Competition: How much is a good thing?


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Competition: How much is a good thing?

Postby Charles » Dec 17th, '09, 16:16

I'm trying to choose the location of our first store and need some feedback on this debate http://www.tearetailer.com/article_23.html. In short, should we pick a spot near another good tea shop to create a destination for tea lovers to choose a new area?
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Re: Competition: How much is a good thing?

Postby sabboreno » Dec 18th, '09, 00:34

I think that all business is small business these days.

I have owned my own small business and sometimes customer loyalty goes a long way. A customer may never walk in your door simply because someone else was on that block first. That's reality.

However, you see coffee shops everywhere. That being said - coffee is a more popular drink in the U.S. Tea - well that falls 6th on the list behind milk and beer. So. . .

My inclination here is to tell you to develop your brand of stores away from another retailer first. It's like soft opening a restaurant. Once you have worked out your grand opening kinks then you advertise and bring on the invitations of critics. If you fail next door to an established competitor before you have the chance to start - you really fail miserably.

I can tell you for example, were you to open next to Todd and Holland in Forest Park IL - you would have a seriously tough time getting loyalty because the surrounding area loves these homegrown tea enthusiasts. Likewise if you open next to a Teavana - you better pull out all the punches because those folks work on a good commission and they will outsell you everytime.

Soft open - work out the kinks and then go next to an established brand.

I'm a little nervous for you though - if you are considering this move - you sound a bit retail naive. And from earlier posts you sound like you are ready to fail. So maybe .. . go where you want.
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Re: Competition: How much is a good thing?

Postby tenuki » Dec 18th, '09, 03:57

open one next to every starbucks worldwide. ;)
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Re: Competition: How much is a good thing?

Postby Charles » Dec 18th, '09, 08:13

"Ready to fail" and "retail naive". Wow. Criticism is more useful than compliments so please tell - what makes you think that?
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Re: Competition: How much is a good thing?

Postby bsteele » Dec 18th, '09, 09:39

sabboreno wrote:Likewise if you open next to a Teavana - you better pull out all the punches because those folks work on a good commission and they will outsell you everytime.


Call me crazy, but I feel like people don't necessarily like walking into Teavana and feeling like they are on a used car lot. So if a better alternative is available... I'm pretty sure they'd take it.
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Re: Competition: How much is a good thing?

Postby Chip » Dec 18th, '09, 10:06

bsteele wrote:
sabboreno wrote:Likewise if you open next to a Teavana - you better pull out all the punches because those folks work on a good commission and they will outsell you everytime.


Call me crazy, but I feel like people don't necessarily like walking into Teavana and feeling like they are on a used car lot. So if a better alternative is available... I'm pretty sure they'd take it.

Still, Teavana is a fun store to walk into, where else can a TeaHead go (and many Teavanas at that) and be surrounded by Asian teaware? Unfortunately one needs a user's manual on how to dodge the broken record staff.

Competition is generally good, keeps everyone "sharp." You can't be complacent with another alternative down the street.

This is an interesting concept, actually, has some merit and some pitfalls.
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Re: Competition: How much is a good thing?

Postby sabboreno » Dec 20th, '09, 23:25

I guess here is the thing:

Certainly competition is good - I like to know that people are responsible for putting a good product out there AND competition does keep retailers sharp for performance.

This is where I am at with your posts. It sounds a bit like you aren't sure of your retail model. It sounds like you don't have a good foundation in place. It sounds like you get to spend someone else's money putting a business near competition while experimenting with a "new" retail model.

I wouldn't worry so much about creating a tea strip. I wouldn't even worry about competition for a first location. I would treat every penny like it was my personal penny. AND THEN AND ONLY THEN would I find the perfect location.

Five years for a standard lease is a long time to be "losing" money while trying to create a long term business model. Think long and hard before you open your first store.

I wish you the best of luck, retail geek that I am.
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Re: Competition: How much is a good thing?

Postby Charles » Dec 21st, '09, 10:48

Thanks for clarifying. I spent the last five years working for the world's largest specialty tea retailer with stores in 9 countries on 4 continents. I have opened five tea shops myself and am very confident that I can create a successful retail store. My new bosses at Adagio are pushing ME to challenge my own assumptions and those of the rest of the industry. Adagio likes doing things a little differently and, hopefully, a little better. I am airing my own musings and ideas to get feedback on those components that are a little farther afield and untested. Not because we have no idea what we're doing, but because the more unconventional the idea the more risky it becomes.

Adagio is a very successful company already. The point of the retail venture is to see if we can create something special. That's not to say that we'll be spendthrift with the money, but it is to say that if we're just copying what everyone has done already there's really very little point.

Innovation is sometimes messy and sometimes painful. It's also the only way to break-through success.

Thanks again for all the feedback.
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