Episode Transcript
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This episode unpacks how to fix it if your business is stuck in the middle. Notvalue, not luxury, and forever worrying about margin and discounting.
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This is part three of my three part series. The three part series has beenfocusing on discounting
data and how to escape the middle market trap, which is also supported by freedownloadable resource and a retail clarity quiz.
More about that at the end. Welcome to Retail Reckoning. I'm Clare Bailey. Thisis the last episode in focusing on how to fix it. If you recognize yourself as
stuck in the middle ground. Let me describe a business and let me see if this
feels
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familiar to you. You're not the cheapest in your market. You're not the mostpremium. You run promotions, but they don't always land. You've
got good products, but customers don't always see the difference between yoursand a discounter. Sales are fine. Your margin feels under constant pressure,
and every now and then you find yourself thinking, we're doing such a lot,running around like headless chickens.
(01:16):
Why does this all still feel so hard? If that sounds familiar, then you are notalone because a lot of the businesses I'm talking to right now are in the exact
same position, and that's the sort of murky middle
ground, and this is the uncomfortable truth. The middle isn't really a strategy.It's often the result of a lack of strategy, so let's consider: why doesn't this
work anymore?
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Well, it used to work. It used to be absolutely typical that some of the bestretailers out there were very much in the middle. You could be reasonably
priced, of decent quality and serve a really wide customer base. That was more
than
enough. But since then, over the last five to ten years, we all know that themarket has changed.
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And customers have become sharper, competition has become stronger. There seemsto be endless amounts of choice, and that changes everything because average is
no longer compelling. For
instance, five to ten years ago, a lot of people probably wouldn't haveconsidered doing their food shop in Aldi — they thought, you know, it's a bit
beneath them.
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Perhaps it was thrifty, wasn't cool. But now, almost everyone I know reallyrates them. Aldi has just been voted
best supermarket of the year for the fifth year running. Lidl are opening morestores. So that puts pressure on the likes of Sainsbury's and Tesco and Asda who
are in the middle.
Waitrose and M&S are considered more luxury and more of a treat. So what'shappening is this polarisation whereby the two ends that are winning are at the
low end — where it's simple, clear value, confident, decent quality, but it's no
frills. Customers know what they're going to get and they trust it.
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The other end — more premium. It's not just that higher price, but it's thatbrand identity, and they give a better
experience, a better story. The packaging looks luxurious, the store environmentis nicer, and it creates more of an emotional connection.
The thing I also realise is that if a retailer is not clearly better atsomething that matters, it's too easy to ignore you or to
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replace you with someone who is, and that is what is happening in a lot ofcategories right now.
So there's this clarity — clear, confident brand identity, messaging,experience, product quality and pricing all go together, and that's why, if it's
not quite one thing, not quite another, it starts to blur. So the middle oftenhas fairly inconsistent pricing,
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somewhat vague messaging and limited differentiation. So you kind of leave thecustomer questioning: why should I choose you?
And if you haven't been able to answer that question quickly, they move on. Andthis is something we also picked up on in another podcast with my colleague
Danny, who's a brand
strategist. We talked about the importance of brand identity, clear messaging,knowing who you were, who you stood for, who you wanted to serve, what you
wanted to make the customer feel.
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And a lot of small businesses, particularly, think that's only for big companies— but it's really not. It's as important for anyone. And the
couple of clients I know who are small businesses who've worked with her throughme — they've really, really appreciated it because they were having light bulb
moments and often they get quite emotional, because they suddenly
feel more connected to their business. And that means they then reallyunderstand how to be consistent — consistent, strong, clear, and confident and
(05:10):
differentiated. And that's when they're no longer stuck in the middle. The otherproblem is a lot of businesses in the middle don't really have
a price problem. It is really just about the clarity, because by trying toappeal to too many people and not being specific about who the customer is, and
trying
to compete on too many dimensions — choice and range, and pricing anddiscounting — and buying more stock because that stock's not selling,
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so we need something that will. And often it's about avoiding making difficultdecisions. So in doing all that, inadvertently,
they're diluting their own proposition — because the reality is, you can't beeverything to everyone anymore. That said, you can be everything
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to someone sometimes. Pretty much everyone I know, whether they earn a fortuneor very little, would
like to shop at Aldi. Not for everything and not every time. So a discounter hasa clear proposition that says: these are the boring basics.
