Co-Opetition - Adam M. Brandenburger [19]
Shouldn’t the antique stores spread out over Brussels so that each store could have its local market? There would then be less direct price competition, since customers would find it less convenient to compare prices. After all, Wal-Mart doesn’t line up next to Kmart, and Pearle Vision doesn’t shadow LensCrafters. Nor do coffee shops or dry cleaners generally congregate.
But that way of thinking sees the Brussels antique stores only as competitors. By locating near to one another, the antique stores become complementors, too. Instead of having to choose only one store to go to—possibly the wrong one—shoppers can go to the Place du Grand Sablon, browse, and make a more informed choice. And because it’s a lot more convenient, people are more willing to set out to buy antiques in the first place. They can also be more confident that the merchandise will be high-quality, because a store with inferior products or inflated prices will have a much harder time staying in business if the superior competition is located right next door. Also, people are more willing to buy one store’s table if they find the perfect chairs for it, and there’s a good chance of finding those chairs in another store nearby. Making it easier to find chairs helps sell tables, and vice versa. By locating close together, antique stores, though competitors in dividing up the market, become complementors in creating the market in the first place.
In some cases, the bunching effect helps creates a bigger market for suppliers as well as for customers. That’s the case for the performing arts on and off Broadway, New York. On the customer side, all the different shows help bring people into the city, even though the shows compete for the same audiences on any given night. On the supply side, the bunching of performing arts creates a critical mass that makes it easier for all to attract suppliers. Chamber music can share the same stage as symphonies. Theater can share the stage with dance. Musicians who play symphonies can perform in operas and musicals. Costume designers for theater can work for opera and dance. Lighting designers can work across theater, music, opera, and dance. Directors have their choice of actors and actresses working off Broadway—or even in restaurants.21
Whether it be diamond merchants, art galleries, antiquarian bookstores, movie cinemas, car dealers, antique stores, or performing arts, bunching together creates complementarities that develop the market, even if there’s sometimes more competition in dividing it up.
Toys “R” Us seems to follow the opposite strategy, relying instead on destination shopping. Its stores typically are located in low-rent areas off highways, not next to other retailers. People go to Toys “R” Us because it’s specifically where they want to shop. Is oys “R” Us doing the right thing? We don’t suggest that Toys “R” Us locate next to another toy store, but perhaps having a McDonald’s restaurant or a Discovery Zone (a supervised indoor kid’s playground) inside the store would make going to Toys “R” Us more appealing. After all, people on their way to the Discovery Zone for a birthday party would now pass through the toy store. How convenient. And why not have a Big Mac while you’re there?
So far, it’s all complements. But the problem for Toys “R” Us is that parents who drop their kids off at the McDonald’s or Discovery Zone while they’re shopping will be less influenced by their children to buy toys on impulse. Thus, McDonald’s and the Discovery Zone are complementors When it comes to getting people into the store, but perhaps competitors when it comes to what they buy.