One of the factors that has helped make the retail chain concept so successful globally is that customers are ensured a similar level of service, access to similar products, and a standardized level of quality, regardless of which of the retail chain sales points they visit. Customization provides an opportunity to make this concept even more successful.
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What we as consumers all love about chains like Starbucks or Carrefour is that we know what we’re going to get from them, each and every time, in all location – be it in London, Dubai or Buenos Aires, such retail chains offer a consistent level of service and quality, factors which are very important to consumers. Aside from national-based customization (such as offering Shrimp Burgers at McDonald’s in Japan) on a product level, little varies between retail chain stores from city to city, country to country.
This level of consistency has played an important role in helping such retail chains dominate markets globally, expanding at an ever-increasing pace, killing off independent coffee shops, bookstores, grocery stores, clothing stores, etc. In almost every retail sector in most countries, a handful of brands make up a large part of the market of their respective categories.
While this cookie-cutter approach works for the most part, it fails to take into consideration local factors, variables that in this day and age of data-driven decision making is disappointing. We believe there are significant opportunities that retailers can capitalize on by customizing their retail sales points.
The concept of customization we recommend retailers pursue is not about radically changing sales points, but rather, making small changes to each one that can have a considerable impact on overall sales. The objective is to identify what is different about each sales point (in terms of its locale, its customers / prospects, even the weather) so as to capitalize on these facts. As a starting point, we believe customization can be tackled around three areas:
1. Product Location / Position Customization
Sales-related data analyses on a point-by-point basis will yield important findings that can help each store reposition the location of some of its products. This can relate to where the products are placed (i.e. in display windows or at the store entrance) or how they are placed near each other. Analysis of sales data will show the importance of specific products to specific locations, findings that should drive the re-positioning of the products based on their importance. This analysis needs to be done down to a specific product & brand level, not just at a product category level.
As such, as an example, the findings will dictate that one Best Buy electronics store should place Apple iPads immediately at its entrance, while another should place Dell netbooks at the entrance (as these are the top moving products for those locations). Many different factors will drive variance in product sales (such as local population demographics, income, weather conditions, etc.), the key is to realize this and act upon it.
Products that are often purchased together at the same time in specific locations can also be considered for re-location in the store. For example, capitalizing on analysis of sales-data from a specific bookstore retail sales point that shows 38% of consumers who purchase The Economist magazine also purchase Businessweek in the same transaction, suggesting placing these two products right next to each other to drive up that ratio.
The above stated ratio will not be the same in every sales point though; the correlation can be non-existent, in fact. There could be a newsstand right out the bookstore which carries Businessweek, for example, a variable which creates a completely different dynamic for that store in terms of products purchased together. As stated before, sales-related data should be analyzed on a location by location basis to ensure the right decisions are made. The concept of placing products near each other can extend into considering bundling the products together, such that the consumer receives some added-benefit for purchasing both products in the same transaction.
The findings of this analysis should also be used in driving cross-sales through sales representatives in the stores. When a customer purchases a given product, the representative (either on the floor or at the register) should make a recommendation around the next best-selling product correlated with that purchase – or even offer a benefit for the extra purchase. So, for example, when a customer comes to the counter with a pair of Baby Nike Air Jordans, the representative can offer a 20% discount on a matching pair of Nike Air baby socks. The concepts discussed here around bundling and cross-selling should be tested, of course, to ensure the optimal strategy is in place to maximize on the opportunities available.
2. Advertising Customization
The method of advertising related to each store should be customized as well, related to local factors that change response rates to the methods used. As there are dozens of methods of advertising (TV, billboard, magazine, newspaper, radio, web, blog, mobile, flyers, etc.), one size definitely does not fit all here. In a given country, in different cities, some tactics will work, some won’t.
As such, for a chain with stores in different cities, analysis needs to be conducted to determine the impact of advertising via different channels. Analysis of sales relative to specific campaigns conducted in the past via specific channels will yield the desired results – based on the findings, in one city, the focus may thus shift to distributing flyers door to door, in another, relying solely on local channel TV ads. As cultural differences have a significant impact on the responsiveness of potential customers to pitches via different channels, customization is a must here.
The effectiveness of using customized advertising strategies on a local basis should be reviewed at least once a year, however. Over time, behaviors of consumers will change, altering their responsiveness to different channels of communication. Annually, local advertising strategies and each channel’s impact on campaigns / sales should be reviewed, with findings used to possibly alter tactics.
3. “Local Touch” Customization
The retail chain concept often prevents customization across the board on all matters, preventing local touches to be made to specific stores, even when such customizations can seem to be no-brainers. Little touches based on local conditions can have a positive impact on customer satisfaction, and ultimately, the bottom line.
Using the USA as an example, this can include providing complementary umbrellas to customers in cities that have significant precipitation (in Seattle, where it rains over 150 days a year, but not in Las Vegas, where it rains less than 30 days a year), or having clerks in grocery stores that will carry bags to cars in cities that have a high elder population (in Honolulu, where around 20% of citizens are over the age of 65, but not in Anchorage, where only 5% are).
Such customization can be made to an even greater degree when relevant, with concepts like opening small day-care rooms and offering home delivery considered (though such customizations can be difficult and costly to implement, and likely not allowed by the global brand).
We recommend each retail point identify what types of local customizations can and should be considered, with the suggestions reviewed and approved / denied by regional management. The small touches (the WOW factor, essentially) can truly have an impact that will be much greater than what it takes to make the customizations.
It is our belief that the concept of local customization will begin to take off in the coming years in retail chains, as companies begin to realize the wealth of data on their hands that can be tapped into for making strategic changes on a local level. We recommend retailers immediately begin examining their own data to identify opportunities for bringing such customizations to life. To learn more about designing retail sales point customization strategies, please contact firstname.lastname@example.org.