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Monday, August 24, 2009

Retailers: "Act Vertical" and Survive Recession

Retail therapy originally uploaded by maistora.
Retail therapy by maistoraAccording to Kurt Salmon Associates [KSA] and their 2008 research of 101 U.S. retailers, there's an intense retail shakeout going on. Only those who adopt an "Act Vertical" strategy can survive the recession. See The Act Vertical Imperative.

So, what is "Act Vertical"?

It's a radical departure from traditional retailing - which sees itself as the "purveyor of national product brands." You know, the kind of retailing that doesn't inspire shoppers, doesn't make for memorable customer retail experiences and does nothing to address customer wants and needs.

Rather, "Act Vertical" means serious product innovation [vs. just merchandising], collaborating with customers and suppliers, controlling quality without owning manufacturing, offering compelling services that lead to customer insights and additional innovation as well as memorable and engaging customer experiences -- which lead to a virtuous circle that further strengthens customer relations.

Some of the retailers who get 'it' and 'act vertical' include: PetSmart, Aeropostale, Coach, Trader Joe's, Target, Apple and REI who have shown strong abilities in seven core capabilities:

+ market research that identifies emerging customer needs
+ product design and development that balances creativity and commercial appeal
+ consumer testing that shapes the offerings and customers experiences
+ sourcing relationships that accelerate manufacturing but delay key product decisions
+ assortment, allocation and replenishment that rapidly shifts products to places of greatest demand and maximized pricing
+ design and execution of engaging and consistent brand experiences across all channels
+ marketing that communicates the brand promise and the uniqueness of the offering.

The KSA research uncovered that retailers have many opportunities ahead - particularly if they want to appeal to consumers for reasons other than low price and high convenience. More specifically, those retailers intent on creating unique and compelling products with a strong in-store customer experience significantly out-perform other retailers.

That gets my attention. Does it get yours, too?

You see, the norm today in terms of customer experience is low-touch. The goal is high engagement, but we aren't there...

Here's another interesting point: most websites provide a higher degree of product information than consumers find in-store. No surprise. They also provide essentially NO product usage information to customers once they purchase. Wow! What an opportunity.

That's right! What an opportunity to engage with customers and continue to provide them with value on how to care for their purchase, what to be aware of, how to deal with emergencies, etc.

Think of the services you can offer to help solve consumer issues. It's certainly true from a flooring or carpet perspective. I'm sure it's true for other product areas...

I discovered this KSA research report through Retail Customer Experience's The seven competencies retailers will need to survive the recession. I urge you to email KSA at ActVertical@KurtSalmon.com or to click on the link above and request a copy of this report.

Then, would you let me know how you Act Vertical?

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