As just described, Home Depot has a sincere long-term desire to please customers. It uses a customer-centered, chainwide approach to strategy development and implementation, is value- driven, and has clear goals. Together, these four principles form the retailing concept (depicted in Figure 1-9), which should be understood and applied by all retailers:
- Customer orientation. The retailer determines the attributes and needs of its customers and endeavors to satisfy these needs to the fullest.
- Coordinated effort. The retailer integrates all plans and activities to maximize efficiency.
- Value driven. The retailer offers good value to customers, whether it be upscale or discount. This means having prices appropriate for the level of products and customer service.
- Goal orientation. The retailer sets goals and then uses its strategy to attain them.
Unfortunately, this concept is not grasped by every retailer. Some are indifferent to customer needs, plan haphazardly, have prices that do not reflect the value offered, and have unclear goals. Some are not receptive to change, or they blindly follow strategies enacted by competitors. Some do not get feedback from customers; they rely on supplier reports or their own past sales trends.
The retailing concept is straightforward. It means communicating with shoppers and viewing their desires as critical to the firm’s success; having a consistent strategy (such as offering designer brands, plentiful sales personnel, attractive displays, and above-average prices in an upscale store); offering prices perceived as “fair” (a good value for the money) by customers; and working to achieve meaningful, specific, and reachable goals. However, the retailing concept is only a strategic guide. It does not deal with a firm’s internal capabilities or competitive advantages but offers a broad planning framework.
Let’s look at three issues that relate to a retailer’s performance in terms of the retailing concept: the total retail experience, customer service, and relationship retailing.
1. THE TOTAL RETAIL EXPERIENCE
The rapid adoption of E-commerce and the proliferation of smart mobile devices makes it seem possible to purchase anything, anytime, and have it delivered anywhere. Such thinking has fundamentally changed consumers’ shopping habits and expectations. Almost every customer encounters a total retail experience in his or her retail journey. Imagine using a mobile app to purchase a refrigerator while attending a ball game. By the time you get home, the refrigerator has been scheduled for delivery. Everything, from the activation of the mobile app to receiving the purchase at home, plays a role in the customer’s total retail experience.
Most retailers are aware that price has been, and always will be, a key motivator in shopping behavior. It is important for retailers to remember, however, that they must provide an appropriate customer experience at every touchpoint with the customer to sustain her or his continued loyalty. More than ever, shopping is about how to “engage” the customer and how the shopping experience makes the customer feel. It is also about driving customer engagement in new and different ways to deliver relevant experiences that customers can share with others on social media. The shift in consumer expectations is compelling retailers to look at aspects of “who” as opposed to “what” they want to be—the competition is now for share of lifetime spending, as opposed to share of wallet.11 Retailers with genuine character and interest in listening to and solving their customers’ needs, core values, and concern for community are likely to profit the most.
The total retail experience includes all the elements in a retail offering that encourage or inhibit consumers during their contact or journey with a retailer. See Figure 1-10. Many elements, such as the number of salespeople, displays, prices, brand names, mobile app or Web page design, accurate product and pricing information, and inventory on hand, are controllable by a retailer. Others, such as the adequacy of parking, the speed of a consumer’s Internet connection, and sales taxes, are not. If some part of the total retail experience is unsatisfactory, consumers may be “turned off” and not make a purchase—they may even decide not to patronize a retailer again if they attribute the failure to be controllable by the retailer. Given the widespread use of mobile devices in-store and the propensity to share information, one bad retail experience can be quickly shared with many other current and potential consumers via social media.
In planning its strategy, a retailer must be sure that all strategic elements are in place. For the shopper segment to which it appeals, the total retail experience must be aimed at fulfilling that segment’s expectations. A discounter should have ample stock on hand when it runs sales but not plush carpeting; a full-service store should have superior personnel but not personnel who are perceived as haughty by customers. Various retailers have not learned this lesson, which is why some theme restaurants are in trouble. The novelty has worn off, and many people believe the food is only fair while prices are high.
A big challenge for retailers is generating customer “excitement” because many people are bored with shopping or have little time for it. For example, Build-A-Bear Workshop is the leading and only global company that offers an interactive make-your-own stuffed animal retail- entertainment experience. The company currently operates more than 400 Build-A-Bear Workshop stores worldwide, including company-owned stores in the United States, Puerto Rico, Canada, Great Britain, and Ireland, and franchise stores in Europe, Asia, Australia, Africa, Mexico, and the Middle East.
Since 2007, the interactive experience has been enhanced—all the way to CyBEAR® space— with the launch of Bearville.com, its entertainment destination and virtual world. In September 2015, Build-A-Bear Workshop launched a new store format and brand refresh as a “multigenerational” brand for millennial parents who first engaged with Build-A-Bear Workshop when they were children.
Guests who visit a Build-A-Bear Workshop store still enter a recognizable and distinctive teddy-bear-themed environment consisting of eight stuffed animal-making stations: Choose Me, Hear Me, Stuff Me, Stitch Me, Fluff Me, Dress Me, Name Me, and Take Me Home. Store associates, known as Master Bear Builder associates, can share the experience with guests at each phase of the bear-making process or they can do it for the guests.12 In addition, guests can enjoy the brand’s “play beyond the plush” with entertainment offerings such as the Bearville Alive YouTube channel, which features original video content and the launch of mobile apps tied to complementary products (an enterprise-selling solution), and creates the memories with their friends and family that they can share through social media.13
2. CUSTOMER SERVICE
Customer service refers to the identifiable, but sometimes intangible, activities undertaken by a retailer in conjunction with the basic goods and services it sells. It has a strong impact on the total retail experience. Among the factors comprising a customer service strategy are store hours, parking, shopper-friendly store layout, credit acceptance, helpful salespeople, amenities such as gift wrapping, clean restrooms, reasonable delivery policies, the time shoppers spend in checkout lines, and customer follow-up. This list is not all-inclusive, and it differs in terms of the retail strategy undertaken. Customer service is discussed further in Chapter 2.
Satisfaction with customer service is affected by expectations (based on the type of retailer) and past experience. People’s assessment of customer service depends on their perceptions—not necessarily reality; different people may evaluate the same service quite differently. The same person may even rate a firm’s customer service differently over time due to its intangibility, although the service stays constant. Interestingly, despite a desire to provide excellent customer service, a number of outstanding retailers now wonder if “the customer is always right.” Are there limits?
3. RELATIONSHIP RETAILING
The best retailers know it is in their interest to engage in relationship retailing, whereby they seek to establish and maintain long-term bonds with customers, rather than act as if each sales transaction is a completely new encounter. This means concentrating on the total retail experience, monitoring satisfaction with customer service, and staying in touch with customers. Figure 1-11 shows a customer respect checklist that retailers could use to assess their relationship efforts.
To be effective in relationship retailing, a firm should keep two points in mind. First, it is harder to lure new customers than to make existing ones happy; a “win-win” approach is critical. For a retailer to “win” in the long run (attract shoppers, make sales, earn profits), the customer must also “win” in the short run (receive good value, be treated with respect, feel welcome by the firm). Otherwise, that retailer loses (shoppers patronize competitors) and those customers lose (by spending time and money to learn about other retailers). Second, due to advances in computer technology, it is now much easier to develop a customer database with information on people’s attributes and past shopping behavior. Ongoing customer contact can be better, more frequent, and more focused. This topic is covered further in Chapter 2.
Source: Barry Berman, Joel R Evans, Patrali Chatterjee (2017), Retail Management: A Strategic Approach, Pearson; 13th edition.