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The Consumer Is King
With ever-evolving standards of marketing and merchandising, only one factor remains constant
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Business New Haven
5/3/1999
By: Abigail White
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The retail market in Connecticut and beyond is being reshaped by changes that signal the end of one era of consumer selling and the beginning of another.
The traditional boundaries that used to define geography, store types, trade channels and consumer demographics are collapsing.
The evolution of retailing has been driven by the changing retail customer. Retailing grew in an environment where the idea was to merchandise, to sell, and to convince someone to buy. The retailing industry has slowly been going through a paradigm shift as the economy has shifted from a product-driven model to a consumer-driven one.
In addition, technology has been another driving force behind the changes being seen in today's retail industry. Technology has had its impact on nearly every industry - and retailing is no exception. Technology used by retailers has enhanced both internal control efficiencies and their ability to communicate with customers.
In a new era driven by consumers and technology, retail businesses have come to rely on their own, internally-created programs to capture and hold their customer bases, irrespective of factors like location or size of store operation. While different businesses do different things to attract and keep customers, they each have found and implemented some way to cater to the needs of their particular customer base.
“One of the keys for the retailer is to differentiate themselves from competitors, not just through products but also through customer service and depth of products,” says Pam Rucker of the National Retail Federation. “What we're seeing is that consumer demographics are changing and broadening.
“Ten years ago you had definitions with the 'specialty shopper,' the 'high-end shopper,' and so on. Now we have cross-segment shoppers going wherever they need to go to satisfy different needs.”
While preferences evolve over time and with changes in demographics, the basics required to appeal to demanding customers remain the same. Successful retailers will offer value, service, depth of merchandise, ease of access, strong money-back guarantees and a unique array of merchandise and services.
Retailers have learned there's a difference between building a store and selling things out of a store. Technology and new techniques have become a part of many retail operations to address the changing competitive market.
For example: issuing credit cards in place of a paper gift certificate, or using a computerized merchandise-locator among several stores in a chain.
“In real estate and retailing there are two axioms,” says Irwin Cohen of Deloitte & Touche's retail division. “The first is the country is over-stored, and the second is the individual retailer will either grow or die. So the pressure on the individual retailer is to open their stores in a good location. As the saying goes: 'strong site strong.'”
Cohen adds that when you look at retailing, it's a zero-sum game: For every one new retailer, another one goes out. “Overall, this has probably been the best retail environment many of us have lived through.”
Area retailers have developed a number of marketing and management strategies to develop their own programS to expand and maintain their customer base. These include:
1) Make shopping an experience. Offer some type of entertainment by hosting a special event, such as demonstrations or lectures of current interest.
2) Provide training for employees so they will be knowledgeable and able to communicate with each customer who enters the store.
3) Management by database: capturing sales information at the cash register by scanning the bar code and from there adjust the inventory records and creates the reorder purchase order. Management can use information coming from sales for analyzing buying patterns and determine what sells well in their store.
4) Marketing by database. Besides having efficiency with the store's internal operations, retailers use the customers' information stored in their database to capitalize on their greatest asset: their existing clientele. Tracking customer information tells retailers how to position their advertising because they know more about their store and its customers better overall.
Methods for collecting customer information vary. Some retailers ask for the customer's name when they buy something; or offer to add a customer to their mailing list; or they may create a “frequent shopper” club whose members are issued cards after giving demographic information. Some stores give customers an item free after they buy ten of them, or they offer ten percent off purchases if they join the club.
5) Target mailings that are sent from the store to let customers know of an activity being held, a new item arrival, or an upcoming special.
6) Vendor alliances: A store's database can be linked by network to its vendors. This facilitates just-in-time delivery, which enables a store to keep less inventory on hand, as well as quickly replenish strong-selling items.
7) Data warehousing and mining, - collecting all possible data about customers shopping patterns, merchandise movement and sales within regions or small clusters of stores.
How exactly is the Internet impacting retail?
“While it is not impacting the bottom line to any great extent, the Internet has multipurpose uses to help the retailer,” says Pam Rucker. “The Internet has shaken the industry. Retailers are reviewing their business plans and some of them have integrated using the Internet with their business. The Internet is being used for marketing, customer service and catalogue sales. Some manufacturers are going direct to consumers.”
Around Connecticut, each municipality has a different retail and demographic profile. Each community uses different tactics to increase customer traffic in its area - everything from sidewalk sales to community festivals.
New Haven has addressed the need to increase retail activity downtown by creating a business improvement group by passing a city referendum. The Town Green Special Services District was placed in charge of coordinating the city's downtown redevelopment activities with information and promotion to encourage to come and spend time in the downtown establishments.
To date, the Town Green district has developed and published a shopping guide and parking directory, and is in the process of planning upcoming events and activities in conjunction with restaurants, shops, museums and theaters.
This overall redevelopment activity has helped to bring people into the city center. “The arts are certainly something that brings people into downtown New Haven,” says Marsha Stein, the Town Green's marketing manager, “but the restaurants and the shops and the museums and everything else that's going on here really allow people to come in and make a day of it. One helps the other.
“Recently we compiled some information that was linking the arts downtown to the economic improvement of the retail downtown,” Stein explains. “One thing we found was that there has been an increase in attendance downtown that has spilled over into the restaurants and shops.”
Adds Stein: “I found this interesting: The first quarter is usually the slowest quarter for retail, and there seems to have been a positive impact because of the arts. The arts bring people in and it's possible for them to make an evening or afternoon of it with eating, theater and shopping.”
Town Green recently issued the second edition of its Downtown Guide to New Haven, as well as a new guide (providing information on rates and locations) for hourly and monthly parking that is available throughout the city.
Another area community has taken a different approach to marketing and success at the individual-store level.
Carol's Creations in North Haven is a specialty shop that sells women's fashions. “I'm very comfortable with the business we're doing,” says Carol Heins.
“Sales have been very consistent and increasing. What's leading to our success here is that we've zeroed in and found our niche with comfort wear. Comfort wear for every day and executive dress-down is where the direction is going and that's what we're catering to,” says Heins.
“Women are getting a lot more casual, and they're even coming in for casual clothes for weddings.”
Heins is seeing that specialty shops may be coming full-circle. “Women are now realizing that the good items are back in the specialty shops. They going back to the quality, things that last and wash well,” Heins says.
To promote the business, Carol's Creations participates in fashion shows hosted by area groups, sends out direct-mail pieces and advertises locally. Even so, Heins says word of mouth has been the best vehicle for building a client base.
“A lot of things have changed over time, and you really have to work at the business every day,” she says.
In an economy driven by consumers and technology, retailers have had to either redefine or reposition themselves to be able to meet changing demands.
In the fast-moving, customer-driven retailing environment, to remain competitive retailers have had to design their own particular program to attract new customers and continue to service existing ones. Retailers add value for the consumer by demonstrating that the store is focused on them, and is operationally efficient with a friendly and responsive customer service.
To keep up with today's customers, employees and technologies, retailers have to find and implement sufficient resources to carry off a successful operation. Many have - and they are stores of all different sizes and types.
Technology as a tool can enhance the flow of management information, to update inventory and to enhance shoppers' experience and perception of service.
Other technologies being used within the retail environment include interactive kiosks, and catalogues on CD-ROM. Some leading-edge retailers are even using direct-broadcast TV to reach employees with broadcasts from the home office.
With regard to increasing traffic to retail establishments, there are dozens of concepts being proposed and launched by retailers: everything from offering product discounts to hosting in-store events.
Retailers must find the right combination of distinctive offerings to attract customer traffic, find ways to let the public know about them, and provide the right type of service to keeping customers coming back - again and again.
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