate an issue. And focus on stores performing well to plan but were not expected to. There very well may be an opportunity in that location that can be exploited in other stores.
At the end of the day, market research is essential for retailers. They must constantly consume and analyze location-specific data. They need to be confident that they know what’s happening in a store across the country and the store below their buying offices. Geospatial technology is an essential tool that enables this.
The rise of location analytics and the tracking of shopper movements provides retailers with an unprecedented view of where shoppers shop. Knowing which other stores your customers are shopping provides important insights into preferences and how your competitors are performing. The mass adoption of smartphones and proliferation of location analytics firms that harness this data, provides retailers with insight into store traffic trends like never before — right down to the individual store, region and chain. Beyond location analytics, as noted by Neil Saunders, getting out and visiting competitor stores is a reliable and useful way to collect competitive insight. Monitoring competitor activity is important, but ultimately retailers need to focus on their own customers and the service they deliver.
I’m sure many fellow panelists have worked through a “SWOT” analysis (strengths, weaknesses, opportunities, threats) at a whiteboard or flip chart. (I’m dating myself on that one.) It’s a useful exercise especially to stimulate group discussion, but it needs to be strengthened by both actual data and personal observation.
An individual company’s sales data are not enough — this requires a deeper understanding of who is winning and losing market share, and why. Industries at particular threat from “disruptors” need to pay special attention to what the future might look like, five or ten years down the road. Planning accordingly is better than being reactive.
My first word of advice is to be a competitive threat. Who was the first company to sell books online? It wasn’t Amazon. Who are Costco’s “real” competitors and is their new digital strategy really a result of a SWOT analysis? Is their digital strategy really a competitive response to “the everything store,” Amazon? Should it be?
My colleagues have said the rest and it hasn’t really changed. The only thing I would add to that is to know yourself. Often, companies react to real or perceived competitive threats without an intimate understanding of their core strengths and in the process destroy organizational value because someone did a SWOT.
Once you have the “what,” the “how” of collecting competitive intelligence is not easy but it has certainly been made easier by the amount of information available and the ease and speed with which it can be crawled and analyzed.
Mark Ryski summarized it well and it’s often baffling how often this simple statement is overlooked: “…but ultimately retailers need to focus on their own customers and the service they deliver.”
Tom and Retail Wire, great topic. This is especially relevant now as many retailers in the US are seeing new types of competitors from social media and retail marketplaces from other markets.
As a first step in evaluating competition, retailers need to gain a full understanding of their current state and the information available to them and what they truly understand. Secondly, they need to have a couple of goals on why they want to build a better competitive intelligence program. Are they focused on a particular competitor? Are they losing share in particular markets? Are they not getting the share of wallet that they used to for their core or emerging customers? Third, build a metrics driven plan to close competitive gaps which may require investment in research, people, technology and potentially some organizational changes.
For web-based tools that can be helpful depends on the retailer’s particular situation, I would like Similar Web or similar tools like SEMrush would be great options to monitor website activity among competitors. Additionally, retailers can do social listening from competitors reviews and social media platforms to understand their customers and competitor’s customers sentiments and call outs on particular experiences or products.
From an old school perspective, I agree with the fellow BrainTrust panelists on the importance of walking the stores, talking to customers and employees as well as digitally walking through the websites form a customer POV. Lastly, I have found that using panel or receipt-based Leakage Trees to be a great way to see where dollars are leaking now versus prior years. Leakage trees with additional data can be a great way to start to understand the situation and prioritize competitive investments.
Why do retailers forget they’re also shoppers? Put your shopper hat on and shop your store or website. How does it make you feel?
I can’t believe we think a need ai to do something so basic.
As many have point out, being out in the field or online shopping as a customer is one of the bet ways to stay connected and to be able to spot things hiding in aggregated data sets. The store associates are an invaluable use of data as well given many of them interact with the customers every day. However, being customer focused and competitor aware is best way to ensure you’re delivering for the customer and not becoming too distracted by what works for others.
How about watching your sales trends…closely. Then, shopping your stores. Then shopping your customers stores. Market by market. You can be swimming in data and miss an insight that is right there in the open…in your stores.
Data mining at scale is the answer andthere are a treasure trove of sources including search and social signals that play a big part into how a retailer is being perceived and sentiment is changing. Companies like i-genie are mining search and social signals at scale and so you can understand sentiment changes well before you see changes in foot traffic and you can align with trends as they are emerging because retail takes time to execute new strategies. This partnership is the beginning of marrying and correlating different data sets to provide competitive advantage.
