By Fred Crawford
fcrawford@alixpartners.com
It seems almost un-American not to strive for perfection in every possible way. But a new study conducted by AlixPartners confirms that striving for perfection in all areas of retail is, in fact, a counterproductive way to deal with today’s time-starved, fed-up consumers.
The 2006 AlixPartners Consumer Sentiment Index asked 6,000 consumers to rank individual retailers within 13 retail categories, from books to sporting goods. The results were startling. In fact, the study detected several marked shifts from the past in consumers’ wants vis-à-vis product, price, service, access and overall shopping experience. Such as:
Product: “Good” Is Good Enough
Long gone are the days of consumers clamoring for only the “best” in terms of product. Thanks to Six Sigma and other quality-improvement processes making quality differences minuscule (and making more store brands acceptable, even chic), consumers clearly stated “good” is good enough. What came through loud and clear, however, is they want to be able to pick from a wide assortment of merchandise and that the advertised merchandise be in stock.
In fact, if there’s one overriding trend today, it is indeed the ever-growing time-compression facing Americans. There aren’t enough hours in the day for most modern Americans, and the last thing they want to do is waste time making a fruitless trip to your store.
Price: “Honest” Is Replacing “Low”
Time-compression also is largely behind the changing definition of “price.” As even price-leader Wal-Mart’s recent decision to retire “Mr. Smiley” (their happy-face symbol for low prices) attests, today’s time-starved consumers are becoming much more interested in what might be called “honest” pricing.
That, of course, means value for the money, but it also means not having to hunt for the actual price of the product. In fact, “well-marked price” ranked #2 among all consumer wants in the survey. The upshot: If “shelf-pricing” is in your company’s repertoire, think very carefully about how it’s implemented.
Access: Layout, Layout, Layout
Again largely due to time-compression pressures, Americans are “chore-stacking” more than ever before—meaning they’re willing to pay a little more for some products, as long as they don’t have to leave your store and it’s easy to find all the products they need there.
In other words, the age-old retail aphorism “location, location, location” has morphed into “layout, layout, layout”—with issues such as wide, uncluttered aisles, effective in-store signage and an overall pleasant environment taking precedence. And one needs only to look at the success of Kohl’s in the study—a retailer that is veritably reinventing the department store—to see the truth in that.
Service: Back to Basics
Consumers today no longer expect—or even desire—customized service when they shop. They know they can get what they want faster if they self-serve. But, as the study reveals, consumers want the merchandise out where they can see and handle it themselves and, to a deafening degree, they’re saying they don’t want to be made to feel like a criminal just because they need to return something.
Experience: “Respect Me”
R.I.P. "shoppertainment." Consumers today, according to the survey, are no longer impressed with in-mall faux rain forests, glow-in-the-dark miniature golf and the like. They’re not looking for entertainment when they shop; they just looking for a little simple R-E-S-P-E-C-T. Consumers’ #1 desire was—guess what?—“courteous employees.”
Who’s Not Making the Grade?
Which retailers, according to the study, are having a hard time meeting these new consumers demands? It’s no secret, of course, that Radio Shack, Kmart, and 7-Eleven are having problems. But you might be surprised to know that BJs was rated “below expectations” in four of the five categories. That Borders stood out in nothing. That Office Max got its ink-jet cartridge cleaned by Staples and Office Depot. That Family Dollar and Big Lots lost their lunch money to Dollar General and Dollar Tree. That Ace and Menards fared poorly, even as True Value scored some significant victories. That virtually the entire Grocery and Sporting Goods categories are struggling (with one fascinating exception, Academy Sports). That J.C. Penney’s scores have been up and down like a yo-yo. And, last but not least, that Gap Inc. is probably “leaving shareholder money on the table” with the widely differing scores among its Gap, Old Navy and Banana Republic stores.
In Search of Strategic Excellence
The bottom-line message for retailers in this new study is this: If you aren’t—truly—dominating in one or two of these five categories today or in the near future, watch out! In fact, a negative trend can hit the financials in as little as 12 to 18 months. Yet, by the same token, the consumer isn’t really expecting you to excel in all five areas. Instead, pick two of the five to truly differentiate from the competition, and be willing to simply meet expectations in the remaining three. But, make sure the two you pick are the ones that really matter most to your particular customers.
No comments:
Post a Comment