Retailers have to contend with a lot of moving parts. From emerging trends to new technologies and continuously changing consumer preferences, thereâs always something new and different on the horizon. Despite everything going on, retail businesses must spend time monitoring and analyzing their competitors and their movesâor risk falling behind.Â
This comprehensive guide explains step-by-step how retailers can conduct an effective competitive analysis. The benefits of doing so are numerous, but a timely and accurate retail competitive analysis can give companies a competitive edge and a clear understanding of their position in the market. Armed with valuable insights about their competitors, retailers can identify market opportunities, conquer anticipated threats, and grab more market share.Â
In the fast-paced and dynamic retail industry, conducting regular competitor analysis is crucial for gaining insights and maintaining a competitive edge. By thoroughly analyzing key competitors, retailers can uncover valuable opportunities for growth, anticipate potential threats, and craft data-driven business strategies
This comprehensive guide will walk you through the key steps for performing an effective retail competitor analysis.
Step 1: Define Your Objectives
First, clearly define your objectives for the competitor analysis Common goals include
- Identifying new market opportunities
- Benchmarking against top competitors
- Finding areas for improvement in your business
- Gauging threats or weaknesses to address
- Informing strategic decisions
- Tracking competitor growth and activity
Having clear goals will shape the questions you want answered and guide data collection
Step 2: Identify Key Competitors
Make a list of 5-10 direct competitors to focus on. These are retailers selling similar products/services to your target customers.
Also include 2-3 indirect competitors – companies with overlapping offerings but different audiences.
Finally, list any tertiary competitors – those targeting the same customers but with different products.
Compiling a comprehensive list ensures a robust analysis.
Step 3: Gather Intelligence from Public Sources
Thoroughly research competitors using public sources to collect data points:
- Company websites – study messaging, product range, designs, pricing
- Social media – follower counts, content strategies, engagement
- Marketing campaigns – formats, offers, call-to-action
- Press releases and news – partnerships, awards, announcements
- Product catalogs – range, quality, options
- Job listings – roles, requirements, salaries
- Patents and trademarks – innovations, intellectual property
- Leadership profiles – backgrounds, vision
Compile findings into a spreadsheet or report.
Step 4: Analyze Competitors’ Digital Presence
Conduct in-depth analysis of competitors’ digital presence:
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Website traffic – use tools like SEMrush or SimilarWeb to estimate monthly visitors
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SEO performance – assess site authority, rankings, optimization
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Social media – examine followers, engagement rates, growth
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Email marketing – list size, open/click rates, automation
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Paid advertising – estimate ad spend across channels
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Web UX – compare site ease of use, navigation, features
Step 5: Compare Strengths and Weaknesses
Use a SWOT framework to assess competitors’ strengths, weaknesses, opportunities, and threats.
- Strengths – advantages, expertise, brand equity, customer loyalty
- Weaknesses – flaws, gaps, negative perceptions, lack of innovation
- Opportunities – emerging trends, underserved needs, partnerships
- Threats – shifts in consumer demand, regulations, newcomers
This analysis reveals areas you can surpass competitors or improve your own business.
Step 6: Contrast Pricing and Product Offerings
Do a side-by-side comparison of key product lines and pricing:
- Product range – how does your variety and inventory size compare?
- Product quality – how does craftsmanship, materials, and durability stack up?
- Pricing strategy – where do you sit on price continuum for similar items?
- Discounts/sales – how frequent and deep are competitor promotions?
- Bundling – what product/service packages are offered?
Identifying gaps in assortment, quality, or pricing presents opportunities to better serve customers.
Step 7: Evaluate Sales and Distribution Channels
Examine where and how competitors sell products:
- Direct vs. retail – % of sales through owned stores vs. wholesale
- Online channels – % of e-commerce sales, marketplaces used, delivery options
- Brick-and-mortar – store count, locations, formats
- Sales team – size of sales force and structure
- Resellers/partners – breadth of wholesale and app distribution
Determining effective sales models allows you to refine your own channels.
Step 8: Consider Competitive Intelligence Tools
Subscription tools like SEMrush, SimilarWeb, and Owler provide robust competitor data on web traffic, keywords rankings, social media, ad spend, and more. They can surface insights faster than manual monitoring.
Step 9: Survey Customers About Competitors
Ask customers direct questions about competitors through surveys and interviews:
- What other brands have you purchased from?
- What made you choose our competitor’s product?
- Where does our product fall short compared to X competitor?
- What do you like about our competitor’s shopping experience?
This qualitative data reveals competitor strengths and weaknesses through the customer’s eyes.
Step 10: Perform Ongoing Competitor Monitoring
Schedule quarterly competitor analyses to keep your insights current and relevant. Maintain a watching brief on competitors through Google Alerts, social listening, and news monitoring.
Regular competitor tracking ensures you stay agile and ahead of market shifts.
