Is It Time for You To Reinvent Your Retail Experience?

Retail is changing.  How consumers research products, shop and buy are changing.  Some of this is due to mobile shopping, some is due to consumers’ ready access to product information online and some is simply due to some retailers cutting back staff – forcing consumers to do their own product information gathering.  And shoppers are becoming better informed – according to a 2012 Motorola Holiday Shopping Study, 61% of retail store managers surveyed said they believe that shoppers are better connected to product information than their in-store associates. 

Given this changing retail world, a question retailers need to answer is:  do you have a strategy and plan for this evolving marketplace and the experience you deliver to your shoppers in store and online?

Mobile shopping is growing – maybe not as fast as some predicted, but it is still growing at a healthy pace.  In 2012, according to eMarketer, $25 billion in purchases were made on phones and tablets – up 81% vs. 2011.  While mobile sales were just 11% of total ecommerce sales, eMarketer predicts this will reach $87 billion by 2016.  According to a recent study from Adobe Systems, 55% of tablet owners use the device for buying products vs. just 28% of smartphone users.  And while, more was spent on tables ($13.9B) vs. phones ($9.9B), shopping on tablets was more likely to be done at home.  According to a 2012 Viacom study, only 36% of tablet owners use their device when shopping in store.

The use of tablets and smartphones as shopping information and purchase devices will continue to evolve and reshape retail as both manufacturers and retailers develop content, apps and better ecommerce tools.  According to the 2013, Shop.org/Forrester Research State of Retailing Online survey, 51% of the retailers surveyed, stated their top priority for 2013 is site optimization, including checkout optimization, user experience, and product detail page enhancements.  Additionally, 43% of retailers surveyed stated that mobile and tablets are among their top three priorities for 2013. 

Different Brick and Mortar retail strategies are evolving – Retailers need to react to this evolving world.  While ecommerce only reach 5.2% of total retail sales in 2012 (source: US Census Bureau), it is growing at 17.7% per year.  Many retailers have concerns about “Showrooming”, where consumers shop at retail and buy online to save money.  Given the rapid growth of ecommerce, retailers appear to be adopting one of four strategies to win shoppers and their purchases in their traditional brick and mortar stores. 

Multi-Channel Retailing – many key retailers, especially the big box stores, are rapidly working to create content-heavy marketing experiences that integrate consumer shopping touch points across stores, retailer websites, social media and email.  Macy’s CEO, Terry Lundgren, refers to their efforts as “Omni-channel” – combining multichannel marketing with new capabilities to fulfill purchases across their system from both fulfillment centers and fulfillment stores.

Multi-channel retailers are working to make sure that in-store shoppers have an easy shopping experience with ready-access to helpful and knowledgeable sales associates.  One retailer in particular working to improve in this area is Best Buy.  Best Buy is a frequent stop for consumer showrooming before buying online.  They are at risk of losing their business if they cannot solve this problem.  Best Buy is working to confront showrooming by creating better in-store experiences that will convert shoppers to buyers.  As Best Buy CEO Hubery Joly put it recently:  “Once customers are in our stores, they’re ours to lose”.  

The key to the multi-channel retail strategy is to offer the right combination of helpful product information, product availability and a good price for the shopper who is ready to buy now.  In stores, this means knowledgeable store associates who can help the shopper find the right products.  Online, it means product selection tools including product reviews, product comparisons, plus upselling and cross selling recommendations to boost total sales.

Experiential Retailing – These retailers have also chosen to give shoppers a great shopping experience, but the path to loyalty has less to do with product information and availability as it does with the experience itself.  These are typically high service retailers that stand out in their category by creating unique and desirable shopping experiences that leaves the shopper wanting to shop in that store again.  While most retailers are looking to enhance their retail experience, there are those who have chosen to create a real difference.  In grocery retailing, smaller retailers like Stew Leonards (CT) and Jungle Jim’s (OH) have created highly unique experiences.  But bigger chains such as Wegmans, Loblaws, and Publix stand out in their experience and service concepts.  Specialty stores such as Starbucks, Sephora, Build-A-Bear and Bass Pro Shops all provide truly unique experiences.  Petco uses puppies and the opportunity to interact with them in store to engage shoppers and create emotional connections. 

The challenge and opportunity for retailers choosing this strategy to identify the key experience activities that combined with store merchandising practices will help them stand apart and engage their shoppers.

