The dynamics of competition always interests me, and it’s easy to see it everywhere we go. Last week, BreadTalk, the Singaporean bakery chain that has taken Colombo by storm, opened its newest outlet on Thimbirigasyaya Road (Havelock Town). This is interesting, because unlike its other branches on Union Place and Park Street Mews, because it is locating slap-bang in the middle of other bakeries and pastry shops along the same street. Less than 20 metres up the road from the new BreadTalk is SenSaal, another bakery with a growing presence in Colombo and booming suburbs. About 50 metres down the road from the new BreadTalk is the short eats “institution”, The Fab. Thimbirigasyaya Road is now probably the only one in Central colombo where three of the cities top bakeries/short-eats outlets are located in close proximity to each other.
But what I haven’t done yet, and would be interesting to explore, is the comparison on price. Intuitively we know that each of them, The Fab, SenSaal, and BreadTalk, operate on different price points to each other, with the lattermost being at the highest end. (On one day last week though, this pricing dynamic was completely skewed in favour of BreadTalk – on the 5th of April, BreadTalk offered its customers 50% discount on all items to mark its one year anniversary). Moving forward though it will be interesting on how the competitive dynamics pan out. Will BreadTalk become a true competitor to The Fab and SenSaal? How many customers actively chose one OVER the other? Or have each of them created a niche for themselves, cater to particular consumer preferences and tastes, and there don’t in fact compete directly with other even if price points were to be quite similar?
Brand loyalty of customers and their established preferences will no doubt play a big part in this. Another instance made me think about this yesterday – the competition dynamics at the Canowin Arcade rest area on the Southern Expressway E01. While the Arcade has a variety of eating options, the most popular seems to be the “institution” New Monis (the main branch of which are located at Maggona on the coastal Galle road).
With Juiceez, Gihans, Gills, and Mikrans all under-patronized and the staff there mostly idling, Monis was busier than they could handle. In addition to brand loyalty and “established preferences” dynamics, it may also have to do with the ‘price point’ aspect too. Monis has a stripped-down offering – sugary tea and coffee from instant machines, basic yet popular short eats like Maalu Paan, and no fancy displays, LCD screens, etc., to advertise their wares. Compared with the fancier set up at the outlets on either side of it – Gills and Mikrans.
I must note the caveat in all this though – it was a Monday afternoon. Things would no doubt be different on a weekend or at a different meal time (for instance, I’ve heard that Gihans is highly preferred choice at breakfast time).
Dynamics of competition and price points are an interesting, but often under-explored, area of economics.