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Tuesday, July 31, 2007

Don't Compete on Price!

Sushi price board originally uploaded by LimitedExpress.
The ultimate customer experience has nothing to do with price!

You don't believe me? Then listen to the experts on this BizWiseTV 30 minute program available for viewing until November at Creating the Ultimate Customer Experience link. The program pitch is as follows:

How can you succeed in today's highly competitive retail environment? Offering the lowest prices or providing unique products is no longer the answer.

Discover the surprising secrets to successful retailing from Pamela Danziger, and transform your store into an experience that shoppers will love.

Learn how you can use technology to transform the customer shopping experience from Brian Kilcourse, President and CEO of Retail Systems Alert Group.

This highly informative 30-minute video will show you:
- How to tap into customers' emotional needs
- The seven critical requirements for creating a successful retail experience
- How adding customer value enables you to charge higher prices
- How technology can help you increase your differentiation in the marketplace

You will also see case studies of Circuit City and J.J. Foods and learn about other retailers who have used technology to provide innovative and superior customer service. Finally, you will learn important store design trends from Gensler, an award-winning designer of retail environments.

It's in three parts.

In part I, Pamela Danziger, author of Shopping: Why We Love It and How Retailers Can Create the Ultimate Customer Experience, discusses the creation of a retail experience.

I've referred to Ms. Danziger before, in Why Amazing Shopping Experiences Matter and in Stores That Floor. Her book offers compelling examples and great descriptions of truly memorable customer experiences. She explores some of those concepts in this program.

For example, she touches on the 'Quantum Theory of Shopping' which consists of (need + product features + affordability) times (emotion-squared). So, a consumer may shop because she needs something, and the price/value meet her criteria, but what will trigger the actual purchase decision is the emotional quality associated with the experience. That's right. Consumers respond to the emotional thrill that successful stores consistently create.

Such stores - i.e., Shops That Pop - deliver a high level of customer interaction that affects store design, atmosphere, merchandising, etc. all converging to encourage a consumer to find her "inner diva" rather than just shop for fashion.... Sales people are essential to the delivery of the equation.

Some concepts from the book:
+ Authentic concept with long lasting value: that is about putting the customer first!
+ Make stores electric and contagious: the best example it the Apple Store [see Retail As Experience - More Important Than Ever].
+ Price/value model that favors customers: it's a matter of how they perceive value.
+ Make sure your store is accessible rather than overly pretentious and too exclusive.

[Ad Age's Create a Stage That Attracts Your Very Own Brand Posse - In-Store Details: Keep Consumers Connected With Retail Evangelists by Patrick Hanlon from 7/23/2007 makes some fascinating points about creating an accessible store: "Some retailers large and small do it right because they understand how to build communities around their brands.... It's not just shopping; it's a lifestyle." He brings up The Apple Store as well as Abercrombie & Fitch, Lego, Izzy and Intelligent Nutrients.

"Shopping is a rite filled with anticipation, expectation and fun. Shopping is release. Losers can become winners by adding energy and innovation to pieces of code. Enthusiasts are engaged by every nuance you provide in icons, rituals, lexicon and other pieces of a belief system that define the retail experience. Let others provide status quo; leaders show ingenuity." It's a good read.]

Finally, merchandise your store to stand out: display products differently, highlight them in unusual ways. Be sure to deliver inherent value that aligns with what a customer wants. Absolutely don't compete on price!

Part II examines the retail space -- the first point of contact with consumers. Stores definitely send signals to customers, so be sure to manage those signals as effectively as possible. Gensler Design - experts in retail design with 40 years experience - share tips and trends.

When the firm first kicks off a new retail design project, it starts with a visioning process. Essentially, sitting down and asking questions to develop a vision for the store. This can take a few hours, or several days.

Some tips:
+ Since retail is about newness, a retail store needs to capture that same sense. Keep it fresh: change colors, move products, generally try to create a fresh new look. Be obsessed with store - the hallmark of a great retailer!
+ Create an emotional connection between the store and the consumer. Make it a memorable experience for the customer. Connect with the 5 senses: sight, texture, light, sound, smells, tastes...
+ Create opportunities to interact with the product.
+ Never underestimate the effectiveness of great lighting in a dressing room.

