Ideas for Improving Retail
I recently attended a retailing conference in New York City. On the ride up in the elevator to the 36th floor, I overheard two retail executives speaking quietly to each other. They were asking each other if retailers were out of ideas, money, or leadership. The execs may have a point about money and leadership, but there are certainly plenty of ideas. Here are a few ideas for improving retail:
Re-think e-commerce: When e-commerce was first established, retailers created separate business units, better know as the silo effect. In my opinion, the only necessary channel is the customer. The focal point should be a point person for the customer coordinating both online and brick and mortar purchases. That associate is easily reachable to answer any questions and make recommendations. Retailers must create a seamless experience for the customer by establishing a human connection. Make it easy, and customers will purchase a first time and then again and again which is the bottom line goal.
Develop a two-tiered strategy: Most businesses, including non-profit organizations, experience the 80/20 rule: 80 percent of an entity’s revenues come from 20 percent of their customers. Retailers rarely reference this standard. However, recently Macy’s reported that 46 percent of sales came from just 9 percent of customers. Companies need to review their analytics to determine how to ensure retention of large volume customers. Loyalty programs aren’t the answer. These customers are already loyal. Today, unfortunately, good customer service is a luxury. Of course, every customer deserves good service, but loyal and high volume accounts need special attention.
Change the paradigm that the sales receipt signifies the end of the transaction: Consumers consider the receipt, whether it’s hardcopy or electronic, to be the end of the sale. That must be changed. Instead, the receipt should be just the beginning. Imagine the receipt as an invitation to continue the relationship. Invite the customer to return, tell them you want to see them again, let them know about future events or specials – keep in touch. The relationship can be ongoing, in effect, never ending.
Decide who is a customer: The definition of a customer needs to be redefined. A recent blog post I wrote highlighted restaurants with policies that restrict non-customers from using their bathroom, a basic human need. One shrewd blog commenter posed the question: who is a customer? Is it someone who only purchases on the day of, or someone who might have purchased in the past? Or, perhaps a person who may become a customer in the future, partly because of a liberal bathroom policy. Marriott sent a ship to rescue guests on St. John after Hurricane Irma. However, Marriott would not allow any guests not staying at their property to board. Isn’t possible that some of these people could have stayed a Marriott property in the past? Perhaps they were loyal Marriott customers and the hotel on St. John was fully booked? The proper definition of a customer is that all people are customers. Show me the rule that a person is only considered a customer if they buy today.
There are plenty of ideas and retailers should brainstorm with their teams each day in every meeting. Many ideas don’t require large expenditures to implement. Retailers can take simple steps to increase market share from already existing customers. This is as important, if not more so, than spending dollars on customer acquisition. What killed retailing was not Amazon and it isn’t technology. Retailers don’t understand how to replicate the personalized service from neighborhood stores to the world of large brick and mortar stores and e-commerce transactions. Technology makes sense when it enhances the interaction. Developing and nurturing the human connection will always be in the headlines.
What are some of your ideas to improve retailing?