By Al McClain
There are obviously lots of reasons why retailers lose sales, but as the industry evaluates the holiday shopping season just past, Pat Conroy of Deloitte & Touche offers some insights that might help retailers do a better job in 2007. Mr. Conroy delivered a presentation at January’s NRF Convention based on a recent consumer survey and sat down afterwards to discuss his observations.
A key finding of the survey was that 66 percent of store visits this holiday season were not influenced by advertising and marketing. Mr. Conroy said this is consistent with previous studies and shows that, to win shoppers, retailers need to deliver consistent shopping experiences and fulfill brand promises. In other words, previous shopping experiences are more important than advertising messages.
Sixty-three percent of consumers surveyed searched for a product or store information online before visiting a store, what Deloitte calls “pre-shopping.” Those “pre-shoppers” spend about $100 more per transaction than those who did not. Forty-eight percent of consumers read online consumer-written product reviews and 90 percent said these helped them decide whether to buy a product or not.
Mr. Conroy said consumers are “becoming more surgical in their approach and using the internet for a variety of shopping and pre-shopping activities.”
Meanwhile, back at the store, Deloitte’s research found consumers frequently left without buying what they intended. When they did, it was because:
64 percent said the item or size was out-of-stock
57 percent said the checkout line was too long
52 percent said a sales associate was not available
32 percent said a sales associate could not answer their questions
26 percent said the store layout was too confusing
Service levels, Deloitte’s research points out, are critical in how much shoppers spend. Younger shoppers find friendly sales help to be an important factor in the decision to purchase. Older shoppers are more impressed and likely to buy from an associate who demonstrates product knowledge.
Discussion Questions: What forms of “new media” deliver the most ROI for retailers and can help merchants connect better with consumers who are engaged in “pre-shopping?” What are the easiest areas of the in-store experience to improve when it comes to keeping customers in the store?
It’s going to be a hard sell to ask retailers not to spend a ton of money on traditional advertising, especially around the holidays when they often do the bulk of their sales for the year. Hopefully, though, statistics and insights like these will lead retailers to think more about non-traditional opportunities that can provide a better connection with potential shoppers. Perhaps it might even save companies money in the process.
We talk a lot about the importance of customer service on this site, so Deloitte is preaching to the choir in this area, but it doesn’t make their message any less valid. I recently heard of a department store shopper who filled out a customer survey. The shopper was waited on by an associate chewing gum and carrying on a side conversation – the customer said in the survey that she was “so mad she wanted to slap her face.” That’s pretty extreme, but shows us that, at least in some cases, shoppers are really frustrated by their poor in-store experiences.
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Customer-controlled marketing programs–or CRM programs that consumers opt-in to receive marketing or promotional messages from brands or retailers they are loyal to–are becoming widely available. These programs allow the consumer to choose to participate and select their preferred channel of communication–Voice message, SMS, email–or any combination of the three. These formats allow the retailer or brand to deliver targeted incentives based on past history or events, as well as provide clear measurements of response. These programs allow the consumer to tailor how they receive marketing materials from the places and brands they enjoy. These new techniques will become commonplace as the consumer takes charge of how they want to communicate and be communicated with by retailers.
Retailers need to start thinking about shopping as a process rather than an event. This is particularly true of big ticket items or holiday gifts with a social value or ego involvement.
It is important to engage consumers throughout the process. This may include so-called new media as well as traditional. It certainly includes building relationships both before and after the sale.
Many retailers also undervalue the in-store experience. For example, our studies of checkout merchandising have shown that a positive shopping trip can easily be undermined by a poor checkout experience.
Too many retailers assume that a slick ad and a discount around a holiday will overcome a history of poor customer experiences in the store.
Of course holiday advertising, discounts and specials are losing their influence in a world where pre-shopping predominates.
The holy grail of effective marketing/advertising/merchandising is to reach people in the market for what you’re selling at their moments of highest desire, need and seeking. That now means the Internet. The challenge for retailers is to build a seamless environment that integrates the in-store, web site (and catalog) platforms. That means consistent design, service, and positive shopping experience, in all channels.
These are the areas where best-in-field retailers are investing time, effort and money.
Ad media selection should not be subject to “The Tyranny of Or.” Translation: older media (flyers, newspaper ads, TV, radio) can refer to each other as well as web sites, and vice-versa. Many retailers don’t display their weekly flyers on their web sites. Many retailers don’t give flyer readers a reason to go to the web site, they just print the URL. If the flyer tells people the web site has more specials, or more details about featured items, or a special contest or game, etc., then the media reinforce each other.
In both traditional and new media there needs to be more story telling to help create demand. The sound bite approach, which may seem cost effective in the short term, doesn’t create loyal shoppers. Retailers and their suppliers need to construct a setting that makes it easy for the shopper to buy, starting from well before the consumer ever enters the store. This involves developing a path from the places and times the consumer is most receptive to the messaging leading ultimately to the store and the checkout counter. Promote dinner entrees, not on Wednesday morning with the weekly circular, but on Monday afternoon via email or billboards when the shopper is deciding whether to cook or order in. And do this so that each offering has a story that has an element of whimsy to keep the shopper interested. Another example–Mothers hate shopping for their kids’ clothing, but realize they need to go just about every morning when the child complains. That’s the time to hit them, on the radio or online, with the story on how retailer X understands their plight and can help.
