3 Examples of Hard-to-Beat Competitive Advantages from Leading US Retailers

It’s tough to get the top in business. But somehow, a handful of companies always manage to outshine the others.

You may not be in position to dominate the market like some of these retailers. But, you can learn from their examples and use that to expand your leadership in your niche or inspire new strategies.

Here’s what some of the big guys do:

1. Wal-Mart’s Supply Chain

One of the many advantages of Wal-Mart’s supply chain management lies in how they work directly with manufacturers. Back in their early days, this was unusual.

Today, Wal-Mart has a policy of “Vendor Managed Inventory,” which means manufacturers manage their own product while it sits in Wal-Mart’s warehouses.

They also use “cross-docking,” which is the practice of moving product directly from an inbound truck trailer to an outbound one without any storage in-between. This reduces operational costs a ton, which Wal-Mart then uses to pass on lower prices to customers.

2. Costco’s Savings and Value-Based Experience

Costco makes around 75% of its profit off membership fees. Different membership types cost $55 – $110.

Why will customers pay this?

They make that money back, assuming they shop at Costco enough. Costco has a partnership with Visa that offers a card which gives customers money back when purchasing. And if they shop just a reasonable amount, customers make back their membership fee throughout the year.

To encourage buying, Costco is extremely fussy about their vendors and product quality. They also sell in bulk. Consumers don’t shop at Costco because of the cheapest price. They want both quality and low prices.

3. Kroger’s Private Label Brands

Costco sneaks some of its store brands into customer’s hands too. Kroger takes a more strategic approach to creating its own brands.

The Private Selection, Banner brand, and Kroger Value target high, middle, and low-income customers.

These brands wow customers because they don’t contain preservatives and additives found in competing brands. At the same time, they’re equal in quality to other name brands.

Then, Kroger also uses their private label brands to access different customer segments. For example, they may offer an organic version of a certain food.

About 28.2% of Kroger’s sales came from their own store brands.

So, what did you learn from those examples? Will you completely transform your company’s strategy?

Or, have you identified incremental changes that could help you dominate the market without your competition even noticing?