I entered the world of retail in the early 1990s and have worked my way up from the sales floor to the head office. Throughout that time, technological advancements have changed retail significantly. Interestingly enough, the following 5 principles have remained constant and don’t show any signs of changing.
1. Customers Are Number one:
Twenty-five years ago retailers were in the driver’s seat, controlling interactions with their customers and dictating their customer’s demands. Sure, retailers valued what their customers said. After all, the customer is always right! However, communication was one way, often driven by the retailer, and took the form of a weekly flyer, direct mailer, or newspaper advert. The adage: “Stack ‘em high and watch ‘em fly” was a popular tactic deployed in store aisles across North America.
Today, with the advent of mobile and social media, the tables have dramatically turned. Customers hold a lot more clout. Through Facebook, Twitter, Instagram, e-commerce and a bevy of other channels, they are able to communicate with retailers and other consumers. Customers frequently use a variety of digital channels to share their product and retail experiences. Are you a retailer who is able to quickly and effectively make sense of this entirely new retail environment?
It can be quite complex to manage. The never-ending list of new data and communication points require a new set of tools and skills. Current Analytics and Business Intelligence systems can integrate online and offline data to provide a deeper understanding into how consumers are shopping. Are you curious to learn more about such systems? If so, check out this post.
2. Merchandising Teams Power Retail:
The merchandising teams within retail organizations have always had the difficult job of sourcing products, negotiating with vendors, planning assortments, designing promotions and staying innovative. This is no easy task. Category Managers, Buyers, and Brand Managers are the merchandising professionals at the heart and soul of a retail organization.
Historically, these roles leveraged sales data from “pre-canned” reports to provide information about what was happening in their businesses. However, completing any custom analysis that answered key strategic questions was no easy feat. As insight rarely comes from a single source of data, analytics required time and savvy negotiation skills to access data that lived in organizational silos. While at one of Canada’s largest general merchandise retailers, it took me over six weeks to gain access to data held in the credit card division to perform a key piece of research.
Luckily, we are now beginning to see some relief. Aggregation tools that consolidate data from POS, CRM, Credit Card and Loyalty Programs among others, help simplify retail consumer insights. Some of these tools also enable the data to be modeled more efficiently to provide visual understanding and trend analysis.
Unfortunately, Category Managers rarely have time to learn how to use these tools. The experts able to navigate the data landscape often sit outside of core merchandising teams. Retailers must be mindful of who the internal users of data insights are and how to best enable their merchandising teams. Often, expensive technology is not the best solution and an option, such as automated analytics, would yield larger gains.
3. Price Matters. Value Matters More:
Price is a retail fundamental. If you don’t get pricing right, you will end a retail casualty. Why? Comparative Pricing information is widely available today. In fact, more and more consumers are using their smartphones to compare your prices when they are in YOUR store aisles! Pricing perceptions were a thorn in the side of Target Canada. Even when they fixed their price issue, consumer perceptions about price persisted. Large retailers dedicate whole teams to price competitiveness. How much time are you spending to ensure your products are priced right?
Having the lowest prices is a good way to combat competition, but it is not the only way or even the best way. To last in this information rich world, you must also offer value. Value exists when the benefits received is perceived to be greater than the price paid. However, the problem for many retail marketers is that benefits are defined differently for different customer segments. What matters to one, does not rank as high for another. What has always been consistent, however, is the necessity of offering value to your customers in every way possible. Even outstanding customer service can be considered a value-add, and value will always remain most important for differentiation.
So, how do you differentiate on value? You’ll need to get into the data. With so many internal and external data points, technology tools can help you determine what your customers value. Some may love a certain brand and would value an exclusive in-store event with reps or celebrities. Others value socializing with people who share their passion for an activity. Performing data based customer segmentation is a great place to start understanding customer interests based on purchasing patterns.
4. Supply Chain & Store Operations Are As Important As Ever:
Procurement, supply chain, logistics, and store operations: These are the unsung heroes of retail and always will be. Without these processes working seamlessly, retailers would grind to a halt. In an omni-channel world, these processes are key for success.
Imagine how you would feel showing up to your local grocery store on a busy Saturday, only to find gaps on the shelves or products on promotion selling out with 6 days left of the week’s sales? Pretty frustrated, I’m sure.
There is a lot more that goes on behind the scenes than consumers are aware of. With so many retail options today, it is absolutely critical that retailers have “the right product available at the right place at the right time”. With the newer “Pickup in store option” which allows in-store pick up of online orders, supply chain and store operations are being given a run for their money in terms of accurate inventory replenishment. Systems and people need to be linked to real time information in order to meet omni-channel demands. Bringing data together from across the organization and breaking down organizational silos with weekly routines will be a key for success in this new environment.
5. Location, Location, Location!
It’s a seemingly straightforward concept – a good location is a must! But all too often, retail stores fail due to lack of foot or car traffic. What’s worse, stores have become so large and crammed with product, it is sometimes difficult for customers to find the product they want once inside.
Despite the rapid growth of e-commerce 80-90% of sales are still recorded in brick and mortar stores. Retailers must continue to make it easy for customers to find their stores and the products they are looking for within those stores. Improved store layouts, touch screen displays, and beacon technology, together can help achieve and enhance the in-store experience. Imagine a world where you type in the product you’re looking for as you enter a store and you get an exact aisle and location for that product. Or, you also get informative videos about how to use or install the product. This blend of digital and physical retail makes for a greatly enhanced experience.
The More Things Change, The More They Stay The Same.
So there you have it, five things in retail that have not changed. Despite ever-evolving technology, core retail fundamentals remain constant. It’s extremely rewarding to be helping develop the very tools that enable retailers achieve their goals within this new digital reality.
Did you find yourself nodding in agreement as you read the observations above? If so, I’d love to hear your stories or other retail fundamentals that have not changed in the digital era. Let me know by leaving some feedback below, or by sending me an email at email@example.com. If you liked this article, please give it a thumb up below.