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The 5 biggest retail customer experience stories of 2009

Faced with a tough economy and shaky consumer confidence, retailers innovated when it came to customer experience this year.

December 21, 2009

If there was anybody more nervous than shoppers this year, it was retailers. The industry had just gone through a devastating holiday season — "we've all just lived through it," said outgoing Walmart CEO H. Lee Scott, Jr. at the 2009 NRF show — and found itself staring down the new year with fear and trembling.

But the recession officially ended, and bit by bit, consumers started feeling good about spending again — especially online. Customer relationships with the brands they buy changed in 2009, and the coming months will demonstrate whether or not those relationships will change back or are fixed in new patterns for good.

Here are a few of the notable stories that caught our attention in 2009:

1. An emphasis on "value"

Walmart made a major shift in its marketing focus in 2009 — and the buzzword became "value." Television ads touted the company's Great Value line of foods, telling the story of how parents could feed their families for $2 per meal. Part of the "Save Money, Live Better" campaign also included a branded web site with videos, free classified ads and a message board where shoppers swap tips on stretching paychecks.

In the bottom-left corner of that site is a constantly updated ticker — currently just over a quarter of a trillion dollars — that shows "the amount of money Walmart has saved American families since January 1, 2009."

2. Private label brands take center stage

One of the biggest beneficiaries of both the recession and the resulting push for value has been the private label brand. Historically, sales of private label products go up during a recession, then back down to normal levels once happy days are here again. This time, however, looks to be different: A study published recently in McKinsey Quarterly shows that among consumers that switched to generics, nearly half said they were better than they expected, a third said they no longer preferred the name brand equivalent, and an additional 41 percent said the name brand "was not worth the money."

Name brands aren't taking this without a fight. Packaging World reported earlier this month that major brands like P&G, Swanson and McCormick have all made conscious efforts to invest in better quality product and packaging, in the hope that private label brands won't be able to emulate them.

3. The shadow of Apple

Computing giant Apple was all over the news this year. Its branded stores continue to be talked about virtually any time the phrase "great customer experience" is mentioned. They also weighed heavily on the minds of people contemplating the first branded Microsoft store, which opened in November.

Eyebrows also went up in October when word broke that Apple's in-house visionary Steve Jobs, who holds a seat on the Disney board thanks to his company's acquisition of Pixar, was being brought in to help the magic kingdom improve its stores. "The world does not need another place to sell Disney merchandise — this only works if it's an experience," Disney Stores president Jim Fielding told The New York Times.

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4. Online price war creates the need for better experiences

Things started to get ugly in November between two of retail's biggest names, Amazon and Walmart. A back-and-forth discounting war started with hardcover books and DVDs, but quickly spread to other products throughout the store.

On the one hand, this is a bad thing for most retailers — if you're not Amazon or Walmart, you probably can't compete with $9 Stephen King hardbacks in this race to the bottom. But in 2010, retailers will be forced to face the reality that if you can't compete strictly on price, you have to differentiate on the experience, and give your customers a reason to pay you more than your competitors for the same goods.

5. Retailers grapple with social media, mobile

That giant whooshing sound you may have heard earlier this year was probably the vacuum created by retailers rushing to figure out what to do with social media. Facebook pages were created, tweets were tweeted, and an awful lot of exploration was done to try to make sense of this incredible new set of media that is equal parts exciting and terrifying. Probably the most innovative use of social media at retail this year was Best Buy's Twelpforce, which uses Twitter to instantly connect users with in-house tech experts.

Mobile is also weighing heavily on the minds of retailers, with a sprawling number of dedicated applications and mobile-optimized sites launched this year. As with social media, this isn't optional for retailers: According to a recent Deloitte survey, 55 percent of consumers use their mobile device to find retail locations, 45 percent use it to research prices and 40 percent use it to research products and services.

... but on the other hand ...

If there was one story we wished we didn't have to write in 2009, it was the demise of Circuit City. Just eight years ago, the retailer was held up by writer Jim Collins in his book "Good to Great" as one of a small handful of companies that performed excellently. This was the year the company finally disintegrated, leaving a smoldering ruin of dissatisfied associates and angry customers.

"They made the dramatic step of cutting their most expensive salaries and in the process, eliminated what remained of their most loyal high quality sales staff," said Jason Goldberg, vice president of marketing for MTI. Jason was on the team that designed the in-store experience for Circuit City in the 1990s. "They were left with a store that required great sales staff, and no experienced sales staff to support it."