What is your competition?

When we think about competition in business, we tend to think about the businesses that look most like us. If you run a café, your competitors are other cafés. If you’re an accountant, it’s the other accountancy practices in town. If you’re a printer, it’s other printers. And if somebody opens a business doing something very similar just down the road, the natural reaction is to wonder how much of your trade they’re going to take.

But I’m increasingly convinced that this is a rather narrow way to think about competition. Of course businesses offering similar products and services compete with one another, but the business that looks most like yours isn’t necessarily your biggest competitor. Sometimes they might even help you.

The Co-op and Lidl

I live in Thurnby, just outside Leicester, where we have a local Co-op which is well used and has been part of village life for years. Now Lidl is building a new supermarket about a mile away, on the other side of the village.

On the face of it, that’s about as straightforward as competition gets. Lidl will sell many of the same things as the Co-op, probably at some very attractive prices, with a much bigger range and all the advantages that come from being a large supermarket business. There will inevitably be some overlap and some people who currently spend money at the Co-op will spend some of it at Lidl instead.

But does that mean the Co-op is doomed? I don’t think it does, because although they’re both selling groceries, they’re not necessarily selling the same experience.

Lidl will be somewhere you drive to, park, get a trolley and do a reasonably substantial shop. The Co-op is in the heart of the village. You can walk to it, nip in because you’ve forgotten the milk, pick something up for tea on the way home or buy the thing you suddenly realise you need at seven o’clock in the evening. One of its great strengths is convenience and being part of everyday village life.

Perhaps the arrival of Lidl should actually make the Co-op think harder about that difference. If convenience is one of your advantages, how can you become even more convenient? What products do local people suddenly discover they need? What services could you offer because you’re in the middle of the village? What can a smaller local shop do well that a large supermarket a mile away can’t?

Rather than asking how the Co-op can beat Lidl at being a supermarket, perhaps the more useful question is how it can become an even better

Co-op.

We are about to experience something similar at Café Fifty Five

There’s another example developing almost opposite Café Fifty Five in Thurnby. Our local garden centre is expanding, with a lovely new shop being built and, as part of the development, they’re adding a café.

I’m involved with Café Fifty Five, so this isn’t just a theoretical business school example for me. A new café is literally opening almost opposite ours. Should we be worried?

There will undoubtedly be some crossover. Somebody who might have had coffee and cake at Café Fifty Five could have it at the garden centre instead. But I’m not convinced that means there is a fixed amount of coffee and cake consumption in Thurnby which we’re now going to have to divide between us.

What if the improved garden centre brings more people into the village? What if people meet at Café Fifty Five and then wander across to the garden centre afterwards, or visit the garden centre, discover Café Fifty Five and come back another day? Having two good destinations within a few hundred yards of one another might actually make the area more attractive than having either one on its own.

More importantly, the two businesses don’t have to offer the same experience. Café Fifty Five has the park next door and the community centre around it. We have activities, groups, families meeting, people working and friendships and connections which have developed around the place. We have our own approach to the food, drink and atmosphere. The garden centre will have its shop, plants and products and its café will form part of that experience. It will have its own character and its own reasons for people to visit.

There is absolutely no reason why both can’t flourish.

Think about places where restaurants congregate, or towns with lots of independent shops, pubs and cafés. We don’t automatically look at those places and think there are too many businesses competing with one another. Quite often the collection of businesses is precisely what makes somewhere worth visiting in the first place.

So what are we actually competing against?

Imagine it’s Saturday morning and somebody is deciding what to do.

They could come to Café Fifty Five or go to the garden centre café, so in that sense we’re competing. But they could also go into Leicester, visit Fosse Park, take the children swimming, walk the dog, make coffee at home, watch something on Netflix or simply decide that the £20 or £30 they might spend going out would be better kept in their bank account.

All of those things are competition too.

We’re not simply competing with another café for someone’s coffee order. We’re competing for their time, their attention and their disposable income, and perhaps most importantly we’re competing with the decision not to do anything at all.

That last one is a huge competitor in almost every industry.

Sometimes your biggest competitor is “we’ll leave it for now”

We see this at Soar Valley Press all the time. You might assume our competition is other printers and, obviously, sometimes it is. A marketing manager needs 5,000 brochures, they’ve asked us for a price and they’ve asked two other printers as well. That’s straightforward competition.

But plenty of the time we’re competing against something completely different.

Should they print the brochure or just put the information on the website? Should they produce branded merchandise for an event or put the budget into digital advertising? Should they replace the tired signage or leave it another year? Should they produce an impressive welcome pack for new clients or just send them an email? Should a school invest in a really good prospectus or rely more heavily on its website?

In those situations the other printer isn’t necessarily our main competition. Sometimes we’re competing with an email, a website, Google Ads or an Excel spreadsheet somebody has been using for twelve years.

