We often look at our market like a pie. It's a faulty metaphor. Although a pie is finite, retailers can expand their market from large to extra-large with pepperoni!
Parties are great and everyone loves Pizza, so a Pizza Party has to be doubly delicious! Unless you are the person planning it! If you want to treat a group of your best friends to a hot tomato pie you need to figure out if you are better off getting six, 14” mediums or three 18” extra-large pizzas. Assuming the cost for three or six is the same, you might not think that 4” more would be the better deal. However some high school geometry will tell you that three of the 18 inchers have 2.55 times as much pizza as six, 14” large pies. In essence, it’s like getting an extra half of pizza FREE!
Expanding Market Share
In retail we often look at our market like a PIE! Every new competitor wants to take one of our slices (market share), or as we often say, “There’s more people to share the pie” meaning each person gets a smaller slice (share). There is a fault in the assumption that the pie is finite, that it cannot be expanded from a large to an extra-large (although too much pizza can expand us from a large to an extra-large). And, this has implications for how we run our businesses. To grow, either we need to bash compete head-to head, or work expand our markets.
Jitterbug Mobile Phones
Consider the marketing plan for Jitterbug Mobile Phones, sold as, "A simple cell phone for seniors, those that grew up with phones connected by wires." The concept appeals to people we often think of as less tech savvy than Millennials. The golden generation wants the convenience of mobile communication, but they don’t always see the need for the latest iPhone 8 or 9, or even the next Samsung Flame phone. Jitterbug tells them Simple is Better, 10 big buttons beats dozens of apps. While AT&T and Verizon were fighting over getting your kids’ business, Jitterbug expanded an under-served market and grew the pie.
The Mattress Pie
Here’s something to ponder in our own industry. Online mattress retailers such as BedInABox.com, Casper.com, Leesa.com, and TuftandNeedle.com, have seen tremendous growth over the past few years. Currently they own about six percent of the market and are projected to grow to 10 percent in the next few years. Sure, they stole a little bit of market share from mattress stores, department stores, and other traditional retailers. But what they really did was expand the market of buyers by appealing to the world famous Millennial generation with a cool message, a no hassle buying experience, single or limited choice, and a true, no risk owning experience. Many Millennials had never bought a bed before and didn’t know that you had to get in a car, shop 3.4 stores, and try 70 beds and then horse trade their way to get the best deal. In brief, many traditional retailers never bothered to appeal to this market. The Bed in a Box folks brought people into the market, expanded the pie, got a lot of the expansion and nipped a piece off of your slice too!
No matter where your stores are located, you are living in a market that has an under-served demographic. It’s the forgotten section of your community that is being ignored by you and the people selling the same products as you down the street. Look closely and you can find that market.
In August I was invited to work at three trade shows. At each show several retailers stopped by to see if we had “the cheapest” queen size bed at the show. Although we are closer to the year 2020 than 1970, those retailers still expected to show and sell a mattress set for $199, because as they told me, their market demands it. I truly believe there are NO WINNERS in the race to ZERO, and if that market really exists, it probably is already OVER-SERVED by their competitors. Chances are good that there is an UNDER-SERVED market in those same areas. Consider the luxury buyer market. It’s that crowd that demands the BEST and is willing and expecting to pay for your best bed, your best adjustable base, and your best pillows, linens and protectors. They either have the money or the credit to get it. The trouble is that too few stores invite them to shop. Think about your own marketing efforts. Are you featuring more beds under $1000 or over $4000? Every time you shout $199, $399, and $599 you turn off the Luxury Buyer and send her elsewhere.
Yes, there are affluent people in your market, but there are other under-served markets too! There are buyers who are shift workers who can’t be home for your normal Monday-Friday 9-5 delivery schedule, buyers for whom English is a second language, and buyers who may be house-bound, have trouble getting to any store. You may also serve buyers who are “un-banked”-in other words, they don’t have a checking account or credit card, but do carry cash. Other buyers are newly divorced and have an immediate need for a mattress, and others are new home buyers who don’t need it for 90 days.
You can expand the pie from a 14” large to an18” extra-large and then reach and capture 100 percent of these otherwise under-served buyers just by making a couple of swift moves. Imagine promoting evening deliveries from 5:30 to 9:00 pm a few times a week and helping someone avoid losing a valuable vacation day sitting and waiting for their bed. Or promoting your store in another language online, in the press and on TV! You don’t even need to learn a new language, just use a translation application on your laptop or smartphone (Jitterbug excluded). How about a Store on Wheels! You can ask the same comfort questions over the phone that you can in the store. Based on the caller’s answers, send three mattresses to their house and let them try them on the spot! You can either deliver a fresh one immediately or let them keep the sample! Just be aware of state requirements for in-home sales.
For the Un-banked, offer Cash is King Bonus to attract that market. Most shoppers don’t really need a new bed the same day they buy it, but how about taking your two slowest retail days and converting them to On-the-Spot Delivery Days. If your sales hit the doldrums Wednesday and Thursday take a shot on it and you may sell a few extra beds. Or take the stress out of moving day by letting shoppers know that $99 starts any order and you’ll hold the price (not the merchandise) up to 90 days. They can get the bed selected and let you know a couple of weeks before they move in, so you can order it. Sure, you’ll get a cancellation or two along the way, but you are only holding money, not any inventory.
When it comes to pizza, I am a purist. I like plain cheese and most of the time I get it all to myself while everyone else fights over the Pepperoni, Meat-Lovers, and Sriracha Chicken and Peppers. Look to serve the under-served, ignored, and forgotten buyers in your market, and find ways to meet their needs - and you too will eat well!