Is the race to the bottom the only race in town?

A good feeling on Fridays

My Fridays are usually dedicated to processing all the to do’s gathered during a week of meetings and 121’s as well as to deep work, work for which I need my full concentration. And I often do this from the comfort of my home office, avoiding traffic, starting very early and working until all the work is done. Rince and repeat almost every Friday. As a practice, it allows me to close the week with a good feel for what needs to be done the next week and with a good feeling for what I’ve accomplished during that specific week.

A typical sandwich shop from the outside

To consolidate that good feeling, I often take my lunch break to go get a sandwich at a sandwich shop a couple of kilometres away, in Werchter (yes, the Werchter of the Rock Werchter summer festival). From the outside, it’s your typical local sandwich shop.

Sandwich shops are ideal candidates for the race to the bottom

Every time I go there, the place is packed, with a considerable line queuing. Not always outside the door, but often enough to notice. And that begs the question: what makes this shop so special? Because it is not the only sandwich shop in the neighbourhood and none of the other ones have the committed clientèle they have. And sandwich shops are ideal candidates for the race to the bottom. They make sandwiches … not the most complicated of businesses nor a business which allows for the easy creation of barriers to entry.

The distinguishing quality is … quality

Actually, what they distinguish themselves with from other shops is the quality of their sandwiches. These sandwiches are packed with whatever you ask them to put on them. There is more chicken, more salad, more tomatoes, more of everything. It is technically not possible to eat one of their sandwiches without having vegetables or condiments falling out.

And when they wrap their sandwiches, they add a sweet to the package.

Value for money

Of course, all this makes the production cost of the sandwiches higher than anywhere else. And their prices are fully in line with prices from other shops. Which means, all considering, they will make less per sandwich than the other shops. But people don’t go to the other shops, the come to this shop. Because they know they will get value for money.

The race to the bottom is not the only option

Which brings me in a very roundabout way to my point: even in industries without barriers to entry the race to the bottom is not the only option in town. If you, as a business, provide real value for money, a significant group of consumers will chose your product over all the other products that provide lesser value for money.

A sweet reminder

And putting the sweet on top of the wrapped sandwich is just a cute, sweet (pun intended) reminder to the customer: “if you shop here, you will get more than anywhere else. Come again next time.” Not a bad business model.