Of course, those fruit suppliers lose. When customers perceive two products as the same, the sellers' options are reduced to a price war. The delighted customer simply shops several stores, browses the Internet, finds the lowest price, and - bingo - buys the cheapest product. The stores' margins sink. In fact, their margins stink.

My last installment of The Art of Retail Management described the importance of retooling your business into a well-oiled machine. Such operational excellence is one of three critical disciplines common among market leaders. The other two are product leadership and customer intimacy, as defined by Michael Treacy and Fred Wiersema in their book, "The Discipline of Market Leaders."

In this month's column, I'll suggest how you might benefit by enhancing your product leadership. (In this article, when I talk about "product," I'm referring to your combination of products and services.)

You become a product leader when your package of products and services is viewed by the customer as superior to that of any competitor. If customers value your product more than those of competitors, you will out-sell them and become the market leader. In sum, the key to product leadership is to offer a product so differentiated and desirable that customers feel compelled to pay you more for the combined benefits. They pay more because your package fulfills so many of their needs and wants (your package targets their wishes), and they can't buy that combination anywhere else (your package is unique).

American management guru Peter Drucker said the two primary functions of any business are marketing and innovation. Marketing is vital because the goal of every business is to attract and keep customers. Innovation is equally important because it is easier to make profit with a product package that customers deem both unique and desirable.

Establishing product leadership is difficult, of course. (You've already done all the easy stuff.) Product leadership requires you to innovate constantly. Practically every time Company A produces a winning product package, Company B will copy it, claim it's the same and cheapen the price. So, product leadership, as a strategy, requires senior managers to constantly think in terms of innovation and quickly bringing those innovations into practice. A company in pursuit of product leadership continually pushes its products into the realm of the unknown, the untried or the highly desirable.

You already understand that a key problem in the floor covering industry is the product similarity among manufacturers. Seldom do customers understand or appreciate one product's superiority over another. And in the infrequent instances when they do, another manufacturer quickly copies it. Then, prices fall.

If you've been in this industry a long time, you'll remember products like Mohawk's Canyon Paradise and Horizon's Jewel Box. Both products were risky innovations. I heard many say that neither would sell, but quickly they became the best selling products in the industry. Many competitors scrambled to copy them.

Some of my most memorable moments came about while working for Horizon Carpet Mills. Peter Spirer, Horizon's president, was truly one of this industry's great market innovators. I couldn't wait to see his next market innovation. He took risks. I think the industry misses leaders like him. Today, one of the few options open to retailers is the use of private labeling to draw distinctions in the customers' eyes.

Otherwise, product leadership depends on the retailer's presentation, reputation and services. How different and valuable are your store and your product/service package? It'll be easier to differentiate your store if your competitors are typical.

The typical carpet store hasn't changed much in the last 50 years. (I know. I visit many carpet stores each year.) Most of them look like the store in which my father worked in 1954. What do you see when you walk in your store? I see racks, lots of racks. Same old, same old.

This sameness makes independent floor covering retailers easy prey for the mass merchants and category killers. "Stodgy sameness" killed other Main Street merchants like shoe stores, jewelry stores and hardware stores. Price merchants stole their customers, because they hadn't updated their presentations to customers for years. They'd grown complacent. Instead of reinvesting profits to refresh their stores and showrooms, they neglected the storefront - leaving peeling paint, cracked windows and unsightly doors. Sidewalks fractured and buckled. Grass grew in the cracks, and litter lay in the gutter.

Nor did these retailers change much of anything inside the store. Layout, signage, lighting, displays, and merchandising remained the same decade after decade. Inventory changed, but often slower than the customers' tastes shifted. Their promotions seemed half-hearted. Does that sound like some retailers in our industry?

The key to product leadership is positioning - the mental picture (image) that customers have of you and your product/service. Marketing guru Jack Trout calls positioning "the fight for the customer's mind." Therefore, product leadership is about gaining customer "mind-share." Experts at Harvard Business School have concluded that without a brand identity, you'll forever labor in a marketplace dictated by price and delivery. Worse yet, you'll have to compete with each new competitor, worthy or not, who comes along. Not a fun or profitable place to be.

In my next article, I'll suggest specific projects you might undertake to refresh your store and differentiate your product/service package, so that you can become the product leader in your market. Stay tuned!