We sell this and we sell it cheaply — not because it's poor quality, but becausewe don't really faff about with store design or
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luxury experiences. You just get what you get. And so people will shop there.But people also then use the savings on what I call the boring basics for the
interesting additions — the little luxuries and the treats. And by saving at oneend, it gives them more to spend at the other.
And I don't think anybody in this market — with what's going on in the world andthe level of competition — can be complacent about this, because even those with
the deepest pockets are still thinking long and hard about where to
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spend their money. Because there's the fear factor — things are changing. Whatif I don't have as much? So people are actually saving
rather than spending. And that's the other problem. Getting the appeal rightmeans you'll actually be able to attract people in, because they'll understand
what you
do. But the fix — well, let's face it, this is what most people want to hear.What is the fix? And it's about being practical.
(07:30):
If you were listening to this so far and thinking, gosh, this is us — wherewould I start? Well, choose where you belong.
Choose your lane. And please do listen to that brand strategy podcast if youwish, because this is a big one. You need to decide where you want to stand
out from the crowd, and it won't be everywhere — but it'll be somewhere,sometimes, for someone.
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And actually if you can nail loyal, dedicated customers — although it may seemcounterintuitive — sometimes less is more, because they'll keep coming back and
they'll make that
emotional connection, whether it's at the value end because they reallyappreciate the cost differentiation, or whether it's at the higher end because
they appreciate the service and
experience levels. And you need to ask yourself (08:20):
are you wanting to compete on
price? Or are you wanting to be stronger on
experience and expertise? When I do conference talks, I often say (08:30):
be more
stellar, because you don't compete on price. You compete on service and
experience. Particularly
if you're a small business, because you know your customer, you can reallytailor the experience to their needs and wants, you understand the local
community because you probably live in it.
And competing on price is a race to the bottom. With some of the biggestmultinationals who've got the deepest pockets, it's never going to work. If you
are trying to do both — which is what a lot of
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smaller businesses do with their positioning, trying to be the best possiblevalue but also brilliant on experience, product and service —
you'll be stretching everything just far too thin. So clarity of messaging beatstrying to do everything.
And the other thing I'd recommend is (09:19):
when small businesses feel that sales
aren't coming through, their first instinct is to add more products to the
range, thinking that if there's more choice, more products, more promotions,
more noise, it'll appeal to customers and they'll come in more often.
But generally, the smarter thing to do is the opposite — and yes, it's slightlycounterintuitive — but editing the range, curating it, tightening up and
focusing on what really sells and
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really drives margin. And also remove what confuses customers. So yourmerchandising is really important. An edited range — so you've got product on
shelf — but then maybe room sets, or outfitting, or whatever design featureyou'd like to create to engage and inspire their interest, so they can actually
see what you've
got. Don't feel overwhelmed. And if you're doing it with the ideal customer youwant to work with in mind — one you've hopefully defined when you've thought
about who you want to be and who you
(10:20):
want to serve — then you can tighten your range and remove the confusion. Idon't know if anybody else has felt this way, but I've gone into a couple of big
supermarkets and I just want to buy
some shampoo, and there are so many options that sometimes I just find myselfwalking away thinking: I can't be doing with that. It's too overwhelming.
There's far too much going on. Whereas in the
discounters, they do quite the opposite. They might have three types of shampoo— not 400. That's probably an exaggeration —
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but let's say 40 or 50. That means my choice is limited and I know that it's
perhaps good, better, best — and I'll just pick the one that happens to solve myrequirement. I only need to pick one. And if there are three available and
they've made it easy for me to shop, I'll be more likely to buy.
Customers find it easier to understand an edited range — easier to buy, lessoverwhelming. The third thing I think is about your price
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architecture. And lots of businesses lose a bit of control here. You getinconsistent price points, unclear logic around margins, and
promotions don't really connect with customers because they don't understandthem. And customers might be feeling confused, even if they don't articulate it.
Your pricing should tell a story —
like I said for Aldi (11:40):
good, better, best — or entry, core, premium. You'll sell
more at the core, less at the premium — more so if you're less
premium-positioned. But entry's there even if you're premium-positioned, tocover the fact that not everyone has a large amount of cash this week. They
might want to buy
premium sometimes, but other times they might need to trade down because they'vejust had a big bill or the car broke down.
