Create value in your retail experience


This article appears in the September/October 2013 issue of Business Franchise Australia & New Zealand


Are we still hanging on to our central mission as retailers; our stores are simply there to “sell stuff”?

As consumers change their shopping habits and seek experiences and solutions, this central mission is fast becoming oldfashioned and an ‘unfit’ business practise.

It’s time to let go of this dominant selling mission in your physical store space and start thinking about what value you can create for your consumers. I recently read an article in the Harvard Business Review, featuring Ron Johnson ex Senior VP Retail of Apple and now also ex CEO of J.C Penney, commenting on the existence of the physical store space Johnson remarks, “It’s got to help people enrich their lives. If the store fulfils a specific product need, it’s not creating new types of value for the  consumer. It’s transacting.”

Business ‘fitness’ in the physical store space does indeed require you to have a value creation mind-set and this will most likely mean re-imagining your entire thinking towards your store space. Like a majority of retailers have done in the past, you have most likely started with the products you sell rather than your customer. Now, to be a ‘fitter’ retailer, you need to look at how you can holistically create value throughout your customers’ entire shopping mission in your retail environment.


Store staff must join your mission to create value

As a retail consultant, I often come across retailer confusion between “selling” and “customer service”. The greatest asset that a sales person can have is to be a strong active listener, confident with the right degree of humility and possess a genuine interest in the customer by being completely solution focussed thus adding value to the shopping experience.

Operationally ‘fit’ retailers have a clear vision of the team they need to bring their “value creation proposition” to life. They then engage them with this proposition before inducting, training and motivating them to carry this through in-store and our
research tells us that engaged and motivated staff deliver on average 20 per cent higher sales and margin improvement to the ‘fitness’ of a retail business. ‘Fit’ retailers also have fully integrated and complete Effective People™ frameworks, which allow them to maximise sales conversions and therefore dollars without any capital investment or increase in overheads.

The brand experience in-store

Retailers with value-creation mindsets are true challenger brands and provide customers with an experience that takes them way beyond the “seen it all before” feeling customers are currently experiencing in so many retail stores. Indeed, consumers face a myriad of multi-channel transactional-based shopping choices right now. If you give them just the opportunity to browse products in your store with the flick of a hand, when they can browse your same inventory online with the flick of a mouse, you haven’t yet initiated your value-creation mindset. Rather, you need to create value across all branded touch points to give customers a single omnichannel experience with your brand.

Australian Geographic Retail is one example of an Australian retailer who has re-imagined the brand in-store. Its ability to combine “an experience” with the navigation and merchandising to solve customers’ problems makes it a leading retailer in its category.

As Brent Dowsett, Managing Director of Australian Geographic Retail commented: “Our entire Australian Geographic Retail business is based around value creation for our customers and we start by providing them with an incredible and unique multisensory experience when they walk into the stores. We focus on trying to find products they can’t buy anywhere else and make sure that everything in the store has a purpose from fun to education. Every person walking through our door has a ‘problem’ they are looking to solve whether it’s a gift for any age group; a purchase for themselves or an unusual piece for their homes. Our job with value creation is to match our products to their needs and solve the problem for them. We’ll show them how products work and let them test and play with them. We also highly value their feedback as we want them to return again and again.”

Predicting and anticipating your customer needs

The ability to re-think your entire brand experience in-store comes from understanding what motivates your customers. As Ron Johnson so succinctly put it, “You can’t follow the customer. You’ve got to lead your customers – anticipate their
needs and meet those needs, even before they know what they want”. Predicting and anticipating their needs requires you to have a deep understanding of not only who your customers are; but also what motivates them and how they interact with your brand.

The RDG Australian Retail Consumer Study 2012, undertaken by RDG Insights in conjunction with i-Link Research, revealed powerful insights into what really drives the Australian consumer to engage with a retail brand as well as how they purchase. Using predetermined neuro-scientific personality categories, the subconscious drivers behind the retail behaviour of over 1,300 Australian consumers was researched. The results clearly proved the correlation between personality type and
purchasing behaviour providing evidence that retailers can now take a more predictive approach thus leading consumers and meeting their needs.

Creating new types of value is all about solving your customers’ problems and having the imagination to provide an experience beyond the products you sell. It is a powerful tool, therefore, when you understand how to communicate with your customers at the subconscious level including such detail as which visual merchandising techniques will drive them to engage with your products in-store and then purchase them. Indeed, understanding your customers in such depth will enable you to re-imagine your entire store space and cater to such details as multisensory enhancements, colours and textures, store design and traffic flow.

You will be able to predict how your customers pre-research and buy across the omni-channel mix as well as their expectations for customer service before, during and after their visit. Furthermore, you will understand how and where you should be communicating with your customers outside of your store environment to repeatedly drive them in.

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Understanding the omni-channel retail environment

If you’ve integrated your offer into an omnichannel retail environment, it’s important to become a “fitter” business by recognising the different roles of your physical (store) and virtual (mobile and internet) store spaces and integrate them in the right way to create value. For example, your e-commerce website is the perfect retail space to rely on a transactional-based strategy and initiate price competition as well as promoting convenience.

However, this is not a value-creation mindset – rather it fulfils a need for this particular environment. There is a certain public perception that there’s been a dramatic shift in purchase behaviour from physical to virtual. This is in fact quite the  opposite.

Harvard reported in December that only about 9 per cent of US retail sales are online today. What is growing, however, is the physical retailers’ extension into the online space. Physical stores remain the main point of contact with customers and as Ron Johnson so rightly summed it up, “The only way to really build a relationship is face-to face. That’s human nature. That gets at the essence of what retail stores have to be about”.

By taking a look at your entire brand from the value-creation point of view, you have the ability to turn your stores into rich destinations filled with customer-solutions focussed experiences, thus becoming a ‘fitter’ and more profitable retailer.

Happy ‘Fit’ Retailing

Brian Walker is Founder and CEO of Retail Doctor Group. Brian specialises in the implementation of insights driven strategy to build business fitness.

Phone: 02 9460 2882