The experience economy

Customer is the KING in Retail?? For that matter customer in any business is always the king.

In the textbook sense, customer service is identified as the manner in which customer is treated upon entering a store and dealt with. It includes the employees and policies, practices and procedures the businesses put to use. However, there is no guide book on delivering the best in customer service, rather it is an instinct, which continues to evolve even today.

We are in the customer experience business where future purchase is directly impacted by how customers feel about doing a business with us, rather than what they think about our product / service. Experiences are what customers’ value most. Hence business must be finely tuned to what customers think and feel.

We should never lose sight of our customers; strive to understand their needs and buying patterns. In order to build and sustain customer insight a company must maintain constant contact with it's customers. Means are many; use the most appropriate ones.

When an entire Organization is imbued (filled) with the kind of empathy for customers, employees are more likely to anticipate and respond to customers in a consistent and reinforcing manner.

The total customer experience is affected by signals, which leave lasting impression on shoppers. These signals may be rational or emotional, each carrying a message, suggesting something to the customers. Sensitizing our people to recognize and evaluate customer signals is an essential part of experience management. The goal is always the same: Eliminate negative signals, overhaul neutral ones to enhance a positive impact; and insert a variety of positive signals that encourage BRAND LOYALTY.

Welcome to the experience economy, where what you sell is less important than how you sell it. Forget about product differentiation, retail today is in short supply of distinct experiences, create one, and we will establish a long-term relationship with our customers. Our competitors may be able to match our services, product/service feature for feature, but the experiences we create are ours alone. This is our true “COMPETITIVE ADVANTAGE”

Contrubted by M Radhakrishnan - MMB Six Sigma

Radhakrishnan can be contacted at raadha@rediffmail.com

World's largest candy shop opens in Dubai

Candylicious, a 10,000 sq.ft. candy shopped opened its doors to Dubai residents today. Located at Dubai, Candylicious is the largest andy shop in the world. A concept by 'Retail is Detail, Candylicious will be a delight for the young and the old. Read more here

Sam Walton’s Simplified 5-P’s of Retail

Sam Walton’s Simplified 5-P’s of Retail - Product, Price, Place, Promotion & People

Sam Walton (founder of Wal-Mart) didn’t follow the 5-P’s to the letter but I’m certain he incorporated each of the 5-P’s into the rest of his strategies and tactics. Having said that I’ll try to provide my simplified description of what I think were Sam’s beliefs about the 5-P’s as follows:

Product: Sam used an outside/in approach to product selection. He asked his customers and his own employees for product ideas and he shopped his competitor's stores for ideas. Of course he also asked his supplier network for product ideas and Sam was one of the first to establish true "vendor partnerships."

Price: While everyone else in retail was using a cost/plus pricing model in an attempt to see how much they could get for every item, Sam tried to figure out how little he could get (charge) for every item and still make a razor thin profit. Under Sam Walton’s Discounting Philosophy, he might make half as much profit per item, compared to his competitors, but he'd sold such tremendous product volumes that he'd make a greater profit overall. This was his EDLP strategy which is what discounting is all about: high volume and low margins generating big dollar profits.

Place: In the early days Sam was the first to admit his stores were poorly merchandised when compared to the planogrammed stores of today. In bygone days brands were king receiving the best shelf position, but not anymore. Wal-Mart’s private label products now receive preferential treatment over the national brands when it comes to shelf placement. Wal-Mart is renowned for its distribution/supply chain technologies that help it to keep its shelves stocked iwth products "just in time."

Promotion: Sam’s first stores were merchandised using a “stack it high and let it fly” approach. Using bins, tables and boxes coupled with hand written signage advertising too good to be true prices, Sam would create a buying frenzy with his special buy merchandise. Word traveled fast in the early days and Sam relied on word of mouth advertising. Not any more. Today, Wal-Mart’s focus on improving margins has turned the giant retailer into a marketing driven company.

People: Sam had strong beliefs about the importance of employees, his associates, to the success of Wal-Mart. Six of his ten self-professed rules for his own success had to do with how you treat people. He was a servant leader and he lived by Golden Rule Values. He used to say, “Our people make the difference.” He believed, “If you take care of your people, your people will take care of your customer, and your business will take care of itself.”

Sam Walton must have known what he was doing because he was worth US$100 Billion when he died!

Contributed by Michael Bergdahl, International Speaker

News

A round up of the important retail industry news in Dubai.

• Damas CEO quits Updated 12th Oct 2009
• Retail in 2010 Updated 9th Oct 2009
• World's largest candy shop to open in Dubai Updated 4th Oct 2009

Retailing after the recession

Your business has survived the worst of the recent financial crises. Almost all your retail outlets still continue to operate though the staff strength has been reduced to half. Your organisation has made the necessary adjustments and realignments, weeded out the poor performers, eliminated the loss making brands, cut down on the marketing dirhams and lived to tell the story. Good.

You may have weathered the storm but are you doing enough to ensure that you are still in business? As we approach the recovery phase, what is it that we as retailers need to do to take our business to a new high.

Here are a few suggestions:

Don't believe in the green shoