Adapt­ing to a chang­ing re­tail land­scape

As­sort­ment mat­ters — it is one of the three in­flu­en­tial rea­sons why con­sumers pick a par­tic­u­lar store to shop. More than half of the re­spon­dents (54%) said their store-se­lec­tion de­ci­sions were in­flu­enced by whether the store had the prod­ucts they wanted r

Business World - - SPECIAL FEATURE -

IN THE past decade or so, the mod­ern re­tail model has evolved from the as­ser­tion that big­ger is bet­ter. Ac­cord­ing to the Nielsen Global Re­tail Growth Strate­gies

re­port pub­lished last year that polled more than 30,000 on­line con­sumers in 61 coun­tries, in­clud­ing the Philip­pines, sup­ply chain process im­prove­ments have made it pos­si­ble to achieve sim­i­lar or even higher lev­els of prof­itabil­ity with smaller stores.

Of course, the change is not ex­actly a boon to big- box re­tail­ers. And, the re­port noted, the re­tail en­vi­ron­ment today is more frag­mented than ever, with fierce com­pe­ti­tion for shop­pers lead­ing to a de­pen­dency on pro­mo­tions among large re­tail­ers.

The sur­vey sought to un­der­stand the pain and the plea­sure points about shop­ping ex­pe­ri­ence. It ex­am­ined the ex­tent to which re­tail­ers were meet­ing con­sumers’ needs and con­sumers’ store pref­er­ence, among other things.

“How can re­tail­ers stay ahead in the rapidly chang­ing land­scape? They can start by as­sess­ing how well they’re do­ing now. What do con­sumers think about the shop­ping ex­pe­ri­ence, and how well do they think their needs are cur­rently be­ing met?” the re­port said.

Many con­sumers be­lieve that re­tail­ers do not un­der­stand and de­liver on their needs. For in­stance, only 49% of the sur­vey re­spon­dents be­lieved that their main gro­cery re­tailer al­ways or mostly com­mu­ni­cated with them in a rel­e­vant way, while 53% said re­tail­ers al­ways or mostly un­der­stood their gro­cery re­quire­ment. It is worth not­ing that the sen­ti­ment was not the same ev­ery­where; com­pared with re­tail­ers in Europe and Latin Amer­ica, re­tail­ers in North Amer­ica, and to a lesser de­gree in Asia-Pa­cific, seemed to be do­ing a bet­ter job.

Price, as ev­ery re­tailer knows, is im­por­tant; “it has been and al­ways will be,” the re­port em­pha­sized. When it ex­am­ined the fac­tors in­flu­enc­ing pur­chas­ing de­ci­sions for 19 prod­uct cat­e­gories, the re­port found that price was one of the top two at­tributes with in­flu­ence on prod­uct se­lec­tion among global re­spon­dents, along with taste for ed­i­ble prod­ucts and brand name for non-ed­i­bles.

“But, as smart re­tail­ers have long known, price and value aren’t the same thing,” the re­port said. “When it comes to store se­lec­tion, price-re­lated at­tributes fall be­low sev­eral oth­ers.” Among the fac­tors that the sur­vey found to be highly in­flu­en­tial in deter­min­ing where to shop were high- qual­ity pro­duce, con­ve­nient lo­ca­tion and prod­uct avail­abil­ity.

Gen­er­at­ing de­cent re­turns on trade pro­mo­tion spend, the re­port noted, is in­creas­ingly hard. “Know­ing which cat­e­gories are more or less sen­si­tive to pric­ing changes is es­sen­tial for break­ing the pro­mo­tion ad­dic­tion and driv­ing growth,” it added.

Re­tail­ers have to un­der­stand what con­sumers say they would do if prices were to in­crease by 10%. Nondis­cre­tionary items like dairy, fresh foods and per­son­al­care prod­ucts are less price sen­si­tive than dis­cre­tionary items like con­ve­nience foods, snacks and al­co­holic bev­er­ages. “For the most part, how­ever, con­sumers aren’t cut­ting out cat­e­gories al­to­gether. Rather, they’re sim­ply buy­ing less,” the re­port said.

When it came to health and well­ness, a top pri­or­ity for con­sumers around the world, 67% of the global re­spon­dents said they ac­tively sought prod­ucts with health­ful in­gre­di­ents, 62% said they read nu­tri­tional la­bels care­fully, and 45% said there were not enough health­ful op­tions avail­able to buy.

“Health and well­ness isn’t just a niceto-have ben­e­fit for con­sumers. It’s a key con­sid­er­a­tion in both store- and prod­uct-se­lec­tion de­ci­sions,” the re­port said. In Asia-Pa­cific, re­spon­dents were par­tic­u­larly con­sci­en­tious about the in­gre­di­ents in the ed­i­bles they con­sumed. Ac­cord­ing to the re­port, across the 19 cat­e­gories ex­am­ined, all- nat­u­ral and or­ganic in­gre­di­ents were rated as more in­flu­en­tial in prod­uct se­lec­tion de­ci­sions in Asia-Pa­cific than glob­ally.

Cater to con­ve­nience. “With life mov­ing at hy­per­speed, con­sumers crave con­ve­nience for ev­ery­thing from choos­ing the stores they shop in to buy­ing the foods they eat,” the re­port said. Fifty-six per­cent of global re­spon­dents said con­ve­nient lo­ca­tion was highly in­flu­en­tial in their de­ci­sion to shop at a par­tic­u­lar re­tailer. The other in­flu­en­tial fac­tors were an or­ga­nized lay­out that made it easy to shop and the abil­ity to get in and out of the shop quickly.

As­sort­ment mat­ters — it is one of the three in­flu­en­tial rea­sons why con­sumers pick a par­tic­u­lar store to shop. More than half of the re­spon­dents (54%) said their store-se­lec­tion de­ci­sions were in­flu­enced by whether the store had the prod­ucts they wanted reg­u­larly in stock.

“Car­ry­ing the right se­lec­tion of prod­ucts, how­ever, is a care­ful bal­anc­ing act, as con­sumers are look­ing for more than just their fa­vorite go-to prod­ucts,” the re­port said. Many of the global re­spon­dents said they of­ten tried new brands, ow­ing to a bore­dom with the same old things and a lik­ing for va­ri­ety.

Re­tail­ers would also do well to know that con­sumers are never sat­is­fied with the sta­tus quo, as demon­strated by the growth of niche re­tail­ing op­tions and pre­mium prod­uct of­fer­ings. “The way to stay rel­e­vant and con­nected to ever- chang­ing con­sumer de­mand is to con­tin­u­ally lis­ten, learn and adapt to pro­vide the prod­ucts and ser­vices that will keep con­sumers sat­is­fied and com­ing back time af­ter time,” the re­port said. The most pop­u­lar in-store ser­vices with the sur­veyed con­sumers were bank­ing, pre­pared food and phar­macy.

Newspapers in English

Newspapers from Philippines

© PressReader. All rights reserved.