Retail Competitive Intelligence: What Is It, Why Care?

Here at Competitive Intelligence Alliance, we often speak about CI for businesses operating in the online B2B space. The many perks of competitive intelligence, though, are available to any type of organization. That includes retailers.

Whether you’re an online retailer or a brick and mortar chain, competitive intelligence can help you stay ahead of the curve, reverse engineer your rivals’ competitive advantages, and win new market share.

In this article, we’ll cover:

What do we mean by retail competitive intelligence?

Let’s break it down. Competitive intelligence refers to either:

The practice of collecting and analyzing data on industry competitors and alternatives.
The actual data itself that you have on your competitors.

Applied to retail, then, competitive intelligence is just that: data retail businesses collect and analyze on their competitors.

But why do businesses do this?

In short, businesses like competitive intelligence data because it helps them create a competitive advantage they can sustain over time.

When you gather this data efficiently, you can analyze it and use your conclusions to inform strategic business decisions. This is true for both brick and mortar chains and online stores, which segues handily into the next section. 🍃

Why competitive intelligence is crucial for retailers.

Retail has its own challenges

While the core processes of competitive intelligence apply across the board, performing competitive intelligence in retail has its own set of challenges. Your rivals might not have much of a presence online, giving you fewer sources of accurate information.

That’s a shame, as without a dedicated data collection process in place, you’re left to hear about competitive developments third-hand. Often, these come far too late for you to do anything about them, are riddled with errors, and spread undue fear through your org.

In short, a lack of data makes you reactive, while an abundance of good data empowers you to be proactive and strategic.

Internal data isn’t enough

Your internal data isn’t enough. You might know which of your locations are seeing the most sales and which products are selling best. You might even be able to forecast and make decisions based on this data.

But it’s only half the story.

When you have data on your competitors, you can let them take on the risk of developing new products for you. Then, you can analyze market appetite for those products. You can even do customer research on those products to learn what customers like and dislike about the competitor’s offering, so you can improve upon it.

Intelligence on competitors helps you see market trends coming. What’s more, it gives you the data to analyze those market trends, and use your findings to reduce risk and mitigate competitor advantages.

Data offers freedom

Many retail businesses are forced to compete on price when they lack data. When sales drop, they lower their prices to encourage consumers to buy.

Without a firm understanding of where the sales you lose are going and why, and of the state of the competitive environment, your business decisions are anything but strategic. You’re forced to guess what to do.

When you have more data, not only can you be more strategic, but you have more room for error. You’re less anxious, because nothing takes you by surprise. You’re less stressed, because you know what you have to do before it comes time to do it.

What counts as retail competitive intelligence data?

So competitive intelligence is important, even in retail marketing.

But what kinds of data constitute CI for retailers? Here are some of the most relevant:

Competitor pricing intelligence.
Competitor conversion data.
Competitor product data.
Human mobility data.
Foot traffic data.

Competitor pricing data is data on how your competitors are pricing their products; this includes data on discounts and promotions. Pricing data is incredibly valuable, but can be difficult to get hold of, especially if you want to ethically gather competitor data of this kind.

Competitor conversion data is information about how many visitors (online or in-store) your competitors are able to convert into paying customers or qualified leads. Knowing this data can give you a benchmark against which to measure your own business, opening the door to a competitive gap analysis if you find yourself falling behind.

Competitor product data tells you everything you need to know about the features and flaws of your competitors’ products. When you have this data, you can reverse engineer their successes and stamp any flaws out of your own products to learn from them as if you were taking on that risk yourself.

Human mobility data is information about migratory trends. If lots of people are moving out of one area and into another, this can and should inform decisions about which locations you expand into next. When you have data on the physical locations of competitors’ stores, you can analyze them with human mobility data to see what you can learn about their growth strategy.

Foot traffic data helps you decide where in town to open your next brick and mortar store. More foot traffic means a more desirable, more profitable (but also more expensive) location. Comparing foot traffic data with other competitor data helps you find the best deals for your business. When a competitor has a location with more foot traffic than yours, you can make more informed decisions about their sales figures in relation to your own.

What can you use competitive intelligence for in retail?

Here are some of the ways you can use competitive intelligence in your retail business:

Understanding the draw of a competitor

What makes customers want to buy from your competitors?

If you can understand the factors that go into customers’ purchasing decisions, then you can reverse engineer (and improve upon) a rival’s competitive advantage.

Customers might like the consistency of your competitor’s buyer experience in every store. They might love the social status conferred by being seen to own a product from a reputable brand. Or, it might be that their products have particular features.

When you combine customer perspectives like these with competitive pricing data, or even product and conversion data, you get a much more complete picture of why your competitors might be winning. Crucially, this helps you identify what you need to do to win back some of that lost ground.

Analyzing competitor pricing

Even if you’re not interested in competing on price and commoditizing your product, it’s useful to know where key competitors position themselves with their pricing strategies.

This can also give you insights into other aspects of competitors’ marketing strategies. These include the sizes of discounts, and what’s included in special offers and promotions.

Gaining a deeper understanding of the competitive environment

When you understand your competitors’ positioning, pricing, and products, you understand the competitive environment itself.

This empowers you to make strategic decisions about your own positioning, pricing, and products to help you identify new market opportunities and grab them.

This is true whether your business model has you operating online, on the high street, or both. In fact, competitor data can be even more readily available for online businesses, thanks to competitive intelligence solutions and software, which make it easier to get up to speed with competitor developments.

TL;DR

Let’s summarize what we’ve learned.

Retail competitive intelligence is just that: CI applied to retail businesses. It comes with its own set of challenges, as online sources of data may be harder to come by.
Retail businesses need CI data because internal data isn’t enough to sustain a competitive advantage in the modern market.
Competitor pricing, product, and conversion data are super helpful, but other metrics like foot traffic can be just as important while being unique to retail.
Use CI to understand where and why your competitors beat you. Get to know the competitive environment, then seize the opportunities available to you.

After more actionable advice?

We wrote the Competitive Positioning Playbook to walk you through the best practices and processes to gather data, identify market opportunities, and position yourself to capitalize on them. All with the help of competitor data and customer research.

Download your copy today, free of charge, no strings attached.

Retail competitive intelligence: What is it, and what can you do with it?

Alex Walton