Retail Power Battle
The sounds of the giants falling has reverberated around the world. Customers stood in shock as some of the oldest and biggest names in retailing such as Woolworths in the UK and massive electronics supplier Circuit City hit the canvas in quick succession.
But don’t just blame the global credit crunch, the worldwide recession, or the crisis in confidence.
A retail seminar in Brisbane this week was told one of the main reasons retail’s former heavyweight champions have died or are flatlining is because they had forgotton the customer is in charge.
A power shift has been happening in the shopping centres, retail strips, wholesale outlets and home-maker centres of the world since the days when the marketing professionals told us what, when and where to buy.
The customer is king and doesn’t want to play by the old rules anymore. Business consultant Roy Tavenor told the Global Retail Insights seminar that the time when brands ruled the retail world was over.
In terms of consumer spending habits, the 1980s and 1990s have been defined as the era of the brands. It was a time when companies such as Calvin Klein could harness a controversial billboard campaign using a half-naked 15-year-old actress to launch a company philosophy that said: Follow us, we’re different.
“The customer of 2009 is the opposite of that,” Tavenor, the managing principal of retail architecture and planning firm Red Design Group, told the seminar. “They aren’t buying that at all. They aren’t driven by status. They want to see something that represents their values. It’s not all about conspicuous consumption.”
And the shopping centres of the future will have to represent those values. Tavenor’s claims were backed up by case studies provided by retail analysts from Monash University’s faculty of business and economics, which showed that old business practices, and not just a worldwide recession, are hazardous to the health of those in the retail game, particularly the bigger players.
“The old rules don’t apply. That’s how Woolworths in the UK died after 99 years of retailing history,” analyst Stephen Ogden-Barnes, from the Australian Centre for Retail Studies, said. “The main thing that customers missed when Woolworths was gone was it’s Pick and Save section, which is the lollies out the front. That was it after 99 years of retailing.”
The success of self-service checkouts in outlets such as Big W in Australia is more evidence that customers like feeling in control. “Customers were asked what they liked about it and they said it was because they felt as if they were in charge,” Tavenor said.
“Research shows that the primary reason people use self-service checkouts is because of privacy - they don’t like people to see what they are buying - and the second reason is control.”
The new customer, who wants value but not at the expense of quality, is also buying with their conscience and those changing values are being noticed by the world’s best retailers, including those at the value end.
Small to medium businesses need a system to keep them in constant contact with their customers to ensure they don’t lose them to a competitor down the track.
