With large stores continuously slashing prices, it’s pretty hard to lower the prices any further. With the accessibility of these low prices to everyone the question arises how important is offering value-added promotions to the client? Clare Rayner, writer of the Retail Acumen blog made an interesting observation from the Multi-Channel Retail Summit that he attended in England. The keynote speaker was Doug Gurr from Walmart. In his speech Mr. Gurr noted that in Japan, mobile technology allows shoppers to scan barcodes of items in stores and that an app provided by Amazon allows shoppers to compare the in-store price with Amazons’ price. This kind of pricing transparency is a reality and will become available to everyone carrying a smart mobile device.
On the other side of the Atlantic Ocean, the National Retail Conference was taking place and Winston Weber, a speaker, cited a study that showed 50%-60% of all shopping decisions are made at the retail store. Therefore, the store remains important to retailers. He also feels that while value-added promotions may not be effective, retailers must begin to promote what he calls solutions. That is, retailers must become their own ‘retail consultants’ and begin to develop a shopper centric retailing model. This requires developing a shopper solution strategy so that the shopper feels that the trip to the store has been productive. The trick is that this requires a new creative approach to the merchandising process.
Merchants and their category managers should refocus their efforts from obtaining the best deal from suppliers to developing retail solutions for customers that may transcend categories. To accomplish this, Mr. Weber states category managers can’t be forced to focus solely on their own key performance indicators, but focus on the overall profit of the retailer. Then they could create product bundling that would increase overall sales and improve satisfaction for the customer. To become ‘retail consultants’ an element of cooperation is required to satisfy the customer and achieve results that are best for the company.
This might be difficult to accomplish considering the longstanding culture in retailers where category management operates in silos. That is why it is imperative for retailers to become ‘retail consultants’. If a shopper centric model is implemented, category managers can work together to focus on what’s most important to each of their customers and make their lives easier. How many times have parents bought a basketball for their kids, but forgot to buy them a jersey that would be in a different aisle. Now life will be easy since they are bundled together for a promotional price. The way to convince the retailer that this is a good idea is to introduce analytics to the process.
In a research report published by IDC, they cite a case study where a manufacturer of high-tech electronic devices and components managed to reform the R&D allocation process by promoting cooperation between competing R&D labs in allocating resources when the data showed that it was in the best interest of the company to do so. Retailers can follow this example and link analytics, merchandising allocation and promotions systems to offer the customer timely and compelling solution-based offerings across multiple channels that will make the shopping experience satisfying to consumers. If this can be accomplished, then retailers truly become retail consultants for their customers.