Believe it or not, but the other day I had to clip a retailer behind the ears because he believed that their business was still suffering the impact of the GFC. I had to remind them that the GFC was officially regarded as the period 2007-2011 and it is now 2017.
I also had to remind them that the world had moved on, there was significant increased competition in their category, customers were better informed and more promiscuous and the internet meant that the shoppers have an eye to the world of options. Possibly more importantly, this retailer had not evolved or invested in the business, rather pouring all their dollars into the heroine of marketing communications without investing in the brand, the experience, their people or the infrastructure that supports their business.
Like a broken record…. To shop is to visit. To buy is to purchase. Our clear goal as a retailer is to turn shoppers into buyers. Unless you make a remarkable impression then all traces of any interaction you have with your potential shoppers whether it be marketing communications, your store, whatever, will have no lasting impact.
Now back to my GFC-blaming retailer; there is some influence the GFC has had on the retail sector in NZ that is still having an impact for some. That is the tightening of the purse-strings and continued underinvestment in the critical requirements for retail.
I do understand how this came about as I think of decisions I had to make as a retailer in the GFC. “We need to tighten our belt this year and only have $2 to invest. Do I put it in my retail asset, my systems and processes, my people or understanding and engaging with my customers better?” $2 ain’t much so often it was $1 each way on whatever would have the best short-term impact (often lipstick on a pig and some more “advertising” to drive sales).
The trouble that is now sitting within the NZ retail landscape for many is that the change and improvements required to evolve their systems and processes (business information systems, data warehouses, enterprise solutions, merchandising platforms), or capital investment necessary to ensure the physical assets are not only acceptable and not outdated, let alone evolved to enable strong conversion with shoppers feels out of reach. Let alone the requirements to provide a seamless customer experience or investment in our people to ensure they have the skills, capabilities and knowledge to make a difference (and feel engaged).
Is there a way out? How do you make the step forward and stop the dollar each way?
There is no hard and fast rules because every retailer’s situation is different but here are some considerations and observations to guide decision-making and prioritisation.
Systems and processes
Today there are many business information and technology solutions that are either a SaaS (software as a service) solution or at a significantly lower cost of entry than in the past. When reviewing the alternatives there is often “we do things differently in here. That won’t fit with the way we do things. We will need to make changes for it to work” without actually considering should we be reviewing the way we do things so that we can link into these systems/process easily? Are we still doing things the same way we did 10/15 years ago and the world has changed?
Retailers must review their interconnected internal systems and process “the way we do things” considering how change and improvements can be made to optimise these solutions simply, easily and efficiently and commit to change. The opportunity costs of having to invest in change management vs. the expensive costs of bespoke systems or even worse, shadow processes (aka work arounds) impacts the long term effectiveness, efficiency and profitability of your business.
Gone are the days of being all things to all people. If you take approach you will be stuck in the middle. Also trying to get the 35-54 Household shopper with kids is not a customer.
Attitudes, behaviours, socio-economic markers are what clusters customer tribes. If you want to connect with those shoppers, or even understand what customers you don’t have - you need to understand what they think, feel, say and do. If you don’t it’s like hoping in a car driving toward a destination with no idea of where you are going or when you will get there. Customer insights are critical to know what you are doing well, could do better or identify opportunities to convert shoppers into buyers and make more money. It will enable focus.
A strong retail brand is about differentiation. What is the difference you make in the lives of your shopper and how do you articulate that? It might be great if I can sit with you and you explain what your brand stands for but that doesn’t matter. It’s what customers have to say. If they can’t articulate it you have failed.
It’s not a logo or advertising, it’s the culmination of key touchpoints on the path to purchase that forms the perception of the brand. Are you investing in these and know what they are?
Your team – the people at the coalface who fundamentally impact satisfaction. Training, development, communication, engagement.
The store fit-out and experience - is it engaging, respectful, innovative or even just clean, tidy and consistent?
Consistency – do you deliver the brand experience consistently. Is there a thread that means you walk the talk and say what you do? Years ago, Postie+ advertised their new look brand, fabulous advertising with great new look merchandise only to be lured to the store to find a new coloured sign on the exterior, a new logo and catalogue and a crappy unchanged store experience with none of the alluring new stock easily found (or available).
I’d suggest that the dollar each way approach is not one to continue, much the same as my retirement investment is a lotto ticket each week.