(12:06):
So it's clear steps, clear logic, clear brand identity, value position — and notrandomness, panic buying or panic discounting.
And the next thing (12:20):
give people a reason to shop with you beyond price. If price
is the only lever you've got
to influence customers, you are definitely vulnerable to the big players withthe deep pockets.
So why else would someone want to choose you? This needs to come into that brandidentity and brand strategy work. Ask yourself: is it our expertise and product
knowledge?
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Very much often the case with boutiques. Is it our service? Again, great withboutiques. Is it speed? Well, there's a
trade-off between speed — instant gratification — and being honest with thecustomer and saying: this is a make-to-order item and it'll be a couple of
weeks. But as long as you manage their
expectations, that's what counts. So the truth about speed (13:10):
if you haven't got
product on the shelf right there,
is it the in-store experience? Does it smell great? Is there lovely lighting?Does it feel like somewhere they want to dwell?
But most of all — do they choose you because they trust you? If you're aboutique, you might be a local member of the community. You might even have kids
at the local football
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club or at local schools. And they'll probably trust you because they know youin a more social way than whoever runs the big chain —
someone they're never going to meet and would never know. So think about whysomeone might choose you. And if you can't answer that question quickly, that's
the signal to start analysing it and thinking
about who you want to be. And I touched on this before — the final one is makingit easier to buy. I think you
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have to step into your customer's shoes and even walk along the street, ifyou're a physical retailer, to your store premises and observe the exterior. Are
the windows
clean, well lit? Is it well maintained? What would entice them across thethreshold? And then is it well laid out? Can they clearly see the offers, the
product?
And do they have inspiration about how to use the product and imagine it intheir own life? And those are the sorts of things you have to think about when
you look at the business through a
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customer's eyes. They need to easily understand what you sell, how to choose it,and how easy it is to buy.
So if you do multichannel, for example, they might come into the store andbrowse, then go away and have a think about it, then order online for click and
collect — that might be how they like to buy. Or they might have been
online, thought "oh, that looks interesting," and then come into the store tovalidate the quality.
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So understanding your ideal customer's journey and flow is fundamentallyimportant, because any kind of friction in the customer conversion process or
customer experience will kill
off the conversion. And the businesses that remove friction and make it assmooth and easy and enjoyable as possible are
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more likely to get customers spending more, more often, and choosing them.
So if you are feeling like you might be in the middle right now — this is not acriticism, it's just a position, and that can be changed. That isn't something
you do by accident; you do it by
design. You do it with intention. So a question I would leave you with is (15:50):
what
do you want to be known for, from your customer's point of view?
Because when you can answer that, everything gets easier. Your pricing, yourranging, marketing decisions — everything. And then you'll start moving ahead
with purpose.
So to wrap up — if there's one theme running through this entire series, it'sall about clarity. Not complexity, not more data, not more panicky promotions,
but clarity.
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Clarity of position, clarity of brand — across pricing pressure and discountingand the rise of smarter systems. Actually, the
businesses that are doing really well have made it clear who they are, whatthey're about, who they serve, and why they matter — and are usually part of a
strong community who support them and
want to support them. So don't think it's a permanent position if you feel stuck— but it's not something that will just fix itself overnight. It does require
choices,
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sometimes uncomfortable ones, and it's a place you might need support to digyour way out of — but support is available.
If these three episodes have provoked thought — and when I talk about support —if you want a no-obligation chat, you're welcome to contact me at
thechampion@retailchampion.co.uk,
or you can drop me a WhatsApp message.
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There's also a free download that accompanies the three-part series, along withdeep-dive playbooks addressing key commercial topics, and that's at
theretailchampion.co.uk/retail-
playbooks. And if you want to stay up to date with future episodes as they land,you can subscribe to receive email notifications via
retailreckoningpodcast.co.uk/
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newsletter. Finally, you can also take our Retail Clarity Scorecard quiz toreceive personalised recommendations based on your answers. Ping me an
email or sign up to the newsletter and I'll send you the link. I've been ClareBailey, The Retail Champion — and this was Retail Reckoning.