The Competition Is Coming For You. Are You Ready? Probably Not!

by Paul Schlossberg
Posted On: 5/23/2018

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Paul Schlossberg
If you're familiar with the book and movie Catch-22, you might recall the line written by Joseph Heller: "Just because you're paranoid doesn't mean they aren't after you."

There are winners and losers when we compete. We see competitive battles every day. There are times when we recognize one. At other times, we might miss the more subtle signs.
 
Competition exists in ways we don't always consider. Think about:


•  Survival of the fittest: Darwinism, according to Wikipedia "… is a theory of biological evolution … that all species of organisms arise and develop through the natural selection of small, inherited variations that increase the individual's ability to compete, survive…"
•  Sports: In baseball, football, basketball and so on, it's one team versus another. 
•  Sibling rivalry: No plans on my part to go any deeper into this one.
•  Business: This is the battle for sales, profits and market share among brands, retail outlets, etc. 

In case you missed it: The competition really is after you. It's not about you in a personal sense. The "targets" in this situation are the shoppers at the locations you are serving. Maybe you thought that the competitive game has been tough up to now – but the battle is on! And the competitive pressure will increase in dramatic and difficult ways.
 
Bachman-Turner Overdrive described our situation perfectly. But, in this competitive moment, the meaning of what they said is negative for us. In the words of BTO, "You ain't seen nothing yet."

You compete in two basic ways:

•  On a B2B basis – business-to-business: Your company is selling its products and services to other companies. Those head-to-head confrontations occur when an RFP is issued by a location seeking a provider for one or more of these services: vending. micromarkets, pantries. office coffee service et al.
•  On a B2C basis – business-to-consumer: Here your company is selling directly to consumers. The competitive scope changes. The competition includes a wide range of companies and channel sectors. 

To name a few
»  Fast-food restaurants
»  Convenience stores;
»  Supermarkets (whether for "brown-bagging" or fresh food sales);
»  Chain drugstores;
»  Food trucks;
»  Take-out (from any of the above);
»  Delivery (from any of the above, Amazon and other delivery services).

Let's get specific about DELIVERY! We have discussed the general subject of competition a number of times in the past few months. But delivery is a new and different matter. And it's about to change in ways that few of us can even imagine.

There are three aspects of delivery you must be sensitive to in the future.

1. Local: Here are are five questions you need to answer:

a.  Are there restaurants delivering to locations you serve? (The odds are that the answer is "Yes.")
b.  What do you know about their menu(s)?
c.  Is that service special-event catering for a meeting or celebration?
d.  Or are individuals, or groups, simply ordering in some foods you do not offer? 

Who is the delivery service provider? A restaurant probably does that by itself. Other food retailers may use parcel delivery services.

2. A UPS or FedEx or USPS delivery means that someone ordered "something" to be delivered to their workplace. We can ignore packages shipped to the office because no one was at home to accept them.

But we should be very concerned about the delivery of packaged food, snacks or beverages. It's likely that the landed cost of the product (per serving) will be less than what you can sell it for. For the shopper, it's a savings. For you, it's a lost transaction. The risk is that other people at the location will be copycats and begin ordering in their own favorite products. We know how easy it is order online for delivery.

3. Amazon and Whole Foods: You're probably well aware that Amazon acquired Whole Foods. This combined company might just be the most significant competitive threat for companies in our industry.  

Lunch-Time Delivery Is About To Be a Very Big Business


In many cities and suburbs, there are restaurants and smaller grocers delivering food, snacks and beverages – especially for lunch. Lots of those deliveries go to offices and other businesses, both large and small. At www.food-management.com, there was a highly relevant article about the growth of delivery at lunchtime: "Getting lunch delivery at B&I (business and industry) locations."

For example, EAT Club is "a corporate catering and office meal delivery service aiming to make lunchtime easier – and less expensive." The company launched in 2010 in Los Angeles and San Francisco. "We call it Lunch as a Benefit, or LAAB. It's an employee benefit that powers organizations and completes a progressive HR benefits package," says EAT Club founder Rodrigo Santibañez. They describe their capabilities as being able to serve locations with as few as 20 or as many as 1,000 or more employees.

The article goes on to note: "Traditional foodservice management companies are paying attention. Last May, EAT Club announced that it had raised $30 million led by strategic investor Sodexo to expand to New York City."

Perhaps you did understand what delivery used to be. EAT Club is changing the definition of delivery. Are you ready for this new competitive development?

Amazon Knows How To Compete

Here is an example. It's from an industry far outside what we do, and about products we do not sell. A report by CNBC noted that Morgan Stanley predicts that Amazon "will become the top player of the U.S. apparel industry in 2018, having gained 1.5% of market share last year. The gains will largely be driven by millennials moving dollars away from bricks and mortar, the firm said in a new report."

Additionally, "Morgan Stanley is predicting department stores will only comprise about 8% of the total U.S. apparel market in 2022, compared with 24% in 2006."

You're thinking, "This has absolutely nothing to do with my business. Why would anyone even worry about Amazon entering into competition with our industry?" That's the point. Amazon might soon become the leader in apparel sales. They have entered new categories and been successful many times.

In very simple terms, Amazon knows how to sell and deliver products. Whole Foods knows a lot about food, snacks and beverages. Imagine if they use their combined knowledge and expertise to pursue "food-away-from-home." What if they focus on and pursue workplace consumption times?

Is Amazon Headed To The Office?

Amazon's new service, Alexa for Business, will compete against virtual assistants from Google, Apple and Microsoft. If you use one of these voice-recognition systems at home, have you thought about having similar technical capabilities at work?

In a Wall Street Journal article, on Nov. 30, 2017, "Amazon Plans to Send Alexa to the Office," RBC Capital Markets predicted that by 2020, Alexa device installations could reach 128 million. That forecast apparently did not include any benefits from Amazon's new initiative for business placements.

If you are providing services to locations where Alexa (or a competitive system) is in use, have you been approached to tie-in to the voice-operated system? Are we at the point where our industry needs to enable one-way voice recognition capabilities? If we can eventually accomplish that, how long will it be before we need to deal with two-way communications?

Another Wall Street Journal article noted that "Amazon Prime Has More Than 100 Million Members." That is a staggering number. Don't forget that Prime members have the benefit of free shipping. So they can order a case of  "______" and not even pay for shipping. How will you compete against that if someone decides to buy a case of one of your best-selling SKUs?

What Do We Do Next?


From an immediate competitive perspective, ask your route techs to pay attention at the sites they serve. Do they notice that food deliveries are being made? Do they see packaging from outside food sources? Ask them to report these developments back to you.

Then you can get the menu(s) and visit the websites of these competitive companies. That will help you understand what products you might be "missing."

Get intensely focused on out-of-stocks. Do not let shoppers at your sites get frustrated by continuing out-of-stocks, especially on best sellers. If they get upset enough, they might order a case of their personal favorite SKUs.

"They" are coming to steal your transactions. You cannot afford to lose your sales to any competitors. What's your plan to protect your share of market? If you don't have a plan, you're at risk of selling less stuff. That's a bad outcome. Get to work on selling more stuff.

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Paul Schlossberg is the president of D/FW Consulting, working with clients to merchandise and market products in impulse-intense selling environments, such as vending, onsite foodservice and convenience stores. Based in the Austin, TX area, he can be reached at Paul@DFWConsulting.net or 972-877-2972 or www.DFWConsulting.net.