Mike Andes argues businesses fail in the middle: pick either low-cost like Walmart or premium like Whole Foods, not somewhere between. He uses Ross, Guess, and a shoe story to show how context justifies price, and warns that your website is your storefront.
Mike Andes.
March 15, 2019.
$34.99.
$110.
What I would be looking for if I was you is one thing. Just take one thing away from the entire conference.
I want you to think in your mind in terms of a retailer that is the absolute cheapest. What do you think about right away? Okay. I want you to think about a retailer that is super, super expensive. Ultra premium. Say it out loud.
Okay? Those are companies that are going to be successful. Everyone in the middle is going to struggle. If you're in the middle of your market, that's where you're most vulnerable. Because your customers are looking at price and they're going to compare that to value. And if you're not high or low, you've become like everybody else. And if your value is not incredibly higher at the same price as everyone else, you're not going to get the job. People look at the dollar amount of this shoe, which is, by the way, a Guess shoe that I bought should be like 100 bucks. I bought it for $34.99 at Ross. Great, right?
The value of the shoe is completely predicated on if it's at Ross or if I go to an outlet store and buy it from Guess. This same shoe will be $110 if I go to the outlet store. But because at Ross, it's cheaper. Why? Because when I go to Guess, I expect what an experience.
I expect to be wowed by their customer service. I expect to be wowed by their design. And when people come to your website and they come into your store, are they walking into a Walmart or are they walking into Whole Foods?
If you cannot create an experience, your website is the storefront to your business. It is no longer just the business card. It is the storefront they walk into. And if they're not getting experience, you better be sure, you better be standing over there, you better be low priced because you have nothing else going for you. You've got to create an experience and be a Whole Foods. Walmart is going to have problems. The only reason they're going to survive is they have a whole bunch of cash and they know where they stand. If you're low priced, that's not a bad thing. Just make sure that's what you market. You are low price. We are the lowest price. We will beat anybody. You can get away with that. Walmart will get away with 1 and 2% profit margins because they figured out that they are the lowest priced competitor and they're gonna brag about it, they're gonna tell everyone about it and they're gonna match every single one's price, you can be that you're gonna close 80% of your estimates if you brag about it. If you're the lowest priced competitor in your market, you better be bragging about that.
And then challenge people to go find something else lower because you'll be the Walmart. You're gonna be massive, you're gonna get huge, you're gonna have low profit margins. I'm not saying that's good or bad. That's just a different business model. That's why you can't compare it to Whole Foods. It's not like Walmart is unsuccessful and Whole Foods is not. It's the fact that Whole Foods has embraced the fact that they're going to be higher priced. But when you walk in there, you expect to have an experience with that food. The people there, the visuals, the signage, when you walk into your website, they're looking at the design, they're looking at the signage, they're looking at how they feel when they look at your website. And if you're not thinking about that, if you're not obsessed about that, you better be a Walmart.
