Football and business have much in common — so much so that many organizations infuse popular NFL coaches’ quotes or speeches into recognition awards, certificates or plaques, or they invite guest speakers who touch on the theme. It’s likely because of the intense competition each entity shares.
You know, as Vince Lombardi said: “Winning isn’t everything, it’s the only thing.”
Growing up playing football, I clearly remember the competition lesson. In one game, we dominated with a formidable lead. Then the opposing visiting team mustered a late-game comeback. We managed to hold on to win, but it was close.
Afterward, our coach was furious. “Never, ever, allow your opponent to get back into the game!” he hollered.
The grocery business, and the produce industry by default, is just as prone to your competition stealing away market share that you have spent years, even decades in many cases, to achieve. No matter how comfortable you are or how loyal you think your customers are, market share loss is a constant threat. And like the football analogy, no lead is safe.
How does this happen? In a nutshell (and paraphrased from LebreTexts Business’ “Wheel of Retailing”):
- A retailer first enters a market fixated on undercutting competition with lower prices and is willing to accept lower margins.
- In the growth phase, the retailer expands, often with plain or understated locations, adding new product categories or added services.
- In the maturity phase, the retailer sometimes struggles to maintain growth. Under stakeholder pressure, the retailer is often compelled to reduce staff and services while steadily raising prices to maintain margins.
- In the decline phase, the retailer becomes vulnerable to new competitors that undercut the market share leader on price and margin, and the cycle begins anew.
This doesn’t mean the leader will fall, but it raises questions about how it all happened and what a retailer can do to prevent or minimize a market share decline. I’m no expert or marketing guru, but I’ve worked for both aging market leaders and hungry upstarts. Retailers rise and often fall. It’s a real thing.
Again, referring back to the nearly lost football game, it’s typically your own fault if this happens.
Harvey Firestone, founder of Firestone Tire and Rubber, said 100 years ago in his 1926 autobiography, “Men and Rubber”: “Competition rarely puts anyone out of business — a man usually puts himself out of business either by not making a good article or by wrong methods in sales or finance.” In the grocery and fresh produce industry, everyone offers the same base product categories. So, by following Firestone’s philosophy, market share loss can only happen because of sales and financial mismanagement.
I have seen it firsthand in many top-level pricing meetings, poring over our company’s retail prices and the vice presidents outright asking, where can we take the “ups” — as in, where can we raise our prices to help boost profit margins? Like the TV game show “Wheel of Fortune,” the Wheel of Retailing concept was all too real before us, in our short-sighted maturity (soon-to-be declining) stage.
Like the football game memory, it was our own fault. We were overconfident and let the competition into our game. We allowed them into our market over the years as our retail prices and margins steadily rose, unchecked. You can’t just keep raising prices to satisfy or artificially push a projected gross and net profit graph line. Not without consequences, like seeing the new banner hanging out their shingle down the street, offering their retail message of The New Deal.
I suspect the better course for most is to stay focused on what got you into the market to begin with: Stay conservative and keep operating costs down. Expand, but follow your initial guidelines of deliberate, careful growth. Challenge the “beat last year’s margin” cliché credo, with being satisfied just to meet last year’s gross profit levels, and do all you can to keep prices as low and competitive as possible, especially in today’s economy. It’s a good exercise in discipline and a way to retain customer loyalty.
Remember that the word “grocer” is derived from a “grosser” (and Latin “grossarius”) — a merchant that sells in high volume and lower margins. The concept got you where you are today, and when compromised, it could easily tip the scales and push you down the market share leader list in a hurry.
Or possibly relegate you, limping to the sidelines in a rout, wondering how your opponent got the best of you.
Armand Lobato’s more than 50 years of experience in the produce business span a range of foodservice and retail positions. He has written a weekly retail column for two decades.
