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Carved a niche? Be careful about moving your goalposts!

Especially during a recession.

Two niche suppliers

At the start of 2008 - when according to many the recession started to bite - we had two main suppliers, both having carved out a niche for themselves.
One renowned for its high quality products from its own FSC certified forests in South America, one renowned for its high quality and bespoke parquet products (all from sustainable sources). Both are highly respected companies.

Fast forward to middle 2011: one is laying off its European Sales department, one is working long hours to fulfill all orders before their standard 3 week Summer break.

Moving goalposts 1

In the wooden flooring trade, 2008 also saw an increase of joint-ventures between European manufacturers/wholesalers with manufacturers in China. Some products were not worth the money it costs to produce and ship, many others however were/are of high quality and worth promoting as acceptable "alternatives" to products produced in Europe. A fact appreciated by many independent retailers - like ourselves - to keep the promise to clients: we give you value for money (less money, good quality).

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However, it soon became rather clear that it is China who decides who will get a constant supply of good quality products. And some smaller European manufacturers/wholesalers, after heavy promoting their "alternatives" to their clients, started experiencing stock problems. Not something independent retailers can cope with when times are already tough. No stock or increased leadtimes up to 3 months is often a sale missed.
Then, when larger manufacturers/wholesales come knocking and are able to offer the "goods" and support, the decision for an independent retailer to switch is easy.

Problem was: while the highly respected company with its own unique products tried to jump on the China wagon, the promotion of and focus (quality control included) on their unique products seemed to fall to almost zero. All focus was on the cheaper alternatives. Which in the end resulted in aggravated clients when stock levels turned to zero or to too sporadic and complaints about the quality unique products turned from almost zero to frequent. Special offers on the unique products are not longer believed to have value for money due to doubts on the quality.
Trust becomes a rare item in these matters. And when trust fails, you are looking at a very long and hard battle to turn it around again.

The European Sales Department team members' tasks are added to the National Sales team members. In quick succession we received emails from the team members who had to find (have found) other employment.

Moving goalposts 2

Strange but true: unique products - of high quality - always seem to be in demand, be it in boom or bust times. The only change could be in the quantity, not the quality.

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So offering more varieties of quality unique products is one way to keep the quantities coming in, as long as you keep complete control on the whole production, quality control and shipping yourself. Keeping in constant contact with your clients keeps the quantity of clients on an even level and could (has) result(ed) in more clients. Improving your marketing and support to a high(er) quality allows your clients to "borrow" quality marketing materials to show their own clients.
And this was exactly what our other supplier has done, and then some. They moved the goalpost too, but to higher grounds, taking full advantage of the niche they had already carved out for themselves.

And then when other manufacturers/wholesalers come knocking and are able to offer the "goods" but not the support or commitment, the decision for an independent retailer not to switch is easy.

The production unit is now on a well deserved three week summer break, after having worked full tilt the last two week to fulfill all the orders for bespoke and standard wood floor products that came pouring in after the annual announcement of the summer break. Orders placed in these last two weeks could no longer be guaranteed to be made before the break. And we are one of the businesses who now have to wait until the production restarts to see our order made and shipped.

As our own client stated: "good things come to those who wait" (the company his insurer had hired to supply and install an exact copy of the damaged parquet floor had failed to come up with the bespoke "goods", therefore he had told his insurer he had had enough of standard suppliers and insisted on us supplying and installing the floor.)

Moral of the above...

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Being a great fan of Jim Collins and Co (Good to Great) and strong believer in the "hedge-hog concept" explained in his book, the message in the above experience to me is clear:

If you have carved out a niche for yourself, be very wary and careful when and to where you move your goalposts, they tend to fall down completely if you remove the foundation i.e: swapping your hedgehog concept (keep doing where you can be the best in, has the best long term commercial value for you and your clients, and has your passion) for short term profit.

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