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The fudge store phenomenon, and why it works

Do you like fudge? Chocolate? Peanut Butter flavor? Maybe, Pistachio? Or, how about Mint? Well you’ll be happy to know there’s an island in Northern Michigan called "Mackinac Island" (pronounced "Mackinaw", don’t ask me why) that has one small village on it, with one main drag where they serve over 10,000 pounds of fudge to tourists each day during the summer. Just on that one four-block Main Street, there are over 10 fudge shops!
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So much fudge is served that the locals have given tourists the nickname, "fudgies." Here’s a .org site where you can learn about the Mackinac Island Fudge Festival, happening this weekend. Who knows, maybe next year you’ll show up and become a committed fudgie.

But this post is not about fudge or fudgies. It’s not about this charming, "no motorized vehicles allowed" island of Mackinac, either.

This post is about the "Fudge Store Phenomenon," and why it works. The Fudge Store Phenomenon occurs when similar businesses cluster close together and benefit from proximity to competition instead of distance from it. The concentration of businesses actually fosters greater customer interest and traffic. And if you’re the best at what you do, you should benefit bigtime.

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The Mackinac scenario is a perfect example. So many fudge stores are present there, that people flock to the island on 30-minute ferries to sample and buy the confections. The fudge-making entrepreneurs of Mackinac have created business by concentrating their shops in proximity to each other in their little village.

This is a strategy that you should consider for your business as well. Here are some examples of other businesses that experience the Fudge Store Phenomenon:

  • Gas stations – how many times have you seen an intersection with gas stations glaring at each other from corner to corner?
  • Coffee shops – how many times have you seen a cluster of corporate or franchise coffee shops nested close by, with a local boutique or two in the mix as well?
  • Home improvement stores – Home Depot and Lowes locate their stores right next to each other in some markets.

These are all brick-and-mortar examples. But the Fudge Store Phenomenon occurs everywhere, even online:

  • Niche community sites: Here’s a random one I picked – cycleforums.com. Scroll to the bottom. You’ll see ads from vendors there that are basically all selling the same thing.
  • Paid search results: Do a Google search for "Steps to Open for Business" and you’ll see the paid ads at the top and down the right hand column, yet another example of this "clustering"
  • Efficiency services: The new SUN vendor service, which clusters small business solution providers so they get a chance to compete for your business.

Heck, to see the Fudge Store Phenomenon in full swing, stop by the diamond district in New York City, or the fish market in Seattle, or a local antique show or farmer’s market. This is happening everywhere.

So, try to think of ways that you can feed off of–and beat–competitors by neighboring with them. You just might find that the Fudge Store Phenomenon brings you sweet success.

One important note, though: To make this work, you should be confident that you’re the best in your niche. In that case, your proximity to competitors will help you. If you’re not the best, then you’ll be making a lot of fudge and seeing very few fudgies to buy it.

About the Author: Rich Sloan

Rich Sloan is chief startupologist and co-founder of StartupNation and host of StartupNation podcasts. He is also co-author of the acclaimed how-to book, StartupNation: America's Leading Entrepreneurial Experts Reveal the Secrets to Building a Blockbuster Business. Rich encourages you to [...]

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