Not that long ago there was a distinct concept, theory or trend I could see happening in the real estate industry that I was yet to come up with a name for.
It was occurring across the professional services industry, including professions such as accounting and in legal firms.
Everyone is talking about disruption, but the potential sleeping tiger is the fragmentation of the industry.
Real estate agents, lawyers and accountants can all now easily hang up a shingle for their one-person or few-person show.
Cloud technology generally has made it much easier to do this and those who are going down this route typically have a powerful, compelling point of difference in the market – you will deal directly with the owner or principal.
This has a flow-on effect to those in the middle of the market as you see the number of operators grow at the smaller end of the industry, while the big continue to get bigger at the other end.
Have a look around the industry – there are more niche businesses opening every day and groups like @realty and UrbanX are making it easier for real estate agents to go out on their own.
For the customer, they may get a more intimate, targeted, specialist experience.
For the principal, they may get more control over their day or more job satisfaction.
However, none of these things come without risk, and the sad truth is that fragmented businesses can fail.
Owner fatigue is genuine in the smaller businesses because they have fewer people to share the load and the buck stops with them.
What does this do for the rest of the industry? What opportunities does it present?
Is there enough business to go around for everyone with so many different brands to choose from?
It suggests the industry is heading down a path of big or boutique.
Now, more than ever, you need to have clarity on why people choose to do business with you.
What is your customer value proposition?
If you are a small boutique, it may be personal service.
If you are a big franchise, it may be market share and reach.
If you are somewhere in the middle, what could it be?
Irrespective of what it is or whether you are big or boutique, use your customer value proposition to drive every decision you make in your business.
If it’s something unique about your customer experience, then make sure you are thinking about that when you buy that photocopier, invest in that technology subscription, or rent those premises (if you even have premises).
Watch out though, I don’t think the industry can sustain so many providers forever, and consolidation is inevitable in tough times.
