The idea that retailers need to put the customer at the center of their activities – being “customer-centric” in industry parlance – has been around for years. But what does it really mean? And is anybody really doing it well?
To find answers, Demandware partnered with The Economist Intelligence Unit to survey 300 senior retail leaders. The report, Finding Retail Growth: A View from the Corner Office, highlights the most significant disruptions facing the industry and provides their strategic and tactical plans to compete, grow, and transform.
In light of our democratized world of retail, where customers control the terms of engagement, retailers are going back to the basics, focusing on: product excellence (defined as high-quality, unique or innovative products); seamless service (defined as providing high-quality service or service across channels); and value for money paid as the most important sustainable ways to differentiate their brand.
In a world obsessed with the latest whiz-bang gadgets and services, focusing on products, service and value can seem almost quaint by comparison.
While products and service have been at the top of any executive’s checklist throughout retail history, increased customer access, control and technology have created a significant amount of friction throughout the shopping experience. This has forced retailers to take a customer-centric approach to these traditional retail verities.
Len Schlesinger, former Vice Chairman of Limited Brands and a Demandware board member, points out that this shift is easier said than done. “It’s like losing weight. Everyone knows that diet and exercise will get you there, but very few people actually do it.”
So, what does product excellence, seamless service, and value for money paid look like when it’s filtered through a customer-centric lens?
- Product Excellence: Designers and general merchandise managers can no longer cling to a “build it and they will come” mentality. We live in a demand-driven world, one where product lifecycle management must be more agile, responsive, and innovative. The new battle ground for excellence will be fought on the grounds of fast fashion, mass customization, and configuration. Some examples: NYX Cosmetics’ extensive use of user-generated videos, which have enlightened the company about unexpected ways customers use its products, and may help inform product development. New Balance (sneaker configuration) and Hallmark (personalized books) retooled their design and supply chain process to accommodate their customer-centric merchandising initiatives.
- Seamless Service: Traditional and reactive tactics can no longer yield seamless service in world where consumers are buying across an increasing number of channels: mobile, social media, search, etc. Retailers must fully understand each customer’s profile, history, and preferences to proactively provide personalized service throughout their physical and virtual shopping journey. With more than 90% of retail sales happening in physical stores, store associates – the biggest brand ambassadors – must be armed with this intelligence and be untethered from the cash wrap to engage consumers on the floor. An operational shift from check-out to check-in – like what True Religion has done by “slowing the consumer down” – is required to serve time-starved customers who probably started their shopping journey somewhere online before setting foot in the store.
- Value for Money Paid: The increased emphasis on value is one response to competition from global marketplaces, which are quickly gaining market share in many categories and geographies. But the concept of ‘value’ can be nebulous and subjective. Retailers must emphasize value as well as quality to avoid a race to the bottom on price. Value is often created by providing an experience, supported by rich content and active communities, where consumers can engage, learn, and become advocates of the brand. Fender Guitars, for example, has leveraged content and stories from their loyal community to help other guitarists get the most of their experience. The music instrument icon learned quickly that significant and authentic value was harnessed by enthusiasts for enthusiasts.
There are countless technologies that help retailers to make their business more customer-centric; personalization, geo-location, etc., and they are enormously valid, empowering and relevant. However consumers are still human, and value the same fundamentals today they did decades ago. Retailers would do well to strike a healthy balance between the two.