Lowest Price – This strategy focuses on the price-driven shopper.  These retailers’ business plan, consumer communication and merchandising are all focused on offering goods at a low price.  The level of sophistication varies from the highly integrated multi-channel marketing efforts of Walmart to the much simpler approach of Dollar Stores.  DSW, Stein Mart and Harbor Freight Tools are examples of this strategy.  This is not a high-service model.  Staffing is kept low and shoppers often have to discover products and product information on their own.  Shoppers are willing to shop there to save money – trading in service and experience for savings.  The key to this strategy is to consistently deliver great prices.  These retailers will successfully compete with other business models by continuing to offer low prices every day on popular products.

Walmart got in trouble and started losing shoppers when they redesigned their stores and tried to offer upscale fashions in addition to everyday low prices.  They cut back many departments shopped by men to add space to categories that women would shop.  The result is they eliminated thousands of low price SKU’s across many categories – and lost the shoppers who came to Walmart to buy them.  Walmart has since changed their strategy and has been adding back many of the categories and SKU’s they previously dropped.  A renewed focus on offering and communicating low prices across key category has helped them regain shoppers and sales.

Do nothing new – The last group of retailers is noted more for inaction in this new world rather than responding to the changes.  They continue to use the same go-to-market strategies that they have for years rather than choosing one of the three strategies above.  They are losing shoppers to the tech-savvy multi-channel retailers, the much more engaging experiential retailers or the value of the lowest price retailers.  Stuck in the middle without a clear reason for shoppers to go there, their only strategic advantage is often the convenience of a particular store location.  Getting lost in the middle of these winning strategies, these retailers will slowly erode sales and market share.  Examples include Sears/Kmart, Sports Authority, Barnes & Noble and The Gap.

Refine Your Experience

Which of these is the best strategy to win in the evolving world of retailing?  The best strategy is the one that differentiates a retailer and attracts and keeps loyal shoppers.   The first three strategies all offer this opportunity.  The winning opportunity is to embrace one strategy and stick to it to create the shopper experience that keeps your shoppers coming back to your store.

This blog was originally posted by GrowthSpring Group on the MENG Blend website.

GrowthSpring Group is a marketing strategy, market research, and innovation firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans. www.GrowthSpringGroup.com

Winning The Retail Purchase Decision – (Part 3) Who Is Influencing Your Shoppers To Buy Or Not Buy From You?

Each day retailers have the challenge of converting shoppers into buyers and brand marketers have the challenge of converting shoppers into buyers of their brand’s products.

In the first part of this blog, we discussed how purchase decisions are influenced in the marketplace and the pre-store research stages of the consumer decision process. In part 2, we discussed how shoppers choose a shopping destination to make a purchase.  In part 3, we focus on what has been called the “First Moment of Truth,” when a shopper makes the purchase decision in the store.

When examining the many influencing factors in making these purchases, we will examine the points of influence that can be controlled by the retailer, those that can be controlled by the brand marketer and other factors controlled only by the shopper.

The Shopper

A shopper entering the store brings with her a mix of variables that may or may not have been influenced by marketing prior to this shopping trip.  These include the shopper’s plan for the shopping trip, her mood, attitudes toward brands and products, value perceptions, shopping budget, time pressure to buy now, convenience orientation to buy now, brand loyalty, habitual grab & go purchase behavior, expected ease in finding her solution on this shopping trip and her level of involvement in this purchase (time spent researching, importance of specific product features, emotional/social involvement with product). 

These internal factors will have strong bearing on her final in-store decisions whether or not they can be influenced in store.  In order to win any shopper who is not an existing loyal user of a brand, they need to be disrupted, engaged and persuaded that a particular brand / product is worth buying on that trip.

The Shopping Experience

The retailer controls most of the shopping experience.  This is the experience between entering the store and the last 3 feet of the shelf where most decisions are made.  The retailer has selected to deliver either a shopping environment that is focused on making easy, quick purchase transactions or one focused on delivering multi-sensory and personal interactions in store and enhanced solutions that they take home from the store.  This shopping experience strategy can impact store loyalty, length of time spent in store, and often the number of items in the basket.

Transactional retailers include convenience stores, many grocery stores, club stores and many mass merchants.  Products are on shelves or racks and most shoppers find and buy products on their own.  If the only sales associate contact is at the checkout, a retailer likely falls in this category.