When shoppers “pre-shop” online, they are forming all kinds of impressions including but not limited to price/value, quality reviews, and availability. Often, they don’t even know what they’re looking for specifically, but know what they want the product to do–like a bagel slicer. Almost always, online shoppers become significantly more educated regarding their purchase target. Then, when they believe they thoroughly understand the product category, they seek the best price and options (like a frequent shopper bonus or free shipping). One of my online companies sells a product that probably 99% of shoppers don’t know exists, but their online search brings them right to our website’s doorstep to purchase a very successful, tightly-targeted product (it isn’t a bagel slicer). This results in thousands of sales annually in over twenty countries.
One of the questions we frequently get is, “Where can I purchase your product locally?” They want it NOW, and they want to avoid international shipping costs (distribution is currently online only). But therein lies a significant opportunity for retailers with integrated selling channels. In addition to using their website to lead shoppers to their store locations (wanting it NOW and avoiding shipping costs), they can use their stores to lead shoppers to their websites. Some stores have already begun this service. The benefits of providing customer access to your website from inside your stores are significant: 1.) Online product specifications are superior to in-store clerk knowledge; 2.) the website can provide infinitely larger selection; 3.) the customer can order items from the website that are unavailable in the store so you don’t lose a sale; 4.) you can have the product delivered (and returned if necessary) to the store so shipping charges are avoided; 5.) you can provide a search function for your website that allows in-store customers to shop by product purpose/function–not just by product name or type; and much more.
Ben’s self-described “broken-record” comment about the importance of in-store customer service reminds me of something he and I discussed briefly over a year ago: If customers seem to be pleased with the service they’re receiving online, would they be happy with online-style service that was delivered in the stores?
Product reviews are, to my thinking, the killer online app for retailers. Allowing your customers to discuss the products you sell on your website serves so many purposes: it engages your customers and starts building a relationship. It provides valuable information, it shows that you care what your customers think about the products you carry. It shows you want to know when something you sold doesn’t meet customer expectations. It gives customers a reason to keep coming back to your site. I could go on. There’s just no “offline” equivalent of this kind of consumer engagement, and as the statistics show, it is becoming a critical part of the shopping experience.
Beyond that, I agree with Mary that retailers can go much further in creating shopping experiences that fit consumer lifestyles. The dinner “kit” is a great idea, and should be integrated with online: visit the website by 2 PM, pick a kit, and it’ll be waiting for you at the store any time after 5. The store doesn’t even have to really personalize the pickup, it can just use the online order to make sure there is sufficient inventory of each kit. Slow mover? How about an “instant special” SMS’d to subscribers on a Saturday afternoon?
Traditional advertising is certainly not dead, but there’s so much more that can be done.
Broken record syndrome be deviled… here I go again.
It’s all about the customer experience in the store. No amount of advertising will overcome a poor perception based on previous personal experience. The best investment retailers can make is in creating a positive shopping experience. Whether that is store design, selection, courteous and/or knowledgeable staff, or–my favorite–standing by your customer with impeccable service AFTER the sale.
Maybe there should be a new “Golden Rule” of retailing? Something like–“what you do is who you are” (I’m sure Gene Hoffman could improve on that, but you get the idea.)
I love the ideas above about hitting Mom when she’s just had the problem.
As for big-ticket purchases and new media alike, one thing we need to do is realize that educating the consumer does not mean throwing out a list of features and expecting him or her to understand why this year’s thing is better than last year’s thing.
I’d like to see us approach these customers on their terms–to step into their shoes and empathize with the problems of their daily lives.
For instance, we all want to get more exercise and spend more time with our kids. (Or at least we say we do.) Answer: the Nintendo Wii (Assuming we could actually get our hands on one.) Once Nintendo actually needs to drive demand for these boxes, maybe that’s a way to get them in the hands of the grandparents.
Or…the Monday afternoon dinner dilemma: what if that email has a link to the customer’s favorite store, or comes from the store, with the ingredients for the featured recipe all together in a prepackaged kit she can run in and pick up, or forward to dad or teenage kid to run in and pick up? (Maybe there’s even a link to SMS that person’s cell phone.)
Another thought: I have a feeling TiVo hasn’t penetrated more households because folks might be afraid it’s too hard to learn to use. How about an online lesson–teach folks how to use it before they ever hit the store?
The common thread here is that we spend a lot of time telling people what’s inside the magic box without letting them find out what the magic box is good for. And while it’s true that the vast majority of uses for new technology get thought up after the technology is out there, we could get to those critical penetration rates a lot quicker if we could give the less technical among us some clue about what the thing is good for and how to get it to work.
I agree with Ron and Raymond’s assessment. The key here is not traditional vs. new media. The key is understanding that consumers pick and choose between media for the most relevant messages, best pricing, and easiest shopping experience. Thinking about it from the customer’s shoes of what information they want and when and where they want it and minimizing the clutter around that messaging will drive a better shopping experience and more loyalty. To do this though, you need the analytics to really know your customer and that appears to be where a lot of retailers stumble.
Customers enter a store to purchase a product, not to sit around trying to figure what they want by going online at the local store’s computer. Yes, information is important but so is convenience, and spending time fumbling with an information screen–is that really what consumers come to a store to do? Online marketing is here to stay and flourish but hey, you want nontraditional marketing? Try race marketing [NASCAR], using the number one brand loyalty factor in all of advertising; that is, being in front of the customer when THEY WANT IT. Otherwise, good, sound quality (& personal) customer service from employees will always trump.