What are Retailers to Do?

While surfing the internet for articles about recession and consumer purchasing patterns I came across many sites emphasising that it is ever more important to increase advertising efforts while competitors are cutting back to reduce costs. This will allow retailers to improve market share and return on investment at lower costs when consumers are uncertain and need the reassurance of known brands. However; I question these statements that focus on advertising with regards to metrics such as ROI. I feel as though during such unprecedented times, with weakening consumer confidence and spending, retailers should not be focusing solely on quantitative metrics. Instead they should be getting to know their customers better, seeing that their purchasing patterns have undoubtedly changed due to increased uncertainty. In order to make sure that management is not only focusing on price cuts and margins executives should focus on influencing customer behaviour through emphasising higher conversion rates, improving interception rates, reducing wait times, all the while increasing the amount customers spend in their store.
During a recession consumers still shop and spend money, although they may make different tradeoffs. From talking to several retail sales personnel the most obvious trend is that consumers come into stores tighter fisted. Instead of having the intention to buy Christmas gifts for their whole family they may only be now planning to purchase for their immediate family. However, consumers are still coming in with the intention to buy. Even if people are coming into stores less often they are still entering, which means that it is even more important for management to capitalize on each person who walks through their doors by improving on the overall customer experience.
The longer amount of time a customer spends in a store the more likely they are to loosen their fist and make purchases. Making your customers want to stay in your store does not have to be costly. One of the best examples of I have seen was in a Quicksilver store, placed in the center of the store layout just past the transition zone was a fish tank. This slows the customers down through the transition zone and creates the desired threshold experience upon entering. By slowing customers down they are less likely to head straight for a certain desired item, but may start looking around more and view the items they see in a different light due to the elegant nature of the fish tank they first saw upon entering. Once customers have slowed down past the transition zone there are ample opportunities to retain customers inside the store. A good example of this was in another Australian surf shop, where a few small TV’s were attached to head sets so that customers could watch clips of surfing videos. Newly released videos and large ticket items such as surf boards were placed in close proximity. Not only would this keep male partners entertained and not distracting females from their in depth shopping experience, but it kept customers in the store that much longer. I found that after watching these visuals my boyfriend walked straight to the surfboards, which made me stay in the store shopping for much longer than intended. These ideas to keep customers entertained and in the store break up a streamlined flow of traffic from going straight into the store and out, although they do take up space that could be used to allow for greater selection in a smaller store. Management needs to understand their customers and know if greater selection would be more beneficial than keeping them entertained and in the store.
As noted in class, cutting back on top performing staff on the floor may not be the smartest move during rough times. Effective employees on the floor increase interception rate. The greater interaction a customer has with employees increase the average sale. This is crucial especially now that people are visiting stores less frequently. However, if management needs to cut back overhead and the only way to do so is through staffing cut backs then they must make sure that each employee is used more efficiently. Staff should not be placed in the transition zone or else customers will not pay attention and their time spent attempting to aid customers is useless. Customers do not always know what they want or where they want to go as soon as they enter the store, so if staff can wait until they pass through the transition zone, say 30 seconds, then customers will be easier to engage. I also found from personal experience and staff at retails stores that it is beneficial to approach a customer by saying “hello” and not “hello how are you doing?” This is because by only saying hello most people are more inclined to say “hello how are you?” in response, whereas if a sales person asks “how you are doing?” I will quickly give a one word response and walk away. Creating more effective engagement does not take any more effort. However, it does allow employees to increase the amount of contact taking place in order to increase the average sale. At the same time employees gain valuable information because they get to better understand customers underlying interests and behaviour so that they can relay to management exactly who is shopping in their store.
Waiting time is the final stage and last impression for a customer, so it is imperative to get this last step right. Even if a retail store has done all the above but makes waiting time long then they do not truly understand their customer. No one enjoys waiting in lines, so even if a customer has experienced a perfect shopping trip their impression of overall service will decrease if they get frustrated with long wait times and are unable to make their purchases. Another interesting technique I saw in a large predominant department store called Myer was the use of a coffee lounge near the checkout counters. This effectively brought customers into the store and made them stay longer, but it also acted as a tool to shorten wait times. Customers could go and have a coffee while they wait for the line to decrease, or as I did, made my significant other stand in line while I went and grabbed two coffees to rejuvenate myself after a long day of shopping. I realize not ever retailer has the space or cash flow to build a coffee shop; but even something as easy as serving a sample of a beverage or cookie while customers wait in line at the grocery store would entice customers to continue to wait. This would make them feel as though they are being taken care of while waiting to be serviced at the checkout.
During tough economic times retailers have to be much more proactive with the changing needs of their customers and realize that they can steal market share by doing the little things right in store. When customers are more uncertain and tight fisted they may be more easily persuaded to purchase elsewhere than they are use to if they feel as though their dollar can be stretched further. Such things as customer service, store ambiance, and wait times all help create customers feel like they are getting more bang for their buck.