My advice to retailers - nothing sticks like sh*t
Image credit: https://nws.mx/2LLcp8i
Excuse the mildly offensive headline.
I’m not being factious. Honest.
Here’s the context. I recently bought a product by that name. To be precise Evo-Stik Sticks Like Sh*t Ultra Waterproof Sealant – a high performance polymer-based sealant. What’s great about it is that it works underwater, ideal for my needs to seal a leaky water butt. I’d looked at a lot of sealants. Some were waterproof, but none under-waterproof. And a bit like Ronseal it delivers on what it promises with a clear, distinctive value proposition.
So, it stood out from the crowd – a differentiated offering both at the brand promotion and product level.
Which leads me onto my advice for retailers…
Most people don’t care about brands.
According to Havas Media, most people wouldn’t care if 74 % of brands ceased to exist. No business is too big or respected to fail as was the case of retailers such as Maplin or Toys R Us. And what got a retailer where it is today isn’t necessarily what will get a retailer to where it wants to be tomorrow. Especially when considering fluctuating macro-economic challenges to success such as squeezed incomes, rising overheads etc.
Retailers need to offer the right potent differentiated mix of value, convenience or experience to attract shoppers – both online and in-store. And they need to harness the opportunities afforded by technology to drive a future-facing lean and financially fit operation with a customer focused offering.
If retailers fail to do either, they ultimately risk failure.
Intoxication of success.
So, I wasn’t too surprised by the recent news of the Bunnings DIY chain’s demise in the UK. If you don’t know, the Australian conglomerate Wesfarmers bought Homebase the UK’s 2nd largest DIY chain for £340m in 2016. Yet only 2 years later, with plunging profits and increasing costs, it is being bought by restructuring specialist Hilco which rescued music chain HMV in 2013. For £1. Ouch. And all 24 stores currently rebranded to Bunnings will revert to the Homebase name.
As one article puts it, the intoxication of success strikes again, whereby replicating a successful formula doesn’t always carry across region. To quote, ‘they thought they could show the Brits how to do DIY’. Yet without doing their due-diligence homework they failed to recognise we’ve become less a nation of DIY’ers to become a nation of Do-It-For-Me’ers –where home improvements are more about getting the professionals in for the grunt work. Yet, gone were the soft furnishings that helped differentiate Homebase, with Bunnings opting for a more basic DIY shed approach. And so confident were they in their approach they fired the existing senior management team. Yikes.
Others argue the Bunning’s offering was too similar with the No1 brand in the market – Kingfisher’s B&Q (who itself has shown some fall in sales) and it’s stable-mate Screwfix. So, no room for a relatively unknown smaller ‘me-too’ chain lacking any meaningful point of difference or value.
Finally, they also lacked a website presence that enabled full product search, purchase or collection – a step back from the Homebase offering – thereby failing to support and compliment the physical store footfall and spend.
So, failure to understand evolving customer needs, aligned with a poorly executed product and service experience has resulted in a potentially steal-of-the-century Poundland shop type opportunity for Hilco.
Inoculation against failure in-store.
However, it’s not all doom and gloom in retail la-la-land. There’s two clear threads running through some of the retail successes of recent years - customer-centricity aligned with a clarity of appreciated brand value across the cross-channel shopping experience. Brands like this fall within the 26% that would be missed from the aforementioned Havas survey.
A separate Which? survey found that customers valued being able to touch, feel and try on items before purchasing them as well as being able to ask knowledgeable staff questions and advice. Not surprisingly, this survey also found queues and crowding put shoppers off. Its editor goes on to say ‘If retailers can strike the right balance between good value, quality products and first-class customer service, shoppers will keep coming back to their stores’.
So, for physical stores it’s about providing a top-notch service and enhanced store experience (that interplays with digital/tech services and operational support) to give a compelling reason to visit beyond the convenience, speed and low-cost value offered by the online giants.
As a case in point is the phoenix like rebirth of Waterstones book store:
Through research with their customers, Waterstones realised that going head to head with Amazon on price was pointless. Likewise, only offering the same best seller products, gave customers no reason to shop with them as it was more convenient to pick these books up as part of their weekly supermarket shop or via Amazon.
They needed an approach that created a store environment that enticed customers in with amazing service, products that they couldn’t find elsewhere and regular events that inspired customers.
Their strategy was to create local stores, where through analysis of sales stores could review which types of stores across the country sold different types of books and therefore not follow a one size fits all approach. The stores therefore felt more like local independent shops rather than part of a chain.
They employed book enthusiasts who could talk directly to customers about books they had read and who offered customers books that they would find interesting based on books / genres they had previously read and liked.
They started to retail less common books that you couldn’t find elsewhere that had smaller print runs, therefore giving customers something different to the biggest sellers that you could get anywhere.
City centre stores would hold book signings for authors, create their own book clubs and have cafes in stores where customers could have a coffee and read new books and meet up with like-minded people.
This differentiation strategy has been critical to their successful business turnaround.
Melding clicks with bricks, retail must crack the AI code.
Artificial Intelligence can bring about immense commercial benefit for retailers.
Forrester expects that AI will drive faster business decisions in marketing, operational management, e-commerce, and other areas of the business by helping close the gap from insights to action. Online giants like Amazon and Alibaba are pushing the boundaries, through applying AI to retail and amassing huge consumer datasets.
Customers increasingly want retailers to offer convenient, responsive and personalised services. A recent IBM study revealed 48% of customers believe it is important for retailers to provide on-demand personalised promotions when online, while 45% want the same options in store.
AI has also found applications in personalising consumer experience.
Russian e-commerce retail giant Lamoda, for example, reportedly separates its visitors into 160 geographic segments, and recommends products based on the local weather in its banner ads. It also uses additional metrics like past purchase behaviour and customers’ preferred brands and colours to drive decisions.
Fusing a hybrid of AI with real humans to get closer to customers is an opportunity to enrich their experience and drive business performance.
Start one bite at a time.
To conclude, we live in a time of raised consumer expectations with empowered choice. Which in turn is being fuelled by digital operational and customer service technologies. This includes the (still hyped) aforementioned data-driven capabilities of AI to drive business efficiencies and an enriched shopper experience.
While this suggests a brighter shopping future, many established retailers must wrestle with current legacy systems before they can effectively offer a seamless shopper experience from store to app, to website and call centre. Innovation is also a double-edged sword, where certainty in results are not always known or guaranteed so requiring some leap in faith. That can be complex, expensive and a little scary. However, in these challenging ever-changing times, inaction is not a strategy for retailer growth or even mere survival.
You may have heard the joke – how do you eat a whole elephant?
The answer - start with one bite at a time.
So, it doesn’t however have to be an ‘all-in’ implementation approach to transforming business performance.
At Lily Marketing, we partner with retailers to help gain a deeper understanding of their customer needs, with gaps between expectation and reality. We seek to find the weakest links that are holding back a business and limiting their growth or performance potential. This enables us to prioritise and map out the opportunities and capabilities required to stand out from the competition. It’s our simple belief when customers win, business wins too.
So, if you’d like to pick our brains we’d be happy to share our thoughts relating to your business challenges over an informal coffee.