Today, Charles is a Business Alliance Executive with Paladin Data Corporation, a software services company that provides retail solutions and services to hardware stores, pharmacies and other retail verticals. His unique combination of entrepreneurialism, practical and business experience helps him understand the trends in the retail market, particularly as it relates to the sympathetic needs of merchants and their customers. His personal goal is to help store owners enhance and grow their retail store operation, profits and customer loyalty.
In the following article Charles answers somequestions about retail and the shift in how retailing works in today’s world. The topic (the paradigm shift in retailing) was recently presented at the Orgill Show in February, and a link to the presentation is available here. If you have any further questions, feel free to leave a comment below the post.
1. What is the “Paradigm Shift in Retailing”?
This is the “Age of Information” in retail, and shoppers are smarter, have more choices and are more price savvy. The new paradigm in retail directly impacts businesses now more than ever as the consumers’ expectations have changed, mostly due to technology. Smart phones and personal tablet devices empower the casual shopper, as well as the experienced, with real-time information on every product ever sold. Consumers have immediate access to prices, product specifications, and alternative stores. Heck, consumers no longer have to leave their homes to shop and this is the crux of the paradigm shift in retailing.
2. What must retailers do in the face of this shift?
In order to compete more effectively, it is imperative that retailers understand the trends in today’s market and focus on meeting the consumer based on the shoppers’ expectations, not the expectations of the retailer. The retailer should be better prepared to connect with the customer on a more personal and emotional level. This can partially be achieved by implementing a customer loyalty program, a frequent flyer program if you will. More importantly, retailers must provide advanced customer services, like tracking consumer purchases to offer easy “no-receipt” returns, historical purchase lookups and targeted discount campaigns.
Improved customer relations can be accomplished by training the employees to do something as simple as “smile more often”, and saying things like “Thank you” and “We appreciate your business” more often. Training the employees on proper customer care and retail etiquette is required as the typical high rate of attrition and low pay, warrants it. The checkout clerks are usually the front lines of every retail operation and therefore, they more than anyone, need to understand the importance of their role in customer retention.
3. What is the goal of retail?
The goal of retail is to attract customers by providing the products and services they want to buy; then up-sell them other products and services they didn’t know they needed. Selling “stuff” to consumers is the only way to sustain and grow any retail business. But how you get there is greatly dependent on how well you treat your customers and meet their needs. It’s important for the retailer to have both the depth of products as well as the breadth of products and services in order to appeal to the consumers’ needs and wants.
4. Why are add-on sales important?
Every retailer routinely offers discounts on certain price sensitive items. These sale items (better known as lost leaders) don’t always directly make the retailer money; they are there to lure customers into the store. The real money is made on the add-on sales or up-sales; those impulse items consumers otherwise didn’t know they needed until they walked the store. Product placement plays a big part in add-on sales too. Add-on sales are the profit makers in a retailer’s business.
There are several tools to help retailers with add-on sales. One often overlooked and inexpensive method is in-store marketing. Wholesalers and manufacturers will give away interactive multimedia Blu-Ray or DVDs in order to help retailers show off and sell more of their products. We’ve all seen end-cap displays in the big-boy stores. Smaller retailers can boost profits in the same fashion with limited investment.
5. What are the building blocks of retail success?
The nucleus of the building blocks for retail success is Customer Nurturing. Surrounding customer nurturing are foundational elements that encompass things like: enhancing the customers shopping experience, planning and executing, leading by example, in-store marketing and changing and adapting to the latest retail trends.
These fundamental success building blocks are often forgotten or overlooked because store owners and managers get caught up in the day-to-day operations of the business. Business owners frequently lose focus of their value by centering on erroneous areas of their business by performing functions that don’t necessarily make them money. Things like ordering, purchasing and stock checking can consume much of a retailers time. These are tasks that automation can regulate for the stores, freeing up time to focus on the more important things like connecting with customers, marketing and up-selling.
Remember, the only way to grow any retail business is through product sales. This is accomplished by attracting more customers to your store, and selling more products, more often.
6. Why is cultivating customer loyalty so important?
One of the most effective methods for increasing a store’s ROI (return-on-investment) is through customer loyalty. Retailers can capitalize on their current customer directory by implementing a frequent shopper club and marketing specifically to the needs of their customers. These types of programs can augment the basic “customer friendly” culture of a retail environment and help to seize an emotional connection with the customer.