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One of the best, and easiest, ways to identify competitive threats in retail is to get out into the field. Walk stores and observe what retailers are doing, talk to customers, chat with associates. A lot can be learned this way. The other way is to conduct traditional market research. We monitor a lot of things for our clients: market shares, customer views, retailer pricing, underlying corporate strategies, web and store traffic, financial analysis, new range launches, and so forth. It helps people keep on top of the competitive environment and take action before threats become too serious. However, this is only one part of retail success: the other part is understanding customers and innovating to serve them better. This is arguably more important and is a strategy employed by some of the great brands like Amazon and Apple, which both tend to place way more emphasis on this than on competitors.
Amen. Your best source of information about your business is your customers. They will tell you the truth. Consider employing tools like TruRating to get continuous feedback.
Although advanced technology solutions are extremely valuable to have in your arsenal, you should not fall into the trap of using competitive intelligence to determine your own actions and strategies, as your brand is unique.
As far as competition is concerned, I need to pay an equal amount of attention to indirect competition, accidental competition, unintentional competition, and changes and alterations in the landscape.
In spite of advancements in technology, it has never been easier to gain awareness, keep track, keep up with, or surpass the pace. The universe has no secrets anymore. With social media, e-commerce, web sites, and now, even artificial intelligence, the competitive landscape is becoming increasingly transparent.
Anyhow, take advantage of your shiny new technology and data, but rather than being reactionary, set trends rather than following them. – Db
To stay vigilant amid competitive threats, retailers can embrace the habit of constantly scanning market factors and consumer moves.
Combining new and old tools like AI and sales data can alert retailers to competitive risks and shopper patterns.
In 2020, Amazon invited select shoppers to provide non-Amazon receipts. This data revealed which retailers and store locations customers shopped at, what they bought and how much they paid. Overall, Amazon gained insights into lost sales opportunities, which could inform and optimize its pricing, promotion and assortment strategies.
The best way to identify competitive threats is to walk a mile in the customers shoes. Walk 10 miles. Walk 100 miles. And I mean that quite literally. Get out from behind the desk and walk the walk of the customer, be it on the website or the stores. Your stores, your competitors stores. I do it with one simple question always in mind. “WHY…???” Why did the competitor make the choices they did? What voids or opportunities did they spot that you didn’t spot? How does your newest product stand up to their newest product? Does your product have sufficient differentiation and distinction from the competition? Are you the leader being copied, or are you the one always playing catch-up?
I love the data that Placer.ai brings to the table. That data will provide the grim reality of real world shopping behavior. But that data won’t always answer the “WHY?” question. And that data may beg a whole host of questions about competitive threats that you didn’t even know existed. Learn from the data, and then start walking.
Jeff, when I started competitive analysis a few decades ago, this how we did competitive analysis-along with Excel spreadsheets and Access databases. We now have a lot more resources and tools to make it easier including things like webscraping , etc. Dunhumby and Placer.ai alone, are powerhouses by themselves. I have used the data from both very positively in the past along with other insights to determine the WHY . The partnership of both will provide more support when presenting to stakeholders on competition, promotions, and projects pertinent to the go to business strategies.
Tenser’s Law of Equivalent Experience states: “The best service standards anywhere are instantly expected everywhere.”
No more powerful reason exists for retailers to to invest continuously in competitive benchmarking and customer research. If you take your eye off this for more than a moment, the marketplace will run you over.
Benchmark by regularly visiting your competitors’ stores and studying their ads and loyalty programs. Web-scrape too, but don’t let the easy availability of that data fool you into thinking it provides a complete picture.
Use accepted qualitative research methods to learn what your customers truly think about you and want from you. Confirm those findings against your POS demand signals, because they won’t always know how to tell you the whole truth.
SWOT analysis is an excellent method, as others here mention. Of course you need to gather the data first to perform this with validity.
Competitive analytics have become far more sophisticated as markets become saturated and customers have more choices about where to shop. Retailers are great about looking at this data when they’re opening new stores. Still, few have the discipline to continuously analyze their market presence for existing stores. When they do, it’s often because a store has lost significant market share or experienced a decline in sales. We all know that trying to re-capture market share is difficult and expensive.
A better approach is to use geographic dashboards and analytics to monitor the subtle changes in a market that can indicate that there is a change happening. This not only includes new competitors, but it can also mean the slow changes in the population around a store that could mean your target customers are slowing leaving the area, or the impact of changes in the local job market it a simple change to the transportation network that can impact how your customers get to your stores, vs. the competition. Also critical, especially for fast-growing chains, is evaluating cannibalization when opening a new location and ensuring the sum of the result is worth the investment.
Best-in-class companies constantly evaluate their network of stores, fulfillment centers, and transportation assets to ensure they’re meeting the needs of their customers while also finding new opportunities for growth. The worst case is doing the due diligence and analysis to open a new store and then never revisiting that market until it’s too late.