Turn Competitor Insights Into Action
Conducting a thorough retail competitor analysis provides invaluable market intelligence. But the key is knowing how to apply those learnings to your business:
- Improve on competitor weaknesses and gaps in the market
- Emulate competitor best practices that customers respond to
- Introduce innovations competitors lack
- Refine pricing and product mix based on benchmarks
- Address factors making competitors appealing to customers
- Prepare contingency plans for competitor product launches or expansion
The ultimate goal is accelerating your growth and boosting competitiveness. With disciplined competitor monitoring and analysis, you gain an edge.
Retail Competitor Analysis Templates
Structuring all your competitive intelligence into an organized report or template is crucial. Here are some recommended formats:
Competitor comparison spreadsheet – Use tabs to compare rivals across metrics like pricing, product range, marketing tactics, etc. Charts help visualize differences.
SWOT analysis template – Summarize internal and external factors in a quadrant matrix. PDF reports or PowerPoint templates are ideal.
Competitive benchmarking – Compile top competitor metrics like market share, revenue, growth into a benchmark report.
Situation analysis – Explain how factors like regulations, consumer demand, and technology impact the competitive landscape.
Leverage templates to turn raw data into compelling, shareable insights.
Benefits of Retail Competitor Analysis
Beyond informing strategy, thorough competitor analysis provides numerous benefits:
- Pinpoints your competitive advantage
- Surfaces unmet customer needs
- Helps forecast industry trends
- Identifies potential partnerships or acquisitions
- Guides investments, new hires, or expansion plans
- Sparks creative marketing and product ideas
- Keeps your brand positioned as an industry leader
Make competitor analysis a consistent business practice to drive growth.
Case Study: Target Competitor Analysis
Let’s look at an example of effective competitor analysis.
Target thoroughly analyzes key rivals Walmart and Amazon to improve its competitive positioning.
Target tracks Walmart’s endless aisles initiative rolling out digital kiosks for expanded inventory in stores. In response, Target is testing enhanced mobile checkout and fulfilment options to simplify in-store shopping.
Observing Amazon’s aggressive grocery expansion with its acquisition of Whole Foods spurred Target to accelerate its same-day grocery delivery capabilities.
Noticing Walmart’s success acquiring niche digital brands inspired Target to purchase DTC companies focused on maternity, loungewear, and home decor.
Target also monitors product assortment gaps compared to Amazon and Walmart. It recently boosted its beauty, food, and beverage offerings based on insights.
Through disciplined competitor intelligence, Target identifies threats and opportunities to maintain its standing as a premier big-box retail chain.
With the right strategies and tools, any retailer can conduct an effective competitor analysis tailored to their business goals. Keeping this practice consistent ensures your strategies are informed by real market data, not guesses. Sharpen your competitive advantage with these tips for producing actionable competitor intelligence.
Step 4: Identifying Their Sales Channels
Next, itâs helpful to determine where the competitorâs customers purchase its products and servicesâin other words, what distribution channels does it use and how successfully? Websites or social media? Wholesalers or retail outlets?Â
Understanding what works for them can influence a companyâs own business strategy.
Identifying Key Retail Competitors
Where else to start by identifying oneâs competitors? It makes sense, but itâs necessary to be mindful that this should include direct competitors (who offer similar products or services to the same audience) and indirect competitors (whose offerings overlap but target a different audience). Some companies also examine their tertiary competitors (brands that market to the same customer group but sell different products or services).
Once a company has listed and categorized its competitors, a good next step is determining their market positioning. In other words, how do they portray themselves to their customers? What messaging do they use? What differentiates their products and services? What are their unique value propositions?Â
To get a good grasp on the competitions positioning, examine their websites, social media, press releases, and product descriptions. Additionally, make a note of any events they host or attend and any interviews their top executives have given.Â
Trust us, a little retail competitor intelligence will go a long way.
7 Easy Steps on How to Perform a Competitor Analysis
FAQ
What is the 4p competitor analysis?
How do I conduct a retail competitor analysis?
The process of conducting a retail competitor analysis will vary hugely depending on your brand’s goals. If you want to improve your D2C store you could focus on comparing competitor websites. If you’re looking for marketing inspiration you could look at social media and PPC campaigns.
How can retailers conduct an effective competitive analysis?
By carrying out ongoing competitor analyses. This comprehensive guide explains step-by-step how retailers can conduct an effective competitive analysis. The benefits of doing so are numerous, but a timely and accurate retail competitive analysis can give companies a competitive edge and a clear understanding of their position in the market.
What is a competitor analysis?
Let’s dive in. A competitor analysis involves collecting data about your competitors to identify their strengths and weaknesses and improve your marketing strategy. Any type of business can benefit from conducting a competitor analysis. Before you begin a competitor analysis, you need to be sure of who your target customer is.
What are the benefits of a retail competitor analysis?
Here are some benefits of a retail competitor analysis: It reveals a company’s unique selling points. It helps a brand establish its image. It lets a brand improve its product offerings. It helps a brand identify challenges and threats it may not otherwise notice. It identifies shortcomings in research and development.
