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Dear ABC's,

My partner and I run a small art gallery in a resort area. Two weeks ago, another gallery opened across the street with an almost identical selection of the artists we carry. And they're pricing 20% below us! We can already tell that our sales are down. What should we do?

Signed,

Imitated and Irritated

Dear Irritated,

They say that imitation is the sincerest form of flattery. We, on the other hand, have kids yelling "MOM! He's copycatting me! Make him stop it!" at least twice a day so we're very sympathetic to your situation. You certainly don't want to look like the next step in your sales program is to rent the Holiday Inn and put your artists on a starvation diet.

Much as the ABC "Start-Up" Moms, Kris and Cindy, might want to, we cannot send your competitors up to their room without their dinner. You're going to have to settle this situation yourself. There are a couple of ways to do it.

Now's actually a good time to review your artists and see who your "stars" have been. Are they local? Or are you selling regional or national artists? What kind of contractual relationship do you have with your artists? How important is your gallery to each artist?

If you are important to the artist, you may want to get some contractual exclusivity with them. In other words, you want to be the only gallery in your immediate area that carries their art or that carries a particular line of their art.

If you are not important to the artist, you may want to drop carrying them. If they are a substantial part of your sales, you may wish to consider either meeting or beating the prices of the other gallery. This will hurt your profit margins, so first review your legal agreements with the artist to see if you have any legal protection under them. Check out the new gallery as well. Is it financially strong? Or are they in there on a shoestring? How you respond to them should be based on weaknesses and strengths, both theirs and yours.

This is also a good time to find some new artists and establish that locally exclusive arrangement with the ones you think your customers will buy. You might want to consider expanding your customer base as well, perhaps offering an art leasing program for professional offices and corporations. It's also a good time to look for strategic allies, such as interior decorators. Given great service and financial incentives, they may become your best sales channel.

You can also provide some better promotions than the competition. You already have a list of customers and you know what they've bought from you in the past. You can offer them special gallery shows, artist signings, provide them with incentives to buy and generally make your gallery a much more entertaining place to be than the competition.

In short, Irritated, all is not lost. Sometimes a competitive challenge can also be a very good thing. Two or more galleries can start making your area an art destination and bring in customers who would never have visited your gallery by itself. You're smart, you've noticed changes already and you are ready to respond. Do it by making your gallery special, a place that meets your customers needs and helps them fulfill their wants. Do it by establishing a close relationship with your artists. And, above all else, make sure it's fun for your customers as well as profitable for you.

Now...Go Make Money!

Kris and Cindy
The ABCs Start up Moms