How To Avoid Going Bankrupt? It Begins With Visiting Your Competitor

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One of the first things I do when conducting a business makeover is to get the owner and manager to accompany me on a visit to a competitor. This usually results in a bit of a battle.

They’re afraid they’ll be seen, they’ll be discovered, they’ll be asked to leave.

They’re afraid. 

Once I convince them most of that is in their heads, we actually go to the competitor. I take the time to focus their attention on what is wrong and what is right.

No business is all good or all bad, we can learn from all situations. But it does take some critical thinking.

Here are 5 questions I ask when visiting a competitor’s store:

-       Why is the merchandise arranged the way it is?

-       Is the store neat, clean, and well-lit?

-       What is the energy level from the staff?

-       Can I detect a trained staff with a plan of how to engage me?

-       Does the staff want to be here or have to be here; how do you know?

After you approach a competitor’s business that way, you can return to your own store and look at how well you measure up. The danger is if you visit without asking these five questions, you return to your store and pat yourselves on the back about how great you are and how awful they are.

I thought about that this week as Payless ShoeSource filed for Chapter 11 bankruptcy protection after going into bankruptcy just two years ago.

You have to wonder if any of their C-level execs ever visited any other stores to compare the experience. Payless’ dated sales banners in screaming yellow and red, their row after row of shoes in boxes, and their single employee stuck to the cash register might have worked thirty years ago because the prices were so good.

You’d think, after having gone bankrupt before, they would have changed their customer experience, but no.  Check out these complaints from Consumer Affairs.

You’d think they would have reached out to frugal Millennials to get them to warm to the idea of shopping at Payless, but no. 

Payless came up with a punk marketing stunt. They invited – hired is my guess – fashionistas to come to a pop-up store filled supposedly with a new fashion brand shoes. Then they tricked these social media influencers into going on camera to say how great the quality of their invented brand shoes – really Payless shoes – were.

They even allowed them to pay for these shoes at ridiculously high prices and then revealed,  like the old Candid Camera did, that they had just bought Payless cheap shoes. The videos showed how stupid these young people were, not how great Payless was.

Let me make this clear, marketing won’t help you if your customer experience is crap.

Payless’ competitor DSW saw the writing on the wall and recently announced all types of customer-first changes:

-       They expanded their rewards program across all channels to offer free shipping, as well as in-store shoe repair and other services.

-       They added a W Nail Bar in some stores that provides nail art, gel manicures, and pedicures.

-       After realizing many of their shoppers were moms, they added a kid’s shoe department complete with creative play spaces.

-       They provided in-store, shoe-donation points for their partner Soles4Souls that puts their social cause front and center; that’s particularly important for attracting Millennial shoppers.

Yahoo reports DSW stock’s expected earnings growth for the current year is 16.5%, higher than the Retail - Apparel and Shoes industry’s expected growth of 11.4%.

The most successful brands today are relentlessly focused on giving a better customer experience in their stores. 

But there is still that an old adage, if it ain’t broke, don’t fix it meaning if something is functioning properly, it's best to just leave it alone and not make any changes that could potentially break it.

That’s the way too many retailers large and small look at retail… if your store has been working fine until now, then why make changes that could potentially mess it up?

Because there are simply too many places to buy too much of your same products.

See also, What Top Brick and Mortar Retailers Are Doing To Combat Amazon

In Sum 

The trouble for most retailers is they don’t recognize their customer has moved on, Their experience in your store has so degraded that someone else has seized on your opportunity  and stolen away what once were your loyal customers.

I don’t want that to happen to you so this week, grab your management staff and go look at a competitor and ask yourselves those five questions.

Then come back and walk your own store to compare and contrast. Then set your sights on improving your customer experience. It will mean changing how you train your employees, how you upkeep your appearance, and how you merchandise your products. It may mean it costs you some money.

But better to spend it on the ones who actually pay your salary – your shoppers – than trying to come up with an event or marketing program that lands with a thud.