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To Increase Your Growth Prospects, Start by Looking for the Biggest Future Pond to Grow Your Lilies

By Donald Mitchell

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Published: 18Jan2009
Word count: 654
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Forecasts are issued all of the time for the size of future markets. Have you ever pursued an opportunity based on a forecast that turned out to be wrong? You have lots of company, because almost everyone has.

You have to look beyond the extension of current trends into the interactions of those trends if you want to find the best opportunities ahead of the competition. For example, if your market growth depends on some scarce factor being available (such as there being undiscovered oil and gas), take a close look at whether the scarce factor will become more expensive or unavailable in the future before betting your business model on it.

Finding untapped future ponds of demand is more complicated than just looking more globally. Supercomputer makers looked globally and missed the large limits on their market. Their problem was that they failed to consider what most of the potential customers would eventually need . . . in the future.

The answer sometimes also means considering totally different products, services, and needs, ones that don't even link to what you do today. Let's head to the mall to see how this was accomplished for one wig importer who began as the biggest fish in his pond.

Mr. Rowland Schaefer had reached the top in U.S. wig importing. To create economies of scale and a more profitable organization, he became his own distributor. He bought The Harry Camp Co., a chain of leased millinery and accessory counters in department stores. The Harry Camp Co. also owned a few free standing millinery and accessory boutiques in enclosed malls called Claire's Boutiques.

When the wig business fell out due to fashion changes, Mr. Schaefer sold The Harry Camp Co but kept Claire's Boutiques. As fashion changed, Claire's was able to change their merchandise mix from mainly wigs and hats to jewelry and hair accessories.

Over time, the concept was refined into what we know today as Claire's Accessories, the core division of Claire's Stores, Inc. These are small mall shops that provide inexpensive fashion accessories and costume jewelry primarily to preteen and young teenage girls.

Chances are that many of the young girls you see sporting normal earrings got their ears pierced for free at Claire's, which provides more of this service than any other source. But keeping with the company's wholesome image, don't expect to get anything else pierced at Claire's!

In describing Mr. Schaefer's quest for the biggest future pond, Ms. Marla Schaefer, vice-chairman, reports that he is always looking for the next big thing. The company's culture favors new ideas, because Mr. Schaefer will listen and act quickly when an idea seems to have promise.

That quest has led Claire's to expand its store keeping units (skus) and store design to reflect scientific measurement of how changes in these elements affect the company's effectiveness. When there were enough stores, the company began directly importing most of these goods from the Far East to cut costs and ensure timely supplies.

In recent years, the company has been buying similar retail operations outside the United States and converting the stores into Claire's-type boutiques. Each outlet will have some items that are special for that country or locale, but 75 percent will be common with U.S. operations. American fashions for girls and young teens has become increasingly global, as American entertainment has continued to become more popular around the world.

As you can see, the parent company can continue look for still other retailing concepts that fit with its business model's core insight and expand from each of those bases. Gradually, the world-wide lily pond of young people looking for value in their fashion choices will be covered, and Claire's will be a very big fish in that enormous pond.

Copyright 2008 Donald W. Mitchell, All Rights Reserved

Donald Mitchell is chairman of Mitchell and Company, a strategy and financial consulting firm in Weston, MA. He is coauthor of seven books including Adventures of an Optimist, The 2,000 Percent Solution, and The Ultimate Competitive Advantage. You can find free tips for accomplishing 20 times more by registering at: www.2000percentsolution.com

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