Retail experience stores create an environment that engage the senses and/or help shoppers find the unique solutions that are perfect for their needs.  Disney and Apple stores, Bass Pro Shops, and Fresh Market are good examples of this category.

Both retail formats can be effective, but they make different use of in-store experience influencers.  Tools to direct a shopper’s path, length of shopping trip and buying attitude include:

Atmosphere – Store design, store layout, visual merchandising, use of space, lighting, music, type of fixtures, width of aisles, breadth of assortment and amount of product on displays. For some, this translates to ease of shopping, for others it translates to pleasure of shopping.  Atmosphere is one key reason that shopper will spend over 3 hours shopping in a Bass Pro store vs. only a few minutes in a mass merchant’s fishing department.

Wayfinding – Overhead and in-aisle signing guides shoppers to easily find the products they are looking for.  Visual design of signs helps communicate information and give visual cues on the department and category of products.  Good wayfinding helps consumers find the products they came to buy.

Store Associates – A shopper’s interaction with store associates can be highly influential.  Educating sales associates on your brand and products can impact your sales.  Shoppers are drawn to associates who are friendly, knowledgeable and helpful.  Having trained sales associates available to help can boost product sales for recommended products and brands.

The Last 3 Feet

While the shopping experience will influence how long a shopper stays in a store and how they shop the store, the last 3 feet is where each purchase decision is made.  The impact of purchase influencers in this space may vary across product categories.  Tools that can be used to influence and win the purchase decision include:

Merchandising – Whether products are featured on end caps, a secondary display or use in-aisle POP signs to highlight a product’s features and benefits, gaining a differentiating visual element to engage a shopper in-store helps sell product.  Merchandising disrupts habitual shopping behavior and engages shoppers in evaluating the highlighted product.  The result can be brand switching or an impulse purchase.

Brochures – Product information / brochures that a consumer can pick up and read will allow a shopper to learn more about a product and why to buy it.  Mobile phone internet service has expanded access to information in store.  Displays and packaging with QR codes provide access to product information without the cost of printing in-store literature.

Product interaction – For many products, consumers want to touch, feel, and try a product before purchasing.  Tools such as in-store product demos and sampling allow the consumer to try the product.  Packaging with windows to see, touch, or operate the product, let the shopper know exactly what they are buying.  Creating these interactive experiences will help you sell your product.

Packaging – Product packaging is often the last source of product information to influence a decision.  If no prior information source has been engaged (on-line research, family recommendation, retail associate, POP sign, etc.), packaging plays a key role in many decisions.  For a lower-involvement product category, packaging may be the only source of information a shopper has when making a purchase decision.  Great packaging that engages consumers sells product.

Promotional offer – Consumers are drawn to value and special offers.  Offering a promotion gets your product noticed for two key reasons.  First, you change the value equation in a way that makes your product more attractive.  Second, POP communication of a promotion helps your product stand out on shelf.

Price communication – The price at shelf is the trigger to evaluate all the product information received up to this point.  The value will be assessed based on the features and benefits of a product vs. competitive products, the need to buy the product now, the desire to buy the product now and the convenience to buy the product now.  How a price is communicated at the shelf can influence purchase.  Pricing multiples (3/$10) has been proven to boost sales over individual price points ($3.33).  Coke and Pepsi are masters of this tactic.

Wild Cards – Outside Influence

No matter how prepared your store or brand is to sell shoppers on your products, there are outside influences that can trump your best efforts.  One of the most familiar is a shopper with kids.  A child who wants a particular product will often be successful in convincing a parent to buy that product.  Kids have unique talents in influencing purchases in store!

Another in-store influence beyond control is other shoppers in the aisle.  Another shopper is viewed as a credible source of product information.  I watched 3 shoppers being influenced by another shopper on which leaf blower to buy—I ended up buying the recommended blower too!  Other shoppers’ presence and social influence can impact what does or does not go into a basket.  What products a shopper wants to be seen buying will impact a trip…and in some product categories, drive sales online.

Smartphones and mobile internet access are rapidly influencing shopping in new ways.  Shopping apps and mobile searches for product reviews can change an in-store decision or even prompt a shopper to change stores to buy a product.  These tools can also be leveraged to encourage shoppers to check-in on their smartphone to receive in-store promotions or coupons.

