By Paula Rosenblum, Managing Partner
3/11/2008
History tells us that in an uncertain economy, retailers retreat into tortoise-like shells. So when the industry reported less than stellar holiday results, technology vendors and analysts alike feared the worst. I actually received one inquiry from a reporter who asked quite literally, “Given the difficult holiday season, do you expect massive layoffs, store closings and a shutdown in spending?” I’m “New-agey” enough to be vaguely alarmed by such projections of negativity, and yet I had to answer “Boy, I hope not. That would be the wrong thing to do,” even as I wondered if something along those lines would actually occur.
Here we are in the middle of March, and the economy remains uncertain at best. You know times are strange when you see a new tour bus in Fort Myers, Florida with the banner name, “Foreclosure Tours ‘R Us.” No, I’m not kidding.
The good news from our perspective is that retailers and technology vendors alike are telling us retailers are NOT retreating into their shells. Consumers continue to speak loudly as well. Customer centricity is NOT dead. Certainly there has been a thinning of the herd, and once venerable retail brands both large and small are either shrinking or disappearing entirely. And certainly any significant retail technology expenditure has to pass an extra level of due diligence to insure ROI expectations are realistic and tangible. Nonetheless, retailers seem to be looking forward.
Early results from our current in-store technology survey indicate that over 50% of respondents believe their biggest challenges are improving customer service while holding the line on costs and in creating more consistent store execution, vs. only 28% saying, “It’s the economy, stupid.” Even more interesting, NO Retail Winners, (those whose sales outperformed their peers in 2007), cited the economy as their biggest challenge.
Similarly, conversations with our vendor clients yield reports that sales cycles, while slower, remain robust. Retailers are investing in tools to improve their out-of-stock positions, to improve their competitive position in the marketplace, drive ever-better gross margins and to improve their sales per square foot.
Finally, a recent Harris Poll commissioned by Chordiant Software reported that consumers remain fixated on customer service – beyond even price and privacy concerns. According to Ad Age, “…a whopping 95% of people believe it is at least somewhat important that companies know ‘who I am, my buying history, past problems or complaints, preferences and billing record.’ Some 37% said knowledge of personal history is important, and more than a quarter -- 27% -- called it ‘very important’.” In other words, the customer has ALSO cast her vote. Gas may be at an all time high and projected to climb in the next few weeks, and she may have to trade down in product quality, but she still expects retailers to know her and cater to her needs.
The bottom line? The economy is tough. Not all retailers will survive. Even fewer will actually thrive. But customer centricity remains the clarion call of 21st century retailing. Those who retreat into their shells may never emerge. Those who keep their eyes laser-focused on the consumer will be rewarded.
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