Why the empowered customer is good for retail

Feb. 23, 2015

By Maya Mikhailov, EVP and co-founder of GPShopper

Retailers and consumers used to have a very unbalanced relationship. Retailers would provide products at local brick-and-mortar stores and customers had very few options what and where to buy. Price comparison was nearly impossible and the sales associate was the only real source of product data, recommendations and reviews. Catalogs started breaking down local boundaries and offering broader customer choice, but it wasn’t until the rise of the Internet that the relationship between merchant and their shoppers began to equalize. New product and pricing information was easily accessible and new players emerged who were not encumbered by geographical boundaries (or local sales taxes). Comparison shopping became as easy as opening a new tab or going to one of many online aggregators.

Now we are at the Mobile Age, where the scale has pivoted decisively toward the customer. All the data available online is suddenly portable; available in the physical retail environment or to access at the shopper’s leisure. There is no need to rely on a (perhaps biased) sales associate when making a product decision. Family and virtual friends can provide advice with the tap of a button. This Age of the Empowered Consumer is fundamentally changing retail and can be beneficial for retailers as well. With an excess of recent bankruptcies and store closings, this position may seem contradictory to current climate. But in the long run, the transformation will benefit consumers and retailers alike.

Stronger retailers and brands that are catering to the needs and desires of this new shopper are emerging. Just as the Internet discovered Taylor Swift and turned her into a global sensation, the always-connected consumer is discovering new retailers and propelling them into shopper consciousness. Nasty Gal, Warby Parker and Bonobos are just a few of the emerging retail brands that started digitally but were pushed into local channels by brand strength. Previously, the lifecycle of retail expansion to the $100M+ sales level involved diligently opening one store after another in local markets while hoping the concept caught on enough to go national or international. With digital devices and social media, these new players are getting unprecedented levels of national exposure and opportunity for growth.

Service, which had begun to be dismissed as a relic of a bygone Age of Retail, is once again becoming an important component of sales and customer retention. Armed with mobile devices from the floor to the checkout counter, the new generation of sales associates has a wealth of data at their fingertips, including product information, customer preferences and shopping history. The shopper is increasingly walking into retail stores well-researched, and the sales associate can augment that research with additional data points and service that makes the overall experience more efficient and more pleasant. Additionally, retailers can use mobile devices and advanced CRM systems to better cater to their most loyal customers. Gone are the days when associates were left with a book of business. Today’s retailers can better anticipate the needs and wants of loyal shoppers, regardless of location.

The desire for service goes hand-in-hand with the new on-demand economy of customers who are addicted to convenience. Mobile devices and the “uber-ification of everything” have further reinforced the notion that convenience (think local) has an economic value that exceeds a dollar off coupon. Whereas the Internet trained consumers to be extreme deal-seekers, the mobile revolution is empowering them to be extreme convenience-seekers. Features such as “in-store pickup” are driving them back into local stores for the instant gratification that delivery services have yet to match at scale. Additionally, knowing local merchandise availability is not only saving the customer time and effort, but helping expose demand to advanced business intelligence systems, making the local channel far more efficient than in years past. No need to offer extremely discounted merchandise that doesn’t sell in one location, when it can be offered online to a willing audience in another.

We have seen retailers like GAP and others reorganizing their structure to consider the customers themselves, rather than focusing so much on the channels in which to sell products. This notion places the consumer at the center of their organizational matrix to better serve their needs across channels.

This transition also benefits retailers who have seen silos ultimately create internal friction and a battle over customers. For instance, an e-commerce sales transaction should not be perceived as “stolen” from the store, but rather a momentary customer choice that benefits the entire organization. Breaking down these boundaries will help retailers create smoother, more unified customer experiences that will undoubtedly increase the overall retention and bottom line.

Unfortunately, there will be those retailers who are left behind in this emerging tilt towards customer experience. In particular, those brands whose very business model depends on the inequality of the customer and merchant relationship. Ignoring consumer empowerment neglects changes that retailers themselves have to undergo to be stronger players down the road, missing out on opportunities to connect with a new generation of shoppers who value convenience, service and personalization. Those retailers cannot and should not risk their future by living in the past. The current retail environment is dominated by the consumer. It is time to celebrate a balanced relationship between the customer and retailer, as this is no longer the obscure future but indeed the present.

(Photo by Laura D'Alessandro.)


Topics: Consumer Behavior, Loyalty Programs, Omnichannel / Multichannel, Online Retailing, Technology


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