Competition or attrition?

Blog pix 21 March 11 001I am in a service business. I have all the modern advantages. I can help people all around the world because we have email and the internet. I do not have to meet my clients, although it is great if I can. However, if they are in South Korea or Chile, they are a long way from the UK. If I can check exactly who they are and give them what they need, I am happy and I certainly hope they are happy.

There are people who have businesses on the High Street or in town, and their businesses look something like mine. I do not see them as competitors. I have working relationships with some of them. We can provide each other with skills the other does not have; rather symbiotic.

However, imagine having a business very near another the same where you are competing for the walk-in customer and where the footfall is limited. In the local village, there is a long-established men’s hairdresser, or barber if you prefer. There is the owner, who is the brother of a business acquaintance. He has two very competent assistants, one female and one male. I do not have so much hair these days, but I am quite happy to have such hair as I have cut by any one of the three. It was a good business, quite busy, and open Tuesday to Saturday.

And then…. A year ago another similar business opened directly opposite. That business takes quite a lot of the walk-in trade. Our village is not that big. I doubt there is enough work to go around. Both shops are now open seven days a week, desperately trying to out-do the other. It is a war of attrition as far as I can tell. One is bound to crack. I know the owner of the longer-established business feels under serious pressure, not just because of the new lengthy opening times, but because I see him looking across the road to see how many people are in the other premises.

If I formed a business relying on walk-in trade, I would not set up next to another. I would find a parade or street lacking my sort of business. We have only one greetings card shop. Why would anyone risk setting up another next door? We did have a florist come to our village to compete with a well-established one. They failed and have gone. Why would a men’s hairdresser risk a similar fight? Even if they “won” by putting my preferred place out of business, the fight must make life and cash flow very tough in the short term.

I do not have the answers, but it all seems crazy business planning.