The retail landscape is in massive flux. Customers’ buying habits are evolving as new technologies and trends emerge, so to achieve retail success, merchants must not only keep up with these changes, but they must also figure out how to capitalize on them.
To help you accomplish this, Vend caught up with Stephen Mader, Vice President of Digital Insights at the top retail consultancy firm Kantar Retail. Stephen is a leading expert on eCommerce, multichannel retailing, and Amazon.com, and he guides Kantar Retail’s research into how technology impacts retail.
We asked him to share his thoughts on the evolving habits of consumers and what retailers can do to stay competitive. Check out what he has to say below:
How have customers evolved over the past few years?
When asked about the changing habits and preferences of consumers, Stephen started off by saying that the fundamental factors behind shopper behaviors haven’t changed. “The underlying drivers of consumer and shopper behaviors are still the same. Shoppers still want to save money when they go shopping, they want to have a bit of an experience, and they want something that’s convenient and saves time,” he explained.
Previously, “convenience” meant going to supercenters or hypermarkets, because everything is all in one place. However, Stephen said that is no longer the case. “Increasingly, we’re seeing that the idea of one-stop shopping convenience is no longer happening in one specific retailer. It’s continuing to fragment across different retailers and different channels.”
Competing in the modern retail landscape
So, what can retailers do to keep up with the above-mentioned changes? Stephen recommended the following:
Before anything else, understand your customers
The first step, according to him, is to understand your customers: “Retailers have to understand their customers’ needs. They have to understand what’s going on in their lives and where their expectations are being set.”
You also need to figure out “what your shoppers are trying to accomplish with going to your store, and you need to make sure you can tailor your offers to what that shopper is going after.”
There are plenty of ways to gain a deeper understanding of your shoppers. Surveys are a great start, said Stephen. “It could be something as simple as sending an online survey to your most loyal customers.”
In addition, he emphasized the importance of having a good Customer Relationship Management (CRM) system. “I think having a very strong CRM solution and a communication system on top of that CRM is a very important capability to have in this day and age.”
He adds that leveraging your CRM system both online and in-store, and then empowering your employees to use it, can do wonders for the customer experience.
As an example, Stephen talks about TM Lewin, a suit retailer in the UK. According to him, TM Lewin arms its associates with iPads that can be used to pull up people’s order history and preferences. This enables them to recognize customers and tailor their approach accordingly.
On top of using their CRM system, TM Lewin associates are also trained to recognize visual and communication cues to determine how to interact with each shopper. For instance, they can tell if a customer just wants to get in and out of the store, or if they’re open to upsells or having a chat in the shop.
Don’t compete on price alone
“It’s very difficult to compete in today’s marketplace on just price alone,” said Stephen. “Amazon [or a similar retail giant] can simply come into the market, come into your category, and disrupt the economics of price in your category.”
“That’s why competing on price is no longer good enough. You need to be able to compete through creative assortments, expertise level, service inside the store, or even theatrical environments. You have to make sure that the shopper has a reason to invest time to go to the store or your web platform.”
Be a category specialist
Being an expert or category specialist is another good way to compete, Stephen advised. “If you can extend your expertise to shoppers through a curated selection of items, that is very, very powerful. See, shoppers have so much information that they are overloaded all the time, so being a specialist is one of the best ways to differentiate and compete against retailers like Amazon.”
“A retailer can say, ‘I’m an expert in fashion, or I’m an expert in eyeglasses (e.g., Warby Parker). I’m not going to give you every single choice out there; instead, I’m going to give you these five choices. And these are the five that I know you need, because you either filled out a form or you checked out a style guide, or because I’m just an expert in this specific category, and I know the trends and what to recommend for you.’”
Use technology to speed up the path to purchase
The retail world is buzzing about a lot of new technologies. There are beacons, 3D printing, mobile, and more. But which of these tools are actually worth investing in? We brought this up with Stephen, and he said that the types of technologies that will win in the future are the ones that make the shopping experience faster and more convenient.
“You can’t use technology to slow the shopper down or disrupt them while inside the store. Shoppers are too smart for that, and they’re over it,” he said.
“One of the reasons why we’re seeing a slower rollout for technologies like beacons is that they’re being used to push offers—and that may not be what shoppers want. That’s why I think we’re going to start seeing retailers using things like beacons as more of a customer experience or customer service tool rather than using it for promotional purposes.”
He also mentioned that it’s going to be the subtle back-end innovations rather than the sexy front-end ones that will really make a difference for both retailers and consumers.
Retail role models
When asked about retailers who are thriving in today’s market, Stephen said that the merchants who will win in the modern landscape are those who can save shoppers time or money. (Hint: Helping customers save money isn’t necessarily about lowering your prices.)
One example of a merchant that does this is the shopping club Jet.com. According to Stephen, the company “is playing with different levers of immediacy and convenience to help bring costs down for their customers.”
For instance, Jet.com gives members the option to waive returns on individual items or switch payment methods in order to lower costs.
“I also really like what Walgreens has been doing,” he said. “They understand how and why shoppers are going to Walgreens—whether it’s for prescription refills, for photos, or health and wellness. And they’re also using a mobile app as the center point for all of that, as a platform for communication and access into the Walgreens eco system.”
While shoppers can use the Walgreens mobile app to purchase products, they still get a lot of value from it. For example, they can order prescription refills, get reminders to take pills, or use loyalty coupons.
Stephen certainly provided a wealth of insights into modern shoppers, and we hope that his advice and examples can give you some ideas on how you can engage and convert your customers in this day and age.
If you have any questions or can name other merchants who are killing it in modern retail, be sure to leave a comment below.
About Francesca Nicasio
Francesca Nicasio is Vend's Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She's also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.