All local brands will disappear and only globally competitive brands will survive

Italian tailors

Some brands and businesses are local and some are not. The main definition of a local brand is that its values are not competitive outside a specific locality. That locality can be a street, a city, a country. Examples of local brands are a cafe on a street level, a taxi service on a city level, and a countrywide distributor on a country level.

All local businesses are in danger of losing to non-local businesses because their local values are not competitive in case non-local brand enters the local market. Local value is for example closeness of the cafe, while non-local value is coffee quality or price. One of the most common forms of disruption is the competition between non-local and local brands. Walmart, Starbucks, and Uber are brands which have beaten local brands by offering non-local more competitive values to customers.

It is inevitable that all local brands lose to non-local brands and eventually disappear. This does not mean that there will be no local cafes, taxis, and distributors and that we will only have Walmarts, Starbucks, and Ubers in the future. This only means that local brands will have to offer globally competitive values and not rely on locality to protect them.

An important strategy for local brands is to find their non-local (global) competitors and compete against them by creating new and unique values, instead of competing only against local competitors and winning locally. The strategy and management challenge in a local business is to have a mindset to compete globally even if they are local. This way they are better prepared for long term growth.

Written by: Nikola Tosic
Publishing date: 3 Oct 2017