Fo­cus on con­sumers at this dif­fi­cult time

Pro­mo­tions need be aligned with the unique con­sumer ex­pec­ta­tions in th­ese cautious

Progressive Grocer (India) - - Memory Lane -

The cur­rent eco­nomic slow­down seems to be build­ing panic across busi­nesses, and no less in re­tail. Like busi­nesses in all other sec­tors re­tail­ers also seem to be look­ing at con­trol­ling op­er­a­tional costs as the top pri­or­ity. Re­cruit­ments are frozen; or­gan­i­sa­tional struc­ture and busi­ness strat­egy is be­ing re­viewed and vi­a­bil­ity of low-per­form­ing stores is be­ing scru­ti­nised very closely.

In fact, many chains have al­ready an­nounced that they will be clos­ing some of their stores. It is the re­tail­ers’ fear of dras­tic re­duc­tion in sales num­bers that is lead­ing to this panic.

How­ever, no one is sure whether the Septem­ber, Oc­to­ber and Novem­ber sales fig­ures are at all in­di­cat­ing a slow down and whether the cash reg­is­ters have been af­fected – yet.

The in­dus­try tar­get of achiev­ing over US$ 50 bil­lion rev­enue from mod­ern re­tail by 2011 still seems to be re­al­is­tic which means mod­ern re­tail is here to grow. How­ever, a change in con­sumer buy­ing be­hav­ior is ex­pected to emerge very soon, and ev­ery con­sumer will be much smarter with their wal­let and look for higher value for money spent. Con­sumer traf­fic in mod­ern re­tail is ir­re­versible and con­sumers will con­tinue to ex­plore des­ti­na­tions to ex­tract the best value for their shop­ping spend.

Large play­ers which have in­vested in their core in­fra­struc­ture in­clud­ing sup­ply chain net­work will be look­ing at re­vised growth strate­gies. This should be seen as a phase in which some ex­cit­ing op­por­tu­ni­ties have emerged for re­tail­ers. Since the panic has been trig­gered by an an­tic­i­pated drop in con­sumer spend, this can be a great op­por­tu­nity to take an­other look at the busi­ness strat­egy with the con­sumer firmly at the cen­tre this time.

Re­tail­ers must now be­gin to start giv­ing im­por­tance to in-store ser­vice as the first step in this di­rec­tion. If re­tail­ers are able to de­velop a clear vis­i­bil­ity of what ex­actly con­sumers ex­pect from their brand, it will help them to de­sign and im­ple­ment ef­fec­tive cus­tomer-ser­vice pro­grams for the store staff. They will also be able to put in place an ef­fec­tive sys­tem to de­liver con­sis­tent and mea­sur­able ser­vice.

Con­sumers are likely to choose shop­ping des­ti­na­tions with pleas­ant mem­o­ries and avoid those where they have had not very good ex­pe­ri­ences. The fi­nan­cial ef­fect of a poor con­sumer ex­pe­ri­ence can be very dam­ag­ing even though it may not be vis­i­ble in a short span of time. Con­sumers are typ­i­cally likely to visit a de­part­ment store only once in 3 or 4 months and it would take a few months be­fore the bad ex­pe­ri­ences are re­flected in lag­ging sales. By then it would most likely be ir­re­versible, and would cer­tainly re­quire a great deal of ef­fort and ex­pense to ad­dress.

To pre­vent such con­sumer ero­sion, re­tail­ers must put a com­plaint man­age­ment sys­tem in place. This would pro­vide a lis­ten­ing post for is­sues at the store, city and re­gional lev­els. To be truly ef­fec­tive, such a sys­tem must promptly route com­plaints to the ap­pro­pri­ate busi­ness role and en­sure timely re­sponse and man­age­ment ac­count­abil­ity.

The next step re­tail­ers must take is more crit­i­cal. They must set up a sen­si­tive mea­sure­ment sys­tem which is alert to un­writ­ten com­plaints that oc­cur when the prom­ise of a great shop­ping ex­pe­ri­ence is not met. While a com­plaint man­age­ment sys­tem picks up only rou­tine fail­ures (such as non­avail­abil­ity, staff ser­vice etc.) fail­ures in pro­vid­ing ex­cel­lent ser­vice dur­ing each and ev­ery con­sumer trans­ac­tion cre­ates silent com­plaints. As th­ese com­plaints ac­cu­mu­late they can be­come po­ten­tially very dam­ag­ing for the busi­ness.

Hav­ing cov­ered in-store ser­vice as­pects and re­lated prac­tices, re­tail­ers will need to now fo­cus on mak­ing ef­forts to­wards con­sumer-ori­ented mer­chan­dise-plan­ning, mer­chan­dise al­lo­ca­tion and pric­ing and pro­mo­tions prac­tices. Dur­ing this time when ev­ery con­sumer is ac­tu­ally count­ing the bas­ket

If re­tail­ers are able to de­velop a clear vis­i­bil­ity of what ex­actly con­sumers ex­pect from their brand, it will help them to de­sign and im­ple­ment ef­fec­tive cus­tomer-ser­vice pro­grams for the store staff.

value while shop­ping, we ex­pect that con­sumers would not in­dulge much in im­pulse buy­ing, and most of the money they spend in a store will be as per their planned shop­ping lists. This can be a great op­por­tu­nity to en­hance bas­ket value by de­liv­er­ing a great con­sumer shop­ping ex­pe­ri­ence. Us­ing his­toric shop­ping data of dif­fer­ent con­sumer groups and pro­files, re­tail­ers can drive ac­cu­rate mer­chan­dise plan­ning and al­lo­ca­tion mod­els to en­sure that mer­chan­dise avail­able in the store will lead to a near match of the planned shop­ping list each con­sumer car­ries. This will not only en­hance the con­sumer shop­ping ex­pe­ri­ence but also help to make in­ven­tory and sup­ply-chain cy­cles more ef­fi­cient.

This deeper in­sight into con­sumer needs will also help re­tail­ers de­sign tar­geted pric­ing and pro­mo­tions for each group and pro­file of con­sumers. To­day, con­sumers are used to shop­ping as per gen­eral pric­ing, or on pro­mo­tions in­tended for all con­sumers vis­it­ing the store. Many of th­ese pro­mo­tions are not pop­u­lar since they do not meet con­sumer ex­pec­ta­tions nor align with shop­ping lists.

Once the pro­mo­tions are de­signed based on con­sumer needs they will not just be more ef­fec­tive but also en­hance trust be­tween the con­sumer and the re­tailer.

Fi­nally, this deeper un­der­stand­ing of con­sumer buy­ing habits will also build suf­fi­cient knowl­edge at the re­tailer end to de­velop a con­sumer-spe­cific pri­vate la­bel for each cat­e­gory, and this can help re­tail­ers to broaden their pri­vate-la­bel port­fo­lio. This will not only lead to meet­ing con­sumer de­mands com­pet­i­tively but also cre­ate new op­por­tu­ni­ties for in­creased prof­itabil­ity.

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