Every market innovates, and therefore, causes businesses to adapt their offerings and delivery.
It’s no surprise that On Demand TV is putting a lot of video rental stores out of business.
Brick-and-mortar video rental stores’ “costs-to-operate” usually consumes 80% to 90% of what they make (that is without the competition of On Demand TV). So, if On Demand TV takes 30% of the video stores’ sales, they are 10% to 20% behind on their bills. This puts the video store in a race to decrease costs before the wave of floating overhead crashes.
A great example of taking advantage of a market shift is Redbox, the self-serve DVD kiosks. The strategists behind Redbox identified that there was still a market for video rental, but delivery would have to be drastically recreated. And they did it.
Redbox figured out how to eliminate labor, cut rent and negotiate with supermarkets to insure traffic positioning while eliminating marketing costs. Now, they can offer rentals at a super low price, $1 per day, and still be profitable.
Here are three questions to help you identify opportunity in your market:
1. What out-of-the-box idea would allow you to eliminate or greatly decrease fixed costs while increasing profitable, long-term growth?
2. What is the potential risk and reward?
3.Where will you be in three, five and 10 years if you don’t change?
