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How to compete

Eco-entrepreneurs faced with competition from established companies will either be pressured into well protected niches, or pushed into the mainstream marketing arena, where sophisticated marketing strategies based on sound consumer research tend to carry the day.

Green retailing is heading for a period of consolidation. This shake-out will have a major impact on small 'green' retailers and the manufacturers that sell through them.

There are four reasons why this upheaval is unavoidable:

  1. Most green consumers prefer to buy environmental products in stores where they already shop;

  2. Mainstream retailers are beginning to feature environmental products, create special green sections, or even open entire green-oriented stores;

  3. Established manufacturers are gradually offering greener products, targeted through mainstream distribution;

  4. Consumer-focused green entrepreneurs are increasingly supplying mainstream retailers.

As these trends accelerate, the number of smaller enterprises will shrink. Larger companies will buy them up, mergers will take place, and some businesses will fail.

With the exception of companies that find merger partners, the survivors will be those with a defined clientele whose special needs cannot be met by the bigger companies.

Two competitive strategies are recommended for green retailers. One is to discover a niche that depends on more than just green differentiation. The other is to build up a following among the deepest-green consumers. Either of these strategies requires coherent, attractive merchandising, superlative value-added services, and ongoing development of exclusive products. Retaining customer loyalty is essential.

For manufacturers that sell through green retailers, competitive strategies must be based on continuous innovation, exemplary retailer servicing, and a direct understanding of consumers' evolving tastes. Even if small 'green' stores and specialty outlets are the preferred distribution system, mainstream retailers may be a better option - particularly if they offer cost savings and financing for expanded production.

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