How To Perform a Retail Competitor Analysis (With Benefits)
Retailers have to contend with a lot of moving parts. From emerging trends to new technologies and continuously changing consumer preferences, there’s always something new and different on the horizon. Despite everything going on, retail businesses must spend time monitoring and analyzing their competitors and their moves—or risk falling behind.
How? By carrying out ongoing competitor analyses.
This comprehensive guide explains step-by-step how retailers can conduct an effective competitive analysis. The benefits of doing so are numerous, but a timely and accurate retail competitive analysis can give companies a competitive edge and a clear understanding of their position in the market. Armed with valuable insights about their competitors, retailers can identify market opportunities, conquer anticipated threats, and grab more market share.
The Importance of a Retail Competitive Analysis
There are many reasons why a retail company should perform a competitor analysis at least quarterly (if not monthly). Let’s discuss some of these in more detail below.
Surviving in a Competitive Retail Market
The retail market is brimming with companies vying to be the best. Gathering competitive intelligence on relevant ones is key to staying informed and coming ahead of the rest. This due diligence keeps businesses abreast of consumer sentiment, the latest market trends, technological advancements in the industry, and more so they can make profitable and proactive decisions.
Fostering Growth and Adaptability
Keeping tabs on the competitive landscape—including direct and indirect competitors—can also spur company growth. For example, observing a competitor’s successful advertising campaign might ignite a retailer’s creativity. So rather than stagnate, the business keeps adapting its strategies and preparing to meet challenges.
To identify new market trends and forecast potential disruptions, a retailer should note shifts in consumer behavior, the implementation of new technologies, and emerging market players. Anticipating changes in the market can help companies remain proactive instead of reactive.
Components of a Retail Competitive Analysis
While retail competitor analyses can vary somewhat between companies, there are several core elements most of them usually have in common. We’ve listed a few of them below.
Identifying Key Retail Competitors
Where else to start by identifying one’s competitors? It makes sense, but it’s necessary to be mindful that this should include direct competitors (who offer similar products or services to the same audience) and indirect competitors (whose offerings overlap but target a different audience). Some companies also examine their tertiary competitors (brands that market to the same customer group but sell different products or services).
Once a company has listed and categorized its competitors, a good next step is determining their market positioning. In other words, how do they portray themselves to their customers? What messaging do they use? What differentiates their products and services? What are their unique value propositions?
To get a good grasp on the competition's positioning, examine their websites, social media, press releases, and product descriptions. Additionally, make a note of any events they host or attend and any interviews their top executives have given.
Trust us, a little retail competitor intelligence will go a long way.
Assessing Competitor Strengths and Weaknesses
Another integral part of gathering and analyzing competitive intelligence involves assessing the competition’s strengths and weaknesses. Conducting a SWOT analysis—technically outside the realm of a retail competitor analysis, yet complementary—for each competitor enables a retailer to define areas where it can personally improve, including its reputation, products/services, market share, partnerships, and so on—all items within its control to change.
SWOT analyses can also highlight potential opportunities and threats on the horizon, which can’t necessarily be controlled but can be prepared for and anticipated.
To conduct a SWOT analysis, follow these steps:
- Gather information about the target competitor from its own sources (e.g., website, social media, etc.).
- Conduct market research on both the competitor and your own company to determine how consumers view each comparatively.
- Use the four SWOT quadrants to structure all the gathered information.
- Determine next steps based on the analysis.
Performing a SWOT analysis on a competitor—or on one’s own business—is a great way to establish their—or your—competitive advantage. This sweet spot occurs when a retailer’s strengths and opportunities overlap with customers’ expectations and needs.
How to Conduct a Retail Competitive Analysis
Identifying competitors is the first step most companies take as they move forward with retail competition mapping (also known as retail competitive analysis). From there, it’s advisable to follow these steps:
Step 1: Gathering Data for Competitor Analysis
The foundation of any successful competitor analysis is correct and timely information. After all, analyzing wrong, outdated data or outside the specific industry will only lead to wrong conclusions and misguided strategic planning.
Accomplishing this is an ongoing process on behalf of the retailer that typically requires utilizing both online and offline data collection methods, including customer surveys, social media listening, web scraping, SEO analysis, competitor website analysis, and more.
Industry reports like G & Co.’s Retail Industry Analysis, market research, and publicly available data can also supplement this retail market intelligence.
Step 2: Pinpointing the Market Leaders
After categorizing specific competitors, it’s time to determine their market share, growth rate, and earnings. Essentially, evaluate each competitor’s success to identify the strongest players. A company might then consider mimicking applicable marketing tactics (and other business strategies) to reach its target customers and boost its own success.
Step 3: Comparing Product Offerings
Another critical step for a retailer is to compare its products and services to those of its competitors. In doing so, the company will become aware of areas where it’s excelling and others where it needs improvement to stay ahead.
Goods and services are often compared in terms of their pricing, variety, and quality.
Step 4: Identifying Their Sales Channels
Next, it’s helpful to determine where the competitor’s customers purchase its products and services—in other words, what distribution channels does it use and how successfully? Websites or social media? Wholesalers or retail outlets?
