This morning I couldn’t help but think that I was ringing in 2014 just days ago. Reality soon hit and I realized that the last month of Q1 is already here. Retailers are reeling from a lackluster holiday earnings period and looking to rebound in early 2014. The North American retail landscape has been categorized by a large amount of laggards and only a few shining performers with surpassed sales expectations.
A CNBC article released last week outlines some key occurrences in retail that may continue through 2014, if retailers do not start thinking about differentiating themselves. In addition to larger than normal on-hand inventory, retailers are also struggling to continue to define themselves from a merchandising standpoint. As mentioned in the CNBC article, Macy’s comes out on top as they continue to cater to the fashion needs of the individual communities that they serve. This not only helps increase sales and reduce eventual markdown spend, but it shows customers that retailers are truly paying attention to their needs.
In my last post, I spoke about how product and price intelligence can be used to differentiate retail price and assortment strategies. Now that nearly a month has passed since my last post, I wanted to re-iterate the differentiation, given some of the bleak numbers discussed yesterday in the CNBC article. Here are three guiding principles to help retail laggards turn their fortunes around and be successful in 2014.
1) Focus on the customer experience across all channels: (in-store, web, social media and mobile). McGladrey summarizes this well. Retailers who have a brick and mortar presence have an advantage over other retailers, as they have personnel troops on the frontline who have constant interaction with your consumers. It is important for retailers to get their store managers and associates trained to listen to customer needs and conduct regular sessions to discuss customer feedback. If you actively listen to your customers’ needs, they may actually help you better define not only local market strategies, but also ones that can be shared across the organization. For online pure-plays, this may mean frequent customer experience surveys or a call-center that acts like the store associate in the example I just mentioned.
2) Use technology and do not be afraid of lost sales: In previous posts, I have discussed the term “intelligent loss of sales”. It may actually be more profitable to get out of certain categories if they are not driving expected sales or margin. Or it may be to not get into them in the first place. Costco is a retailer who really knows what this means and a retailer that continues to experience positive comps year after year. Reference to intelligent loss of sales can be found in one of my previous posts. Price and product intelligence can continue to help in this regard. A quick and easy example is to get out of a margin-losing category that is constantly being promoted in the market. You may not have the buying power or means to get the backend funds from a supplier that others might. Therefore, does it make sense to keep getting beat up on price and lose money? Price and product intelligence can help provide this insight.
3) Excel at a few things and focus on your strengths: As a spin off to my previous two points, I believe that this strategy can only succeed with an organization’s willingness to dig down into what’s not working. Additionally, there needs to be a true commitment to the customer experience. Once a retailer sheds its unhealthy fat and knows which categories and business units are keys to its success, they must continue to focus on these, even if that means short-term pain. However, it’s best to react quickly, before your competitors are able to out-maneuver you and dominate the market. 360insights, the newest edition to 360pi’s product suite, can help you in your discover the strengths and more importantly, the weaknesses of your pricing strategies.
I am still a strong believer that keeping it simple and focusing your efforts in 2014 will help you to achieve better comps, improved sales, and drive a more focused customer experience. Retail is all in the detail.