Retailing - Getting it right from customers perspective!

Looking at the normal value chain of activities, retail is actually a very complex business to be in. Both manufacturers and consumers, which lie at either ends of the value chain, enjoy a great level of discretion when it comes to decision making. Manufactures to a great extent have the freedom to choose or alter their target customers, change product formulations and most importantly, have margins under their control. Consumers on the other hand are the czar of their own wish. They can choose which products, which brands, what quality, what price and from which points (retailers) to buy.

Stuck between them are the bewildered retailers having little choice available from either side. They have to stock the goods which customers want to buy (even if they offer low margins where other higher margin options are available) else they fail to build patronage amongst them. In most cases they have to stock what existing set of manufacturers produce (even if that is not something their customers are exactly looking for).

Add to this the increasing competition both from existing domestic players and the likely entry of global giants, lives of retailers is in anguish.

A lot has been written and researched on what they should do in order to sustain the wrath of competition and maintain profitability. But what all has been done till now, is limited to what retailers should do with whatever limited resources they have. This school of thought though is wise on judgement and suggestions, but fails to undertake the customers’ perspective. Retailers often state that they understand their customers and they conduct researches to know what they are actually looking for, but most of them fail to act upon it.

All the research and understanding remains on one side and retailers act for short term profits losing sight over what is required in long run to survive i.e. customer advocacy.

Let us try to see the situation from a little different angle and see what goes around in a customers’ mind when it comes to choosing and patronising a retailer and also see what the implications for retailers are.

Customers always look for experience and choose a retailer who can provide the experience they truly desire. They never buy only a product but along with it all the attributes in terms of service, store image and other related intangibles which form an attractive whole. In some cases the whole is something which the customers never know or even fail to express, but they become happy when they get it.

Retailers can concentrate on creating such an experience by touching all five senses of customers. Attract their vision with state of the art display & decoration, mesmerize them with the music they love, win them with cosy feel & comfort they fall for, enthral them with pleasing aroma and let them taste the excitement you have created for them. Do it all and they are madly yours.

Customers normally see or consider shopping as a way of self expression. They evolve in their life with new habits, changing tastes, advancing lifestyles, emerging aspirations and thus their expectations from shopping as an act and retailers evolve too.

With all this, it becomes imperative for retailers to stay relevant to them. Customers are never going to go to retailers and tell them the changes they expect, it will always have to be the retailers to keep the track of the change in customers lives.

To face this challenge, retailers will have to continuously research & understand the ‘changing customer’ and operationalise this understanding by incorporating required changes in their store positioning & imagery, store personality, store emotions and relationships it wants to build with customers.

Another interesting thing about customers is that it is very difficult to please but very easy to annoy them. This is to an extent that even a little undesired or unpleasing act done by retailer will ruin years of efforts and investment put into building a happy customer.

It is important for retailers to understand that customers are no kids and they hate being told a new story every other day. They expect consistency of experience every time they visit a store. Imagine a retail store which has long positioned itself as a low price retailer with average level of services (RVP). Customers learnt and imbibed this RVP with their interactions and experiences with the store. One fine day, the retailer changes its positioning to a quality store with above average prices. Customers will feel a bit disheartened but will try to adjust with the new positioning due to their long & satisfying relationship with the store. Sometime later, the retailer again changes its positioning to a high quality high price retailer, but this time customers are not likely to adjust, they may unpatronize the store or in worst case spread a bad word of mouth about the store.

It has implications for a retailer in the context that it should very thoughtfully devise a positioning strategy and stick to it until some mammoth factors forces it to change. The retailer will have to strike a fine & delicate balance between staying relevant by changing and resisting the temptation to change its positioning often to prevent disdain amongst customers.

I stated earlier that customers are not kids and hate being told newer stories, but there is one more side to it which says that customers are just like kids and expect parenting behaviour from their retailers. It has been observed that in a rush to attract more & more new customers, retailers fail to maintain relationship with their existing customers.

In a country like ours where online shopping has not gained much wide acceptance and physical shopping at stores is still an inseparable part of daily life; customers can be understood as very emotional beings who shop with less of reasons and more of heart. They establish a sense of bonding with the places they shop and expect similar involvement from the retailers. In such an environment chasing new customers and giving little regard to the existing ones is like parents starting to love the new born baby and forgetting the whereabouts of their earlier kid. It does not seem to be much acceptable and retailers must understand that existing customers are the biggest asset they have created and belittling them for new ones is a sure shot strategy for a business failure.

All said than done, understanding customers was and always will be a complex process and retailers will have to think like customers, if they want to stay in business.