Core competency and retail

About a month back a hotel opened for business near the place where I stay. Thought yet another hotel in a locality already crowded with hotels. But surprisingly since the day of opening the place has always been crowded with customers. Out of curiosity visited the hotel  and found that the hotel has only 5 items on the menu. These items (idli, vadam khara bhath , Kesari  bhath and coffee)are standard items available in every hotel. Yet so much of a crowd? Spoke to a few acquaintances. All shared the similar feeling. This was the best hotel for the basic items in the locality. The service was fast, place not over crowded and prices were decent for a repeat visit. What more could a customer wish for?

To keep the excitement he had something on ‘today’s special’ list, this item would change every day.

So how does having limited items on the menu matter to the customer and to the hotelier? These items are basic items which most of the customers have in their breakfast. Infact its their staple breakfast. Hence the hotelier is working on volume game as against the fine dining restaurants which work on high margins. The manpower required is limited. Not many of great expertise required. The space required is limited as customers do not spend much time in the hotel either for waiting for their order or for eating. Thus the turnover at each table is very high. All this helps in keeping the overheads low. Imagine if he had kept few more items such as dosa, puri. It would require additional manpower just to prepare it against customer which would also add to the customers waiting time in the hotel.

For a customer, he/she gets quality staple breakfast at a good price with fast service in a clean and hygienic environment. Hence customers visit the place frequently.

So what’s the learning’s for a retailer? Identify the core competency which will be whole heartedly accepted by the customers in the most economical manner by keeping the overheads low. This whole economic activity should be profitable to the retailer.

There are many retailers who have built their entire business model on similar core competency. E.g. a retailer who sells only breads (different varieties). Also there are retailers who sell only bananas throughout the year and they are well known in that locality. Also there are retailers who sell only plantain leaves. Such retailers will always have defined set of clientele who are loyal to them. It is very difficult for competition to attract this customer. Imagine the potential of such business.

Have heard of any such specialized retailer? Do you wish any product should be handled by a specialized retailer?

Please share with me.


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