I was born in a relatively small town and its two biggest hypermarkets had remarkably different strategies. The main difference between the two was this: one of them had a great location (within walking distance of most neighborhoods), whereas the other one was just outside town, pretty much impossible to get there by foot.

The one which didn’t have an amazing location had to basically make compensating for this situation a crucial part of its business model. It had buses which brought people from their homes to the hypermarket in question, it engaged in aggressive advertising and so on. The other one was just “there” and that’s pretty much it. They both had pretty much the same “big brand” products and similar prices, although the one with the bad location had slightly lower ones.

The result?

The one with a great location does considerably better.

Back when the people behind the one with a good location bought the land in question, real estate was ridiculously cheap compared to today’s prices. Back then, people thought they overpaid but in hindsight, they got an amazing deal which pays dividends to this day and which will continue to pay dividends indefinitely. Lower operating costs (no need for buses), lower marketing costs (less need for advertising) and the list could go on and on.

The people behind the other hypermarket could have bought better real estate but they didn’t. They tried to save a buck and competing against the better positioned competitor was an uphill battle right from day one. Perhaps they assumed the city would expand and that they’re blazing trails by buying real estate just outside town. If they did then they were wrong, it didn’t expand. In fact, the population is lower nowadays. I won’t draw any parallels, I’ll limit myself to sharing this story today. Draw your own conclusions 🙂