Why Retailers Should Focus on Value, Personalized Service and the Local Market
The ground has been shifting under the world of retail, but in my opinion, the real quake hasn't hit yet. There are three major factors causing this upheaval: economic uncertainty that's begun to split the middle class, the increasing share of wallet moving online, and the shift from the boomer generation to millennials as the driving force.
Each of these factors alone would have significant impact on the world of retail; the three combined have affected every retail segment. Even Wal-Mart is feeling the impact as its revenues slip and profits fall. While there's no "magic bullet" to address these changes (is there ever?), a deeper examination of these factors brings to light consistent themes and provides a jumping off point to ward off a real quake. There are immediate, low-risk changes that every retailer should consider implementing as soon as possible.
1. A higher focus on value. Value is vastly different from price. While price will continue to be the only important variable for the bottom third of the market, value for money (and time) spent has bubbled up as a decision point for consumers. The challenge for retailers is shifting from a price strategy to a value strategy. The two are related but are very distant cousins. A properly executed value strategy is much more beneficial to the bottom line than a low price strategy.
For the past 20 years, too many retailers have shouted "low price" in the hopes of getting shoppers to believe — and buy. The advent of mobile and the transparency it's brought has quickly changed the impact of this tactic. Today, a low price can be trumped by a slightly higher price when there's an added value included in the mix. Convenience, information, instant gratification — all of these and more are part of the consideration process.