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Five Things Your Retail Customers Expect This Year (Hint, Quality Experiences Is One of Them)

Guest Blog By Michael Hemsey

For Toys “R” Us, February has not been a good month. The global retailer’s CEO, Gerald Storch stepped down after the company failed to hit revenue targets, as well as lackluster same store and overall store sales during the 2012 holiday season. While Toys “R” Us’ recent miss stems from heightened discount competition, some of the company’s shortcomings might be internal too – hyper-reliance on excessive discounts.

Discounts, as we have seen, can do a lot of damage.

But at least there’s a lesson to be learned by other retailers. Despite Storch being credited for heralding an omnichannel strategy at Toys “R” Us, relying heavily on in-store and merchandising across multiple channels, increasingly, consumers are striving for quality brand experiences as much as they seek quality prices.

And with experiences being central to customer engagement and loyalty, here are five things that retail customers can expect more of this year:

#1. The continued rise of corporate philanthropy and brand social awareness: Panera Bread is a good example. While the brand is spending some $70 million on its “Live Consciously” campaign through multiple channels, its Panera Bread Foundation established Panera Cares Cafés. These are places offering variable pricing based on customers’ ability to pay, if at all. Instances like this support recent eMarketer data which finds 56% of US Internet users have purchased a product based on a brand’s cause allegiances.

#2. An increase in loyalty program transparency, where fewer hoops means happier customers: It should be obvious – shoppers want the most bang for their loyalty buck. Consider gas stations. Most gas station loyalty programs’ link their rewards to convenience store purchases. But British Petroleum is changing that with its BP Driver Rewards program. Starting in April 2013, BP will launch a new loyalty program where consumers earn 5 cents off every gallon of gas they pump, after the first 20 gallons. Consumers will see direct savings for buying something they already need: fuel. Similarly, Winn Dixie’s Fuelperks program earns users 5 cents off per gallon pumped at Shell stations for every $50 they spend in groceries.  Simple, honest and direct loyalty programs mean business and retailers are eager to jump on board.

#3. Customer engagement that uses 21st century Big Data metrics to drive traditional outreach: Or as Claud Cecil Gurney, founder of design firm de Gournay describes a consumer purchase: “[Feeling] like something they’ve created for themselves rather than something that’s been bought off a shelf and stuck in their house.” Accomplishing that genuineness requires constant engagement across all channels. It also requires acting on gathered data which is a central tenet of the omnichannel loyalty experience, an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience.

#4. The improved organization and de-siloing of Big Data: This one’s a no-brainer but it bears repeating. A recent Forbes article discusses how brands should opt for a single “golden version” of customer data and maximize engagement by taking a holistic view of the customer. To me, this sounds a lot like convergence and the need to bring loyalty data and traditional CRM data under one de-siloed roof. Forbes refers to it as “master data management.” Whatever you call it, convergence is key. The good news is that, according to a 2012 Retail Horizons report, nearly 67% of retailers surveyed ranked customer satisfaction as their top strategic initiative for 2012. Another 82% said customer service strategies would be top priority, up from 75% the year before. If that was the sentiment in 2012, you can be sure 2013 will be just as intense.

#5. Growth of alternative forms of payment: We’ve written about the increasing popularity of mobile wallets and the brand possibilities that come with Apple’s Passbook app. But here’s another take. Walmart is expanding use of its iPhone “Scan & Go” app to 40 Denver, Co. stores. The app allows customers to scan products while they’re shopping. When they’re done, the app organizes purchases under a single QR code that can be read by QR-equipped readers at checkout. Think of Apple stores, where salespeople are on hand to scan products throughout the store. There’s no checkout line. Walmart’s experiment is proving similarly effective in streamlining the in-store shopping and checkout process.

And if Walmart’s doing it, others will follow.

But as Toys “R” Us begins the search for a CEO, it would be wise for it – and other retailers – to keep these five customer expectations in mind. An omnichannel approach is great and competitive prices are too. But that’s just the first step toward enhancing loyalty and driving ROI. Enhanced social good, loyalty program transparency, Big Data and the use of its metrics in a de-siloed data environment, and one that relies on innovative payment methods are increasingly vital components to include in the loyalty mix.

Michael Hemsey is president of Kobie Marketing

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