With the rise of the ecommerce marketplace, retailers are having to work harder to define their offer and justify their place in the consumer’s shopping journey, writes Bensons for Beds’ chairman, and author, Ian Shepherd …
A post I wrote recently for my regular Moving Tribes newsletter was designed for a general retail audience, but got me thinking about the implications for our sector in particular.
Once upon a time a lot of the value that retailers generated came essentially from ‘place’ – from their role as part of the distribution chain connecting manufacturers of product with consumers. At least some part of the margin that they generated came from the fact they were there, and were probably one of only a few retailers in a particular neighbourhood selling that particular product.
In that world of a few decades ago, ‘transaction costs’ for consumers were high. In economist speak, transaction cost is a broad term encompassing how expensive, time-consuming and generally bothersome something is. And in the retail world before the internet, being a consumer involved significant transaction costs – getting to the retailer selling the product you wanted, finding it on their shelves and getting it home again were all time consuming, and if you wanted to compare prices by going to other stores too, those costs just multiplied.
But to consumers who have come of age in the last 20 years, all of that sounds bizarre. We now live in a world where every product, from every brand, is available to us almost instantly through the internet, and where price comparison is just a mobile search away.
Your customer can be on their phone comparing prices with an online-only retailer based at the other end of the country whilst they are standing in your store – and indeed, that is an increasingly common behaviour.
So, in most circumstances, the answer to that most fundamental customer question – why should I buy this from you, right now? – can no longer be, “Because you are here, and you can’t be bothered to go anywhere else.”
In a world of infinite customer choice, we need a different and better answer to that question.
The good news is there are plenty of great answers we might choose. I think of these answers as different retail ‘archetypes’, because they each lead to different strategies for the retailer trying to bring them to life.
To get us started, here are two classic retail archetypes with particular resonance in our sector.
Curators and experts
There are some types of retailing where there is simply a huge amount of choice of different types, designs and colours of product available – so much so that customers are in danger of being overwhelmed by that choice and struggling to find what they want.
In response to that, a retailer might have scoured the market and carefully selected a subset of products that they think will appeal to their customers, cover all of their most frequent needs, but be simpler and easier for them to browse.
If that’s the case for you, you are earning your margin from the retail archetype we might call the ‘curator’. Your success will be driven by your ability to read the market, understand consumer trends, understand your own target customer segments, and find and display the products they want.
Now let’s consider a different scenario. There are some sectors where products are quite complicated. There is a lot of terminology involved. Customers don’t buy the product all that often, and therefore arrive in store worried that they will buy the wrong thing.
If that scenario fits your business, your response to that will have been to make sure your store colleagues are well trained in the products they sell and in the kinds of questions customers are likely to ask.
You’ll work hard to demystify some of the terminology in your PoS, and your whole sales process will be designed to reassure customers that you are giving them the right product for them.
In this scenario, the retail archetype you are living is one we might call an ‘expert’. Your success (and most directly, your profit margin) will come from your ability to put customers at ease. Your sales cycle will be longer, as customers need time to consider their options, and you still face the challenge of closing the sale rather than ending up in the horrible position of offering expert advice and then seeing the customer turn to an online provider at the last stage – but fundamentally it is your product knowledge, and the way you bring that to life in-store and online, which is the driver of your success.
These ‘retail archetypes’ are not binary, of course, and there are many more out there than just ‘curator’ and ‘expert’, but I think these two are of high relevance to our sector.
That’s true at the upholstered furniture end of the market, where colours, fabric choices and designs give us something in common with the clothing boutiques, in needing to read fashions and give customers what they want.It’s also true at the technical end of the sector, with products like mattresses which come with potentially confusing terminology and choices for the customer.
One way or another, your business’ success is probably some kind of blend of choosing (or making) the right set of products for your customer base, and then making the sale to the customer based on your product knowledge and sector expertise.
Making it matter
So far, perhaps so obvious. We should finish, however, with a health warning, because there is a trap in the retail archetype model.
Whenever I talk a retail team through this way of thinking about their business, they find it easy to fit themselves into one of the archetypes.
The sting in the tail is this – it doesn’t matter where you think you are on the expert/curator spectrum. What matters is what your customers think. And making the archetype that you want to apply to your business actually come to life for your customers is more of a challenge than you might think.
If you think that’s an exaggeration, consider the story of the specialist retailer in a complex market (outside our sector) which discontinued the product training programme for its store sales colleagues as an unnecessary expense. I won’t give you a prize for guessing who that was, because I’m sworn to secrecy (it is a real story about a major UK high street brand), but there are also no prizes for guessing how well that strategy went!
To say that we are at our best as retailers when we deliver for our customers is obvious – but to really engineer our businesses to curate products and act as trusted and expert salespeople for our customers is harder than it appears.
As I look around our sector (both chains and independents), I see many excellent examples of these archetypes being brought to life – a real skill that will surely drive success.
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