The path to differentiation depends on whether your company is a hopeful, doer, visionary, or a differentiator.

• Hopefuls need a strong brand strategy.
• Doers will benefit from a capabilities-driven strategy. First, identify your competitive advantage and build a strategy around it.
• Visionaries should focus on building operational capabilities so that they can take action on their strategy.
• Differentiators should focus on growing strategically through innovation, strategic alliances, etc.

Hopefuls and doers should put the customer at the centre of their approach in the four brand strategy components: identity, value, perception, and awareness. Then they should build operational capabilities on top of that strategy.

• Focus on what you do best for your customers.
• Recognise that value is more than just price.
• Ensure you know who your customers are.
• Use social media to connect with consumers, sharing stories and other engaging, authentic content.

Operational excellence doesn’t require differentiation in all six areas. Most successful companies focus on only a few of the areas.

Operational areas:

1. Product offering. Adidas set record-high sales by focusing on its portfolio, where other retailers often do the opposite.
2. Strategic pricing. Everlane positioned itself as an ethical value player in the clothing industry.
3. Digital engagement. L’Oréal encouraged people to experiment online with their products.
4. Loyalty programs.
5. Multiple channel experience. Online and a store.
6. A well-functioning supply chain is crucial.

Retailers continue to face a changing environment, such as market disruption, changing macroeconomic conditions, competition. 

Consider the following tactics to stay relevant:

• Embrace disruption from new entrants. Continue to innovate and reinvent.
• Capture growth opportunities. Acquisition targets can help to leverage or enhance your existing capabilities.
• Know your competition. Identify emerging direct, indirect, and adjacent competitors.