The road to networking success might be an old one but travelled with new wheels

Recent news in the world of business show that many retailers are re-considering their strategic position.  Some of them have seen that position being under threat given the entrance of new players into their markets.  Technology seems to be playing a key role but still the strength of many companies seems to be what they do well and who they do this with.

I recently wrote about the TESCO case, and with my students we looked again at what TESCO should be doing to retain if not attract their customers.  TESCO has lost ground to other supermarkets, possibly because customers have become more in tune with what the competition offers:  more attractive shops, more focused and tailored offers, and in general a better experience.  

In other sectors, companies like BLOCKBUSTER have also seen their market share reduced, because competitors are now offering the experience of watching a video through an electronic channel.  BLOCKBUSTER is now closing some of its stores in countries like the US (I also learned they are closing stores in other countries like Colombia).  The UK has now seen the entrance of competitors like NETFLIX and LOVEFILM.  The fight is on to attract or retain customers.  

Both TESCO and BLOCKBUSTER still have a critical mass of customers, and it would be more costly to attract new customers than retaining existing ones.  This is why other companies like FACEBOOK are investing in acquisitions (i.e. INSTAGRAM), because in a way, they want to buy customer groups (INSTAGRAM has already attracted more than 20 million customers in less than 2 years of operation).  An acquired company can not only bring their customers, it can also bring a new technology to serve them.  

So networking is taking an interesting avenue of development:  working or buying channels of distribution which at the same time bring know how on new technologies.  Perhaps TESCO and BLOCKBUSTER can take stock from what FACEBOOK has just done.  

This is not to say that both TESCO and BLOCKBUSTER need to find solutions to their crises outside them. On the contrary, they need to review what value they are offering to customers and see if they can learn from their competitors or future collaborators.  Thinking strategically of how companies deliver value needs to be on the table.  TESCO might have lost that in their attempt to be good at everything.  BLOCKBUSTER might have lost it by not considering that technology can make life easier to their customers.  Perhaps they need to add technological value to what they are about.  This might mean they need to travel the old road to success, what they know best, but with new wheels.