Ask global retail consultant Wendy Liebmann to name the retail industry’s person of the year and she’ll say it’s the one holding the credit card. The way she sees it, retail is shifting to a shopper-based model and those merchants that cling to the retail-based model of operations not only fail to view their stores through the eyes of their customers, but risk not seeing any customers at all.
“When people have so many places to shop, retailers cannot afford to just look at themselves in the mirror,” says Liebmann, founder and CEO of consultancy firm WSL Strategic Retail, based in New York. “They really have to build their proposition around, ‘What does that person who buys from me want from me?’”
Liebmann provided a familiar example – the placement of milk at the supermarket. By tradition, it sits in the farthest corner of the store so shoppers are forced to pass through several product-laden aisles.
“The last thing the mother wants to do with two kids, one screaming, is walk to the back of the store,” Liebmann says.
Fortunately for that mother, there are other options such as grabbing milk at the convenience store. Translation: retailers can no longer get away with the model upon which they built their empires.
What will separate the retail victors from the others comes down to a few key practices. Liebmann categorises them under three activities retailers are doing right, and three they are still doing wrong.
What retailers are doing right
Putting away the operational mirror – retailers that stop examining their own needs and instead view their businesses through the eyes of their shoppers will pull ahead, according to Liebmann. They do this by determining how their retail proposition is meeting the needs of the shopper, rather than how it fulfils their own operational needs. In short, they think about the shopper’s life first and foremost, and then apply that to the operational model.
Removing the seams – this means giving shoppers more than one way to shop. It’s called omnichannel retailing and it requires a great deal of agility. Good retailers cater to the consumer, whether she wants to buy in-store, shop online or order first and pick up later.
“If you don’t allow her to shop at 11 o’clock at night when the kids have gone to bed, that can be the point at which she chooses another merchant,” Liebmann says.
Investing in people – a key to retail success is ensuring the best-suited staff are appointed for each customer touch point. This means physically, by phone or online. “That personal connection… that’s the hidden juice that makes [retail brands] really successful,” Liebmann says.
What retailers are doing wrong
Opening more stores – there are too many retail stores and outlets are no longer necessary for growth.
“I remember when we were talking about the ‘Gapification’ of America,” Liebmann says. “It was like the commodification of retail. Digital is a great way to reach people without having to open more real estate.”
Placing efficiency above necessity – while retail does require efficiency, merchants should not focus solely on being efficient.
“If all I’m doing is putting the merchandise where it is most efficient for me so it can be restocked, and having so many registers open or so many staff on the floor because it is more efficient, then I lose today,” Liebmann says. Sales held on the US public holiday of Thanksgiving are a good example, because they don’t actually address an expressed customer need.
Not breathing humanity into digital – online interactions should be as human as those that occur in the store. Unfortunately, Liebmann says, some retailers still think they can get digital right with far too few people. Online employees are still expected to answer questions and fill orders – she points to the model of US online-only fashion retailer Zappos.com, which gives staff the training and freedom necessary to talk to customers as long as needed. In return, the brand benefits from unconditional loyalty. “You are investing in happiness but really you are investing in the people you have,” Liebmann says.
When it comes down to what shoppers really want in these post-recession years, it is happiness.
“We’re seeing this very different kind of yearning for stability, less stress, greater well-being,” Liebmann concludes. “The competitive environment has changed – it’s not just about the other guy selling things against you; it’s about the other guy selling a set of values.”