Posted by Christopher Stevenson
Reuters.com posted an article today on the problems facing booksellers with the release of Harry Potter and the Deathly Hallows. The big boys, namely WalMart and Amazon.com, are discounting the book so deeply that other retailers feel they need to match the price or lose business. The end result is that the smaller retailers won't make any money, or will lose money, on one of the biggest book releases in history.
There is one sentence in the story that offers a ray of hope, though. Chapter One Bookstore, an independent bookseller in Hamilton, Mont., is trying a different tactic. Instead of competing on price, they're selling the books at full price and donating seven dollars from each sale to a library of the purchaser's choice. That's smart. Instead of following the masses into the never-ending abyss of price slashing (for a good lesson on price slashing, see Vlasic's story), Chapter One is appealing to the consumer's desire to do something good for the community. They may not have the volume of sales of the retailers that discount deeply, but they'll make money on each sale (always a good idea in business, don't you think?) and differentiate themselves in the process.
The same kind of story is happening in financial services. Credit unions are competing in a commodities market with tight margins. Offering good rates, or even great rates, isn't enough; there will always be someone who is willing to give a better rate on a mortgage, auto loan, or certificate. The financial services organizations that will come out on top will be those that offer something better—better community involvement, better service solutions that meet the savings and spending natures of consumers, better hours of operation. Credit unions already offer good rates, plus member ownership and a rich heritage of serving the community and the underserved. Do we really need to do more? We'd better.