Shotgun marketing approaches are costly and are, at best, a hit-and-miss scheme. Once a customer signs up for a loyalty program, the real fun begins. By signing up for the program, the retailer has access to all of their customers buying habits. This information can be leveraged through targeted marketing campaigns. These campaigns are typically significantly less money than customer acquisition campaigns and yields far more than the shotgun approach.
7. How do you determine goals for success?
There are several factors in determining a retailer’s goals for success. To begin with, goals must be realistic, attainable, and measurable. The hardest thing for most retailers is to find the time to sit down and figure out where to begin the planning and goal setting process.
The first step is always determining the “Why”, in other words, “Their Purpose”. Once the retailer understands their purpose, then determining the “How” comes into focus. Next, put the goals on paper. Writing down goals will help plant them into the subconscious memory and help to stay on point. Then post the goals in a conspicuous place for constant visual affirmation. The next step is to tell someone. Share it with a spouse, a friend or a mentor. This will help with the accountability aspect. Without accountability, the goals are more susceptible to becoming ignored or diluted.
Once all of these factors are put in place, attaining the goals follow a mental and subconscious path of least resistance. Lastly, and most importantly, track the progress and success of the goals and celebrate any and all accomplishments.
8. What are ways retailers can grow their businesses?
Define a Growth Path: Understanding the growth path is the retailer’s first step to growing their business. Many retail businesses flounder because they don’t map out a plan for growing the business. We’ve all heard the axiom, “He who fails to plan, is planning to fail”. It’s true.
Target a Niche Market: Find a niche market and tailor products and services to that market. It has been said “Define your market segment, or the market will define you.” Embrace the local community’s business needs and enhance product offerings in that specific market.
Focus on B2B: Expand the market beyond B2C (business-to-consumer) and reach out to the B2B (business-to-business) audience. It falls into the 80/20 rule. “Eighty percent of revenue is derived from 20 percent of the clients”. Catering to businesses can quickly translate to the majority of a retailer’s success.
Add In-Store Marketing: Enhance the shopping experience by incorporating multi-media presentations at the stores entrance, at checkout, and on end-caps. At the same time, sell more products. It’s been proven that this type of elective “in-your-face” marketing really works.
Reduce and Expand: We’ve all heard the adage “You can’t sell from an empty wagon”. This is never truer than in a retail setting. It is important to have both the depth of product, and the breadth of product. At the same time, it is important to free up real estate on the shelf, eliminating products with little to no turn and replacing them with products that sell. “It doesn’t matter how pretty and well-stocked your retail store is, if it ain’t selling, it ain’t making you money”.
Make room for the high-movers. It’s all about turns, turns, turns. Overall, four to five turns annually is an excellent place to be.
9. How can technology help retailers in this new paradigm?
Technology can offer assistance to retailers by automating the back-end store operations, thereby allowing retailers an opportunity to spend more time connecting and interacting with their customers. Daily tasks like, ordering, receiving, price updating and margin control can be accomplished with inventory control automation.
Technology, specifically Point-of-Sale (POS) Systems, can enhance the customer shopping experience through faster checkout, customer purchase historical lookups, automated emailing of receipts and statements, and integrated loyalty rewards programs. POS Billboards can be inexpensively added to the POS stations for very little investment, thereby addressing the need for multimedia marketing.
The right technology solution can deliver stunning reports that offer comparative revenue results indicating daily, weekly or monthly statistics, year-over-year. Slow mover reports, employee productivity reports and end-of-day till reconciliation reports are the norm with technology solutions. Inventory ordering and receiving can be an automated process that enables electronic communication with the retailer’s main supplier(s). The retailer is no longer required to walk the store and shoot-for-outs.
10. So, what’s the bottom line?
The bottom line is this: It is important for all retailers to know and understand their business, their customers, and their growth path, regardless of what they are selling. Just like before, the way to combat this new paradigm shift in retailing, and in order to grow any retail business, the customer is still, and will always be, King.
For More Information
The downloadable version of the seminar that Charles gave on the paradigm shift in retailing is available here: http://info.paladinpos.com/Orgill_SeminarFeb2014.pdf
If you have any questions or comments, please let us know in the comments section below!