Where To Prioritize Your Efforts

With all these variables, where should a brand marketer focus time and spending?  According to a 2011 study commissioned by Google with Shopper Sciences and IPG Mediabrands, the top sources used by shoppers when making purchase decisions are: 

Product packaging                                                    50%

Brochure/pamphlet read in store                                  49%

Talked with a salesperson or associate                         38%

Product signage/display                                             36%

Phone call with a customer service representative          31%

Sampled/experienced the product in a store                  22%

As the impact of these tactics will vary by product category, we recommend you test and establish best practices for your brand.  For most categories, product packaging, product signage/display and retail associates will play significant roles in the final purchase decision.

Winning at retail is an art and a science.  We always recommend starting your shopper marketing efforts with fresh insights to optimize your opportunity to have the biggest impact and best chance of winning vs. your competitors.

GrowthSpring Group is a market research, marketing strategy and innovation firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans.

Sell more by understanding why shoppers buy from you

If you are like most companies, you have a core group of shoppers that are your loyal customers and then you have others that buy your product or service on occasion and some who try your brand and never buy again. 

Do you know each of these groups behave the way they do?  Do you know why your customers buy your product?  Do you know why others never buy your product?

Let’s start with the reasons people buy—what drives them to consider and buy a product or service.  Your brand may fall into multiple purchase decision categories for different customer segments.  Which of these are the most likely reasons your customers buy from you?  There may be other reasons / purchase behaviors for your category, but likely most of your customers can be found on this list.

·         Replacement – replacing something that is used up or broken.   A less frequent purchase, but usually one where someone knows what kind of product they want to buy.

·         Routine – buy regularly from an acceptable set of products or services.  You may be the only product they buy in this category or part of a rotational set of product (or services).  Canned soup, breakfast cereal and fast food restaurants are representative of this behavior for many.

·         Brand loyal—this too can be a routine, habitual purchase.  But these shoppers are brand loyal.  Discounts, special offers will not cause these loyal shoppers to switch.  Brands like Budweiser, Heinz Ketchup and McDonalds may or may not offer the very best product, but they have a loyal following.   Do you provide your customers a reason to be loyal to your brand?

·         Variety seeking—someone who is loyal to a category, but wants to try something new.  A good example is seeking variety when chosing a restaurant.  Condiments, fashion, beauty salons and car shopping can fall into this behavior.

·         Seasonal—the time of certain events or seasonal weather, these category purchase decisions increase at certain times of year.  Examples include:  gardening, hunting, swim suits and Christmas decorations.  Due to the seasonal nature of these selling seasons, sales happen in a shorter time window.  Understanding why shoppers will want your product and how to market it can make or break your year.

·         New & improved—people are often looking for the next new thing.  They are willing to try something new to see if it offers a real improvement, a better value or a solution that simplifies their life.

·         Brand switching to upgrade—like new & improved shoppers, many customers will search for a better product or service if they are not completely satisfied with their current product.  Do you provide a better solution?  Do you communicate these benefits so others know to try your brand?  If your customers are not truly satisfied, you need to re-engage them before they seek better value elsewhere.

·         Brand Mom/Dad/person of influence always uses—sometimes it is easier to trust someone who has more experience.  Many brands are bought because it is the brand that Mom always used.  Friends, neighbors, celebrities, professionals and doctors are other influencers depending on the category.

·         Brand switching to seek value / cut costs—in today’s economy people are looking for value.  Some are willing to reduce value for a lower price.  But if you let your shoppers make decisions only on price, you are missing an opportunity to communicate and sell your unique value.  Most shoppers will pay more if they believe the value for the money is worth it.

·         Indulgence—small indulgences are a hot trend this year.  Can your product and service offer this benefit?  Chocolate, Starbuck’s, fashion shoes and microbrew beer are categories that benefit from this trend.

·         Gift purchase—not everyone is shopping for themselves.  Purchase motivations and personal constraints change when they are buying a gift.

·         Impulse—these people saw your product or place of business and on impulse decided to try it.  For some categories this can be over 20% of purchases.  Understand what drives this behavior for your shoppers.

Each of these purchase behaviors have different buying motivations and purchase criteria.  If you assume all off your customers have the same reason for buying your product or service, you are missing the opportunity to segment your customers and grow your business with customers who buy for different reasons.

If you have not recently conducted research to understand who your shoppers and customers are, and why they buy, you have a great opportunity to boost your business in this year.

GrowthSpring Group is a market research, marketing strategy and innovation firm focused on accelerating your sales and profit growth. We help you identify new business growth insights & opportunities and execute winning strategies & plans. www.GrowthSpringGroup.com