Understanding what works for them can influence a company’s own business strategy.
Step 5: Exploring Social Media Efforts
Finally, any competitive analysis template will suggest investigating each competitor’s social media, content, and marketing campaigns (don’t forget their blogs, email newsletters, PPC campaigns, and more). How do they communicate with their target audience? How effective is their content strategy in reaching potential customers? What marketing opportunities do they take advantage of?
Monitoring competitors can help a company spot relevant industry trends and consumer trends to better anticipate market shifts and inform its decision-making.
Using Technological Tools for Competitive Analysis
There are many different tools available that make it easier for a business to collect and analyze retail competitor intelligence. Some of these include:
- Free and paid software (e.g., social media listening, website comparisons)
- Free and paid databases (e.g., directories)
- Templates and diagrams (e.g., SWOT analyses, competitive analyses)
- Primary research (e.g., surveys, observations, interviews)
For a more comprehensive and in-depth analysis, it can be helpful to employ the services of a professional market research company or agency. Global strategy consulting firm G & Co., for instance, leverages a network of over 9,000 U.S. and 60,000 global respondents to capture consumer sentiment and feedback so companies know exactly what measures to take to acquire and retain more customers and improve their brand’s consumer perception.
Retailers are also encouraged to use their own internal resources and expertise to carry out ongoing competitor analysis.
Benefits of Retail Competitive Analysis
Retail companies can benefit greatly from conducting frequent competitor analyses. First and foremost, doing so empowers them to make well-informed decisions based on data-driven insights versus intuition or mere guesses. Additionally, conducting a SWOT analysis can help a company pinpoint its competitive advantages, identify areas for growth, uncover untapped markets, and reveal gaps in its strategies that competitors may have missed.
Additional benefits include:
- Minimizing risks more effectively.
- Anticipating challenges and threats in a fast-changing retail landscape.
- Devising and executing strategies to enhance customer satisfaction.
- Developing impactful marketing campaigns.
- Preparing for the launch of new products/services or market entry.
- Strategically planning and benchmarking overall.
Consistently performing competitor analysis can ultimately improve a company’s business performance and dramatically enhance its competitiveness.
Case Studies: Successful Retail Competitor Analysis
Let's examine how certain successful retailers gained an advantage by analyzing their competitors.
One of the world's largest retail chains, Walmart monitors its competition’s pricing, product assortments, supply chain efficiency, and customer service initiatives. In doing so, Walmart has been able to identify gaps in the market and capitalize on them.
For example, Walmart's competitor analysis revealed that many retailers rely on frequent sales and promotions to attract customers. The company adopted an Everyday Low Prices strategy—offering consistently low prices to customers. This move not only differentiated Walmart from competitors but also attracted more cost-conscious shoppers, increasing store traffic and customer loyalty.
Competitor analysis also showed Walmart that efficient supply chain management is crucial to reducing costs and maintaining competitive prices. As a result, the company has invested heavily in advanced inventory management and distribution systems to keep its shelves well-stocked and respond quickly to changing consumer demands.
Finally, Walmart analyzed its competitors' product assortments and identified opportunities to tailor its offerings to specific local markets. This approach ensured that each store met the unique preferences of its local customers, thereby enhancing customer satisfaction and loyalty.
Global eCommerce giant Amazon has largely excelled by conducting extensive competitor analyses. The company closely watches its competitors' online platforms, customer experiences, pricing strategies, and fulfillment methods. Its data-driven approach has enabled it to continually evolve its services.
Amazon's competitor analysis previously highlighted the importance of personalized customer experiences. Over the years, the company has leveraged data analytics to recommend products based on customer browsing and purchase history, leading to higher conversion rates and increased customer satisfaction.
Competitor analysis has also shown Amazon the challenges of achieving efficient order fulfillment. The retailer's implementation of Prime, offering fast and free shipping, set a new standard for customer convenience. The company has invested in building an extensive distribution network and has utilized advanced technologies like robotics to streamline its fulfillment process.
Amazon's analysis of its competition has also emphasized the need for diversification. Consequently, Amazon expanded from an online bookstore into a diverse marketplace that offers a wide range of products and services, including Amazon Web Services (AWS), Kindle e-readers, and Amazon Prime Video. This diversification has reduced the company’s dependence on a single revenue stream and positioned Amazon as a multifaceted tech and retail giant.
Stay Ahead With Retail Competitor Analysis
In the dynamic and ever-changing retail industry, gaining a competitive edge isn’t merely a goal—it’s a necessity for survival and growth. By closely scrutinizing and comprehending competitors' strategies, strengths, and weaknesses, a retailer can unlock many insights that will inform and refine their business approach.
Regularly following the steps described above—identifying the competition, gathering accurate information, comparing product offerings, and so on—will motivate any ambitious company to adapt, innovate, anticipate and prepare for threats, and seize timely opportunities. In essence, competitor analysis provides a roadmap to success that enables enterprising retail companies to thrive in a competitive retail landscape.
If your company wants to amplify its competitive intelligence potential and start winning in the ever-frenetic retail world, contact leading brand intelligence firm G & Co. today for exclusive access to its unparalleled expertise and strategic market insights.