Friday, November 4, 2011

Building A Sustainable Competitive Advantage

Que. Explain the concept of Sustainable Competitive Advantages to a retailer. List Seven important opportunities for retailers to develop SCA.

Ans. : The final element in a retail strategy is the retailer’s approach to building a sustainable competitive advantage. Any business activity that a retailer engages in can be the basis for a competitive advantage, but some advantages are sustainable over a long period of time, whereas other can be duplicated by competitors almost immediately. 

    For example, it would be hard for Starbucks to establish to establish a long term advantage over Seattle’s Best Coffee by simply offering the same coffee specialties at lower prices.

Establishing a competitive advantage means that the retailer, in effect, builds a wall around its position in a retail market.

Over time, all advantages will be eroded due to competitive forces, but by building high, thick walls, retailers can sustain their advantage, minimize competitive pressure, and boost profits for a longer time. Thus, establishing a sustainable competitive advantage is the key to positive long term financial performance.

Seven important opportunities for retailers to develop sustainable competitive advantages are as follows:

(1) Customer Loyalty,
(2) Location,
(3) Human Resource Management,
(4) Distribution and Information Systems,
(5) Unique Merchandise,
(6) Vendor Relations, and
(7) Customer Service.

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