The state of the retail market

[John Porcaro](http://johnporcaro.typepad.com/blog/) links to a very nice (albeit short) analysis of the retail market and consolidation within it in a recent post. It includes a very nice graphic and the trend is believable. What that means is that either you are cheap or you have some added value. This is not much else than what Porter has been saying all along if you think about it with his generic strategies

_\- cost leadership: you set out to be a low cost provider, which gives you additional flexibility in your pricing structures

\- differentiation: select attributes for your products that are perceived as important to be able to have a price premium. You still need a good cost position

\- focus: using cost or differentiation you outperform your competition by focusing on a special part of the market_

So all in all you still need a good base price. I won’t spend 20% more to get service. The question is then if there shouldn’t be place for somebody that provides services above Wal-Mart, for example. It might be hard to get in there.

Another thing is important: _Bowman and Asch (1996) added that in our complex world, a lot need to be kept in mind. Customers for example do not care about the input side (costs) and not all differentiators lead to a price premium. You need to pay attention that you are not forcing yourself into one box._

The your structure of the organisation needs to fit to what kind of strategy you choose. Your entire vibe and culture too.