Indirect competition is between two
or more retailers using different types of
business formats to sell the same type of
merchandise. For example, supermarkets
and department stores compete in selling
women’s pantyhose, but they are very
different types of retailers.
Vertical competition is between businesses
at different levels of the supply chain. The
best example is apparel manufacturers who
sell their apparel lines to retailers, as well as
to the retailers’ customers through factory
outlet stores.
Lifestyle competition does not involve
similar stores or products, but rather a
fi ght for consumers’ pastimes. Instead of
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consumers shopping as a form of leisure
activity, spending discretionary income in the
process, they may decide to use that time and
money to dine out or watch a movie. Although
restaurants, video/DVD rental services,
and movie theaters are also consumer
retail establishments, they are not apparel
retail stores. See 13-9. Thus, they present a
completely different type of competition.
Since shoppers have more choices today,
retailers must select their target markets and
marketing mixes very carefully. They should look
at which competitors are satisfying which market
segments. Possibly several retailers are going
after the same consumers, while other consumer
groups are being ignored. Also, retailers can no
longer count on higher sales and profi ts by just
opening new stores, since the rate of population
growth has slowed and people are spending less
money on material goods. To gain more profi ts,
retailers must tighten their operations to lower
expenses and try to lure customers away from
competitors.
There will always be competitors with
similar products. Since stores of similar types
offer mostly the same merchandise, they must
convince consumers that they have benefi cial
differences. Retailers must set themselves apart
or differentiate themselves from competitors. To
win customer loyalty, companies try to offer the
desired merchandise, services, and atmosphere
preferred by their customers. Some retailers have
repositioned themselves in the market, such as
going from full-line general merchandisers to
limited-line apparel merchandisers.
Retailers can set themselves apart from
others in many ways, as shown in 13-10.
Differentiation can be achieved with unique
merchandise, such as private labels or confi ned
national brands that a retailer sells exclusively.
Retailers can feature goods from other countries,
13-7 American Eagle Outfi tters sell sporting
apparel, accessories, and equipment for
outdoor activities.
13-8 Trail Creek Outfi tters sell very similar
merchandise at similar prices to American
Eagle Outfi tters. The two stores are in direct
competition with each other.
13-9 Restaurants compete with retail stores
for consumers’ time and money.
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