One of the more effective “old school” tools I would use, which still has merit, is to create a dashboard based on a simple quadrant analysis. The axis is – “Store performing well/not performing well” vs. “Performing to plan/Not performing to plan.” That allows you to focus on the stores that were expected, based on store forecast, to do well but are not, which could indicate an issue. And focus on stores performing well to plan but were not expected to. There very well may be an opportunity in that location that can be exploited in other stores.
At the end of the day, market research is essential for retailers. They must constantly consume and analyze location-specific data. They need to be confident that they know what’s happening in a store across the country and the store below their buying offices. Geospatial technology is an essential tool that enables this.
The rise of location analytics and the tracking of shopper movements provides retailers with an unprecedented view of where shoppers shop. Knowing which other stores your customers are shopping provides important insights into preferences and how your competitors are performing. The mass adoption of smartphones and proliferation of location analytics firms that harness this data, provides retailers with insight into store traffic trends like never before — right down to the individual store, region and chain. Beyond location analytics, as noted by Neil Saunders, getting out and visiting competitor stores is a reliable and useful way to collect competitive insight. Monitoring competitor activity is important, but ultimately retailers need to focus on their own customers and the service they deliver.
I’m sure many fellow panelists have worked through a “SWOT” analysis (strengths, weaknesses, opportunities, threats) at a whiteboard or flip chart. (I’m dating myself on that one.) It’s a useful exercise especially to stimulate group discussion, but it needs to be strengthened by both actual data and personal observation.
An individual company’s sales data are not enough — this requires a deeper understanding of who is winning and losing market share, and why. Industries at particular threat from “disruptors” need to pay special attention to what the future might look like, five or ten years down the road. Planning accordingly is better than being reactive.
My first word of advice is to be a competitive threat. Who was the first company to sell books online? It wasn’t Amazon. Who are Costco’s “real” competitors and is their new digital strategy really a result of a SWOT analysis? Is their digital strategy really a competitive response to “the everything store,” Amazon? Should it be?
My colleagues have said the rest and it hasn’t really changed. The only thing I would add to that is to know yourself. Often, companies react to real or perceived competitive threats without an intimate understanding of their core strengths and in the process destroy organizational value because someone did a SWOT.
Once you have the “what,” the “how” of collecting competitive intelligence is not easy but it has certainly been made easier by the amount of information available and the ease and speed with which it can be crawled and analyzed.
Mark Ryski summarized it well and it’s often baffling how often this simple statement is overlooked: “…but ultimately retailers need to focus on their own customers and the service they deliver.”
Tom and Retail Wire, great topic. This is especially relevant now as many retailers in the US are seeing new types of competitors from social media and retail marketplaces from other markets.
As a first step in evaluating competition, retailers need to gain a full understanding of their current state and the information available to them and what they truly understand. Secondly, they need to have a couple of goals on why they want to build a better competitive intelligence program. Are they focused on a particular competitor? Are they losing share in particular markets? Are they not getting the share of wallet that they used to for their core or emerging customers? Third, build a metrics driven plan to close competitive gaps which may require investment in research, people, technology and potentially some organizational changes.
For web-based tools that can be helpful depends on the retailer’s particular situation, I would like Similar Web or similar tools like SEMrush would be great options to monitor website activity among competitors. Additionally, retailers can do social listening from competitors reviews and social media platforms to understand their customers and competitor’s customers sentiments and call outs on particular experiences or products.
From an old school perspective, I agree with the fellow BrainTrust panelists on the importance of walking the stores, talking to customers and employees as well as digitally walking through the websites form a customer POV. Lastly, I have found that using panel or receipt-based Leakage Trees to be a great way to see where dollars are leaking now versus prior years. Leakage trees with additional data can be a great way to start to understand the situation and prioritize competitive investments.
Why do retailers forget they’re also shoppers? Put your shopper hat on and shop your store or website. How does it make you feel?
I can’t believe we think a need ai to do something so basic.
As many have point out, being out in the field or online shopping as a customer is one of the bet ways to stay connected and to be able to spot things hiding in aggregated data sets. The store associates are an invaluable use of data as well given many of them interact with the customers every day. However, being customer focused and competitor aware is best way to ensure you’re delivering for the customer and not becoming too distracted by what works for others.
How about watching your sales trends…closely. Then, shopping your stores. Then shopping your customers stores. Market by market. You can be swimming in data and miss an insight that is right there in the open…in your stores.
Data mining at scale is the answer andthere are a treasure trove of sources including search and social signals that play a big part into how a retailer is being perceived and sentiment is changing. Companies like i-genie are mining search and social signals at scale and so you can understand sentiment changes well before you see changes in foot traffic and you can align with trends as they are emerging because retail takes time to execute new strategies. This partnership is the beginning of marrying and correlating different data sets to provide competitive advantage.