Published on February 24, 2014
Guidance for 2014 5 Directives for Driving Growth in Retail by
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Guidance for 2014 A new year – a new approach. In Guidance for 2014, BMC offers retailers a short “to-do” list that’s long on opportunity. 1. Prepare for shoppers to assign a monetary value to time. 2. Look for the point of diminishing returns in personalization. 3. Test new approaches to fee for services. 4. Increase your vigilance re competitive prices. 5. Watch for new vulnerabilities in very large competitors. MORE »»» 2
Guidance for 2014 1. Prepare for shoppers to assign monetary value to time. More shoppers will consider the time they spend shopping to be a cost. This will lead to more online buying for at least some shopping occasions. Shoppers who calculate their “savings” by combining travel time with in-store shopping time will be the most impacted. Interest in time-cost and time savings will extend to greater interest in quicker service and checkout inside the store. Implications/opportunities o Retailers will have an opportunity to differentiate themselves on the basis of the time they can save shoppers. o Capturing this benefit will require the retailer to: • Communicate to shoppers how they can think about these benefits and “do the math” for them. • Promote the store’s time-saving features as a way to make that store a more attractive choice for convenience-oriented purchases than other options. 3
Guidance for 2014 2. Look for the point of diminishing returns in personalization. The costs and challenges of personalization will become more evident as markets are sliced into ever-smaller segments. Retailers will need to weigh these costs against the expected incremental sales. Reaching “segments of one” may not always be cost effective. Implications/opportunities o Retailers who can understand what it costs to execute the key elements of personalization can create competitive advantage. o Among the challenges they must overcome: • Collecting and validating shopper information without “creeping people out.” • Translating that information into a form that’s appreciated by and useful to shoppers. 4
Guidance for 2014 3. Test new approaches to fee for services. Look for greater use of subscription fees for execution and delivery of online shopping orders. More businesses will realize that moving away from “one-off” transaction fees not only promotes more orders per household, but actually increases household spending. Implications/opportunities This form of “service pricing” resonates with shoppers and grows the sales of retailers that implement it. To keep pace, all players will need to find ways to apply this concept without eroding customer profitability. The challenge will come when shoppers have to make choices between several competing services since it feels a bit like joining a “club” or committing to one retailer. Will it be reasonable for a household to subscribe to multiple grocery services, for instance? 5
Guidance for 2014 4. Increase your vigilance re competitor prices. Shoppers’ growing access to and use of competitive pricing information is undermining many traditional pricing practices. Price will continue to be important, as even more shoppers tap into the reservoir of available information. Retailers will need to adjust pricing strategies accordingly. Implications/opportunities Since more and more shoppers will come to the purchase decision armed with a real-time understanding of marketplace prices: o No retailer can afford to charge “insult” prices just because they’ve been able to do so in the past. Prices today don’t have to match, but they do have to be closer. o Retail margins will compress because it will be harder to sell higher-than-market-priced products in order to balance out lower prices on other items. o Increasing the velocity of product sales will become an even more important way to improve performance. 6
Guidance for 2014 5. Watch for new vulnerabilities in very large competitors. Among shoppers, there’s concern that very large businesses could grow so big that they stamp out smaller competition, disadvantaging shoppers in the process. (Think Amazon and Google.) As more people realize these companies can already do things customers don’t like – and that there’s little customers can do about it – concern will likely increase. Implications/opportunities This will make some business opportunities more attractive by making it easier for smaller and more specialized sellers to win a loyal following. 7
Guidance for 2014 Brick Meets Click delivers the strategic insight that retailers, suppliers and technology providers need to drive growth by meeting shopper needs in an omnichannel environment. We also host a commercial-free forum on the future of shopping at our website. Visit us at brickmeetsclick.com Follow us: Twitter, LinkedIn, Google+ or Facebook 8
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