Gensler discusses the importance of letting consumers interact with the product. This brings the store to life and improves the store experience. The better the experience, the more likely a consumer is to buy [e.g., the Apple Store or Bass Pro Shop].

In developing a new store design concept, Gensler builds prototypes to mimic customer experience and model consumer movement through the space. It spends considerable time understanding the store from the consumer's as well as the employee's perspectives. That means not only working the store, but also shopping it, and then explaining to employees how best to use the design features of the store to enhance the customer experience.

Exceeding customer expectations creates value and adds to the store experience. Imagine delivering that magical moment! It's completely a function of service and goes beyond the product being sold [i.e., think (emotion) squared].

Be sure to look at the store from both a visual and verbal perspective since people absorb cues differently. For example, the Northface store in Chicago translates a catalog/online environment into a retail experience while still communicating stories.

+ Green stores that focus on using sustainable materials, decreasing energy dependence.
+ Weaving visual technology into stores, using, for example, "Now" kiosks to sell product where the store carries a limited range of product, with the full line easily seen via the kiosk.

Part III looks at technology solutions that enhance the customer experience. You'll see a nifty in-store video conferencing kiosk at Circuit City [fire dog live support] in action. This is technology to delight the customer and - as Retail Systems Alert Group explains - delivering actionable information into the consumer's hands.

Retailers must definitely do the basics first and then use technology to streamline the process, and focus resources on the selling process. Technology can be a market driver enabling retailers to provide excellent customer service and banish the focus on price!

Small and medium retailers can excel at service, offering reasonable product at reasonable prices.

Experience JJ Food, in the UK. In the food distribution business, it has differentiated itself by being the easiest to do business with. Its call center drives business and growth because of its amazing CRM systems. As a result, JJ Food sells 70,000 products via 83 telesales agents, in a variety of different languages to 20,000 customers, streamlining costs at the same time. JJ Food has successfully established relationships because of its reliability and consistency and customer service has made the difference to creating an extraordinary experience.

In case you don't yet get the point, don't compete on price!

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Anonymous said...

It is very interesting indeed, and there are lots of products catgories where experience is crucial but on the other hand, how can we explain the growing popularity of discount stores (in DK at least). How can we explain the long lines before sales or special offers supermarkets have. Sometime ago I have also run across numbers that 80% of clothes are bought in supermarkets, discount stores. I think we need to be careful and don't overdesign it. Some brands create fantastic experiences, products that are affordable to few, the masses perceive products as luxury brands and they crave them but can't afford them. So supermarkets make private labels or others produce copies that look like them and this is where price matters.

Anonymous said...

Your excellent blog reminded me of this quote
 “Businesses today face an increasingly stark choice. They can aim simply to be the cheapest – and leave themselves vulnerable to being beaten on price. Or they can achieve secure growth with design at the heart of their strategy acting as a catalyst to completely new offerings.”
- Digby Jones, ex-Director General Confederation of British Industries in UK.

CB Whittemore said...

Daria, you bring up an interesting paradox that the authors of "Trading Up" capture in "Treasure Hunt" and illustrate with European examples [e.g., Aldi]. In the US, Target - a discount store - sells 'cheap chic' via a fun experience! Thanks for sharing a DK perspective.

CB Whittemore said...

Jim, thanks for sharing that quote. It captures the essence of what retailers face! Thanks, too, for visiting.

Paul Dunay said...

Nice post and congrats on your #7 spot on Being Peter Kim's Top 20 marketing blogs - I have been following your blog.

I wanted to point you to a survey of B2B marketers of their favorite Web 2.0 tools

here is the survey link

here is a directory of the results

and here is B2B Marketing Magazine's coverage of it

and here is my most recent post on it

Paul Dunay

PS let me know if you would like to do a podcast with me sometime

CB Whittemore said...

Paul, thanks for your comments and for your wonderful links/resources -- and for the podcast offer! I look forward to digesting them all.

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Reminder: Please, no self-promotional or SPAM comments. Don't bother if you're simply trying to build inauthentic link juice. Finally, don't be anonymous: it's too hard to have a conversation. Thanks, CB

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