The Changing Consumer
By Sarah E Taylor-Oracle on Jan 28, 2011
At the World Retail Congress in October, I had the opportunity to chair a panel that explored how retailers can better interpret new customer trends and behaviors that have materialized in this post-global recession era. The retail industry has in effect been redefined by a number of macro-economic, socio-demographic and consumer technology dynamics over the last couple of years and consumer behaviour is very different now.
The information explosion has given consumers the control - they can find the best price, the best products and the best services through any venue. For retailers, this means that the customer experience is the last lever for differentiation and the shopping experience they offer must be ubiquitous and seamless in order to be successful.
So what are retailers doing to create loyalty and relevance in an environment such as this that is shifting, complex, competitive and challenging?
We are seeing two key trends - the first is that retailers are re-aligning their operations to service consumers' needs. By realigning business processes, organizational structure and systems together, retailers can deliver a modern consumer shopping experience. This means making the organizing principle of the retail business, the customer and channels, rather than what has traditionally focused on product and store - or in other words evolving from product centricity to customer centricity. It means focusing more on new growth avenues and selling more to existing customers rather than scaling the business to open new stores for the "average customer."
There are three big initiatives that retailers can consider implementing to combat this growing trend:
· Merchandise to the customer, not the category: Place the customer at the centre of the business, identify the problems they need solving and think holistically in terms of merchandising strategies.
· Think in terms of a customer fulfillment chain instead of a supply chain: Deliver merchandising strategies with systems that optimise every aspect of the supply chain in the service of the customer - ensuring the customer can get the item they need any time, any place.
· Maximise every interaction with core customers within every channel to build loyalty and share of wallet: ensuring the customer can buy anywhere and return anywhere.
The second trend we are seeing involves redesigning the brand experience for the consumer. The phenomenon caused by the information explosion online has the capability to diminish a retailer's brand value. If the consumer can rely on other consumers to tell them where to find a product at the price they want, then why is brand important? With pervasive information and a proven multi-channel proposition, retailers may become more of a warehouse or collection point, fundamentally changing the value and significance of their brand.
However, those retailers that are adapting to partner with their customers or 'consult' rather than 'sell' to them can create a differentiated proposition and combat these market dynamics. Apple and Amazon are well known examples of this, as is Nordstrom in North America which creates relationships with its customers, trying to understand their needs, solving their problems.
I'd be interested to hear from you - from your perspective, which retailers are managing this transition well? Which retailers are developing relationships with their customers at a different level? Please use the comments below to let me know.