And very often we’re competing with: “We’ll leave it for now.”

Once you start thinking about competition this way, the competitive landscape becomes much wider.

An accountant might assume they’re competing with other accountants, when they’re also competing with accounting software and the business owner’s belief that they can manage everything themselves. A personal trainer competes with other trainers and gyms, but also with running, YouTube workouts, fitness apps, walking the dog and, inevitably, the sofa. A restaurant competes with other restaurants but also with Deliveroo, supermarket meal deals, cooking at home and the increasing cost of going out.

A business coach competes with other coaches, but they also compete with podcasts, books, AI, peer groups, YouTube and the business owner deciding they’ll figure it out themselves. A hotel competes with the hotel down the road, but also with Airbnb, staying with friends, making it a day trip rather than an overnight stay or deciding not to go away at all.

Looking at competition this way is more complicated, but I think it’s also much more useful because it makes you think about why your customer is buying rather than simply who else is selling.

The danger of looking sideways

There is another problem with concentrating too heavily on your obvious competitors. You can end up becoming more like them.

You look at their website, their social media, their pricing, their products and their latest offers. You notice something they’re doing which appears to be working and naturally wonder whether you should do it too. Then they’re looking at you and somebody else is looking at both of you, and gradually everyone in the industry starts offering remarkably similar products in remarkably similar ways.

You can see it in almost any sector. The same packages, the same offers, the same language and sometimes even websites that look as though somebody has changed the logo and little else.

I’m much more interested in asking what we can do that makes the comparison less relevant.

The Co-op probably shouldn’t try to out-Lidl Lidl. It would be rather difficult. Lidl has scale, enormous buying power, sophisticated distribution and a business model developed over decades. But Lidl can’t move its new supermarket into the middle of Thurnby. That’s the Co-op’s advantage, so it makes sense to lean into it.

Likewise, Café Fifty Five doesn’t need to become a garden centre and the garden centre doesn’t need to become a community centre. They can each concentrate on being really good at the things that make people choose them.

You don’t have to be better at everything

I think this is particularly important for smaller businesses.

You don’t have to beat a larger competitor at everything and, realistically, you probably can’t. They may be able to buy more cheaply, advertise more heavily, employ more people and invest much more money in technology. Trying to fight them on all of those fronts isn’t particularly sensible.

But you can be easier to deal with. You can be more knowledgeable about a particular problem, more responsive, more specialised, more personal or more imaginative. You can understand a particular type of customer exceptionally well. You can notice and solve the awkward problems that aren’t significant enough for a large organisation to care about.

At Soar Valley Press, we’re never going to be the biggest print company in Britain and I don’t particularly want us to be. But we can make design and print incredibly straightforward for the people who work with us. We have our design team, printing equipment and finishing in-house. Customers can come in, look at things we’ve produced, talk through an idea with us and often find a solution to something that didn’t start with the words, “I need 5,000 leaflets.”

That’s a different game from simply trying to be a little bit cheaper than another printer.

Sometimes competitors grow the market

There’s another aspect to all this which I think businesses often overlook. Competitors can create demand as well as take it.

Imagine a village with one fairly average restaurant. Now imagine the same village develops six excellent independent restaurants. Those restaurants obviously compete with one another, but collectively they may also turn the village into somewhere people travel to for dinner. The market hasn’t simply been divided into six smaller pieces; they’ve helped to make the market bigger.

The same thing happens with shopping areas, tourist destinations and all sorts of clusters of businesses. One good business attracts people, several good businesses can create a destination.

That’s why I’m genuinely interested to see what happens in Thurnby. A better garden centre, another good café, Café Fifty Five, the park and other local amenities could collectively make the area more attractive. There will be competition between them, of course, but that doesn’t automatically mean somebody else has to lose for one of them to win.

Competition is real. I’m not suggesting we pretend otherwise or merrily ignore a competitor who is taking our customers. Businesses need to know what’s happening around them and respond when things change.

But perhaps we spend too much time asking the standard business-plan question, “Who are our competitors?”

There are better questions.

What is our customer actually trying to achieve? What are all the different ways they could achieve it? What else is competing for the same money or the same bit of their day? What might make them decide not to buy anything at all? Why would somebody choose us when there are dozens of alternatives?

And perhaps most usefully: what can we do differently enough that the obvious comparison becomes less important?

Because there will always be another café, another printer, another accountant, another consultant and another shop. Trying to eliminate competition is pointless.

Being distinctive is much more achievable.

So when that new business opens down the road, don’t only ask how much of your business they’re going to take. Ask what they’re bringing with them. Ask whether they might grow the market. Look at what they can do that you can’t, certainly, but then spend rather more time thinking about what you can do that they can’t.

And take a wider look at what you’re really competing against.

Because your biggest competitor might not be the business across the road.

It might still be the sofa.