Retailers must adapt fast to earn loyalty
Ongoing shifts in the global demographic and technological developments are combining to shape a entirely new breed of post-recession consumer, according to research by TCC in collaboration with Planet Retail, suggesting that retailers will have to learn to adapt more rapidly in order to earn the loyalty of tomorrow's customers.
The study found that a new breed of hyper-demanding shopper is emerging with redefined notions of value and loyalty – and tough expectations – for "anytime and anywhere" retail experiences. As a result, TCC warned that retailers must take notice, adapt to, and engage this target group, or risk losing ground in the battle for shopper loyalty.
In addition, technology has opened up new purchasing "sweet spots" at certain times and periods of the day (such as commuting or late at night) which were traditionally retail "dark spots".
Ageing communities, urbanisation and increasing single-person households has led to a rise in smaller store formats, fuelled by demand for simpler, convenient shopping for carrying out time-pressured, frequent shopping trips, with smaller basket sizes. This has resulted in redefined notions of value and complete digital transparency on retail price and experience so, now, shoppers are cherry picking between stores and holding back their loyalty.
However, TCC also noted that many retailers are still failing to see the bigger picture and target the wider trend holistically. According to TCC's CEO, Michael Ioakimides, "The shopper is constantly evolving, both in terms of demographics and lifestyles, and it has never been more important for the retail industry to take notice and adapt. While retailers are honing in on certain demographic shifts – with small formats and online increasingly a point of focus – the sector must recognise the wider trend at play. The successful retailers of the future will be those who adapt to this new marketplace and adopt an integrated multi-channel strategy."
For retailers with a heavy physical store presence, it is vital that stores provide a point of differentiation which goes beyond price. While it is important to be flexible with store formats, it is vital to also be flexible in terms of how retailers attract shoppers to physical stores and offer them a complete end-to-end experience. Retailers must therefore strive to understand what shoppers are truly motivated by, beyond the price tag.
"In such a competitive retail environment, retailers that adapt will find themselves at an advantage if they can satisfy the key elements with a range of initiatives from building brand equity, creating an emotional connection to providing customer service and quality and offering a sense of exclusivity," concluded Ioakimides.