The changing behavior of retail customers
On behalf of Nitin Lehri
In today's knowledge based society, consumers are aware that products are interchangeable. What has led to this self-awareness? Of course internet revolution and social forums riding on the cyber wave have a major part to play in this. Organizations have gone to a great length to increase the penetration and reach every consumer in its household thereby educating consumers. Thus consumers have gradually migrated from 'hard' shopping to 'smart' shopping. Few years back retail landscape could be summarized as small corner shops or couple of mom-and-pop stores with few scattered supermarkets. Consumers were having few substitutes for a product at any given store. Further there were few options for the stores itself in the vicinity. Now even the supermarkets are getting saturated fighting for a piece of pie especially in developed economies like UK or Germany. Another significant change has been in purchasing power of consumers as they comfortably splash on luxury goods after satisfying their physiological needs. Thus the standard consumer target group "Joe Bloggs" of 1950s has metamorphosed into multiple precise target groups.
Joe Bloggs - the average consumer from 1950s who used to spend on regular stuff. Increase in income levels made it possible to venture into luxury segments i.e. travel, electronic goods, car etc. This group was not used to self-service until supermarkets mushroomed.
Yuppies - the Young Urban Professionals of 1980s whose obsession with class and quality gave birth to brands and popularized champagne. Communal living gave way to single households.
Dinks - hot on heels of Yuppies came Double-Income-No-Kids couples in 1990s for whom priority in life was career. Marketers made a queue for them considering their high purchasing power due to low costs.
Lohas - 20th century saw health conscious well-educated high income consumers who believed in Lifestyle Of Health And Sustainability. Producers started focusing on standards, governance, working conditions and environment friendly products for e.g. organic produce, nutritional information, best before dates.
Woopies - Economic superpowers like Japan and Germany are focusing now on Well-Off Older People due to their declining working population. Driven by generous pension schemes and their own private wealth, they are well-positioned financially.
All this makes life of the retailer challenging. The time has come to answer what 'motivates' consumers rather than just focusing on the needs. For e.g. products like washing detergents and toothpastes are trying to showcase what 'extra' can they offer besides their respective primary purpose. Consumers can no longer be treated as a standard target group where everyone will react in the same way. Retailers need to make use of behavioral economics and market research data to understand the behavioral trends of personalization, virtualization, mobility or interactivity and reform precise segments with pin-point communications. For refined understanding of the consumer, optimum contact or connect is to be practiced so the message and the channel has to be picked carefully. Sentiment marketing is another way forward for the retailers which take into account the behavioral patterns of consumers.
First step towards understanding the customer is business intelligence. Thus a significant strategic decision in this direction is to build up data and make use of the analysis. Organizations queuing up for Big Data cannot be without a reason. Strong corporate commitments towards data have fuelled the success of retail giants like Tesco, Walmart and same hold true for others irrespective of their size. The good news is that even customers are opening up to share 'intelligent' data which can be as simple as a like on the FB page. Another example is the non-transactional information where customers react to online recommendations presented to them based on the products they are looking for as in flipkart or bookadda. Data from multiple such feeds enriches the data mart which further empowers retailers to fine tune their contact strategy.
Coming to the channels to establish the 'connect' (CCCM and MCCM are the fads), orthodox channels like print media, billboards and snail mails were popular among Joe Bloggs but with Yuppies and telecommunications revolution, telemarketing boomed. Call center agents started explaining the offers in detail. Dinks were more tech savvy so retailers started using e-mails with them which was much more cost effective. With Lohas, retailers can showcase the credibility and certifications through web marketing. Organizations can tap social forums to get a pulse of this group. For Woopies, retailers should go for relationship managers or store managers. Even though this group contains high net-worth individuals, usually they are not tech savvy or used to details over phone. Store managers will add a personal touch and consumers will prefer to return to stores that understand what they want.