Do you want to be Kodak, the Taxi Industry, Bilo or do you want to be like Amazon, Uber or Aldi?
There have been a lot of articles recently on what we can learn from Uber, Amazon, Aldi or any other number of market disruptors. However, there is often less focus on what their competitors could have done better to counteract them.
The Taxi Industry
Taxis are generalised as being unreliable, providing poor service, unclean and the list goes on.
When Uber came on the market, Uber was seen as an illegal, tax dodging, foreign owned company. Uber’s app is not a particularly interesting technology, an app that tracks cars and accurately tells you when it will arrive and guarantees it will arrive. However, despite Uber having a large number of objectionable traits and no great technology, we know what happened, why?
The taxi industry still hasn’t fixed its primary objections, it has made no real effort to match the technology of Uber and customers continue to bleed to Uber.
In 2006 Coles Myer owned 180 Bilo discount Supermarkets. In 2006/2007 it began dismantling / rebranding the Bilo brand to the point where there is only 1 remaining today.
With no large scale discount competitor Aldi entered the Australian market in 2001. Aldi now has 12.6% of the Australian market.
Could Aldi have grown so quickly if it had to compete with 180 Bilo stores?
In 1975 Kodak developed the first digital camera but chose not to pursue it for fear it would impact its film business.
Kodak’s competitors had no hesitation developing digital cameras whilst Kodak sat on the sidelines.
By the time Kodak tried to switch to digital it was too late, and Kodak was bankrupt by 2012.
Each of these companies allowed their competitors a free competitive advantage, they either chose not to compete or reacted too slowly. Could it have been different?
Mitre 10 vs Bunnings
In 2001 Bunnings acquired BBC Hardware, making it approximately the same size as Mitre 10 Australia and gaining access to the NZ hardware market.
Since then the fortunes of Mitre 10 in New Zealand have been quite different to Mitre 10 in Australia, why?
Mitre 10 NZ exploited its own competitive advantage through aggressively marketing its New Zealand ownership. Simultaneous Mitre 10 New Zealand negated Bunnings strengths through expanding its big box format (traditionally Bunnings strength). Mitre 10 Australia did neither! Mitre 10 New Zealand is still the biggest hardware provider in New Zealand, Mitre 10 Australia (separate owner) is not even close to the size of Bunnings in Australia.
Could it have been different?
Imagine if the Taxi industry had done the same thing as Mitre 10 New Zealand? Negate Uber’s competitive advantage (service, reliability) and exploit their own competitive advantages (Australian owned, operating legally, tax paying). Unfortunately the opportunity seems lost.
So what to do next?
As we saw in Kodak’s example reacting after your competitors have often means the horse has bolted and it is too late.
Minimise your competitors’ competitive advantage
Australian retailers should be able to provide same day or even 4 hour shipping, if Coles can get $250 worth of groceries to you same day, why can’t JB HiFi get me a television in less than 3 days? If they do this, then this leaves one less opportunity for Amazon when they arrive.
Maximise your own competitive advantage
Make sure the in-store service and after sales care you can provide allows you to retain your loyal, high value customers.
Focus on Amazon’s tax practises and US ownership (if possible fight this war through a well funded proxy like the Australian retailers association)
Will this fully stop the pain?
Probably not, but it may be the difference between being Mitre 10 Australia and Mitre 10 NZ.
Scott is the Director and Principal Consultant at ATEO (www.ateo.com.au). The opinions expressed here are the views of the author/ATEO and do not represent the view of any current or former companies that Scott has provided consulting services for.