Not to sound like a broken record, but companies that focus tend to do better than companies that do not. If for no other reason than because they can become great and relevant at something, which assuming that is something customers care about, generates sales and profits. This need to focus is especially important in a downturn. (For more on this, you can listen to my BBC Ulster radio interview.)
Recent reports from Wal-Mart reinforce this belief. In a downturn, companies that are focused on the so-called “value price” point tend to do better. However, Wal-Mart’s same store sales are up 5% over last year, while K-Mart is down 5.6% and Target is basically flat. So, there must be something else going on.
Indeed there is. Wal-Mart has steered away from the “diversification” strategy that was going to have them add “up-scale” merchandise to their stores and open some “higher-end” type stores to better compete against Target. All this silliness did was confuse their customers. If the customer wanted Target, they would be in a Target. (Reminds me of when Coke decided to compete with Pepsi by creating New Coke that tasted more like Pepsi. Their customers said if they wanted Pepsi, they’d buy Pepsi and New Coke was history.) Moving away from that misguided strategy and refocusing on being “Wal-Mart” has increased sales, profits and customer satisfaction.
Even the world’s largest retailer can’t be all things to all people … and neither can you. Find a focus, get great, and win.