You can’t win on price.

 

Every day consumers log onto the Internet from their computer to search out the best prices on the products and services they want. Ask anyone selling software, TVs, even cars and they’ll tell you a story about a consumer coming in holding the printout from a website. The Internet has created a price transparency dynamic that has fundamentally altered price driven industries like computers, hotels and airlines. And it’s going to get worse. 

Right now that same consumer can stand in the aisle of their favorite store, and with their cell phone, scan a bar-code to instantly see if your competitors are selling the same product for less. Before long, someone will create a means for doing this before that consumer ever leaves their house. That means consumers can price shop groceries just like they do airline tickets. Upload your shopping list ad instantly see which grocery store will result in the best overall pricing -- not just best on a few items. Think about what that means for products, but more importantly retailers. It means that there will be only one low –price leader or worse, no low price leader. Everyone will be selling everything at the same price.

So what is it that you’re going to do to differentiate? How are you going to compel consumers to do business with you? I think it is going to come down to three things.

First, shopping/brand experience. Let's face it, what passes for acceptable experiences today basically isn't all that great. That's why Starbucks is able to charge $3.95 for a latte -- because they give (or used to) you an experience that is actually desirable and meaningful.

Second, service. Imagine if a grocery store gave you an iPhone app that allowed you to not only track your grocery list, but once you enter the store, gave you a map of the most efficient shopping route. Maybe it even included the ability to scan the bar-codes as you put the items in your cart and some kind of payment gateway so that check-out lines become a quaint thought. And best of all, as you scan an item, it automatically pushed coupons to you from competitive items or the one you're holding. After all, the manufacturer of the item is willing to give you the discount, why punish you for simply not knowing about it. Lastly, it could have a search feature so that when your wife calls you and asks you to add one more item to the list, you don't spend 10 minutes looking for it. You just search and bingo, the app tells you aisle and location.

Third, recognition. We all like a good ego stroke now and then. Retailers that find a way to include recognition of loyal shoppers will win in my book. It is that extra intangible that successfully done, can't be easily copied by competitors.

If you're a retailer of goods, I think you have less than two years to figure all of this out. Right now the bard-code on the phone trick is still limited primarily to G1 phones with the Android OS. It's coming though, quicker than you think. Tick Tock.

And thanks to @andreagperez for Tweeting me this link to a Microsoft "view of the future" video on YouTube. Exactly what I'm talking about. Tell me you wouldn't favor this retailer over the competition that is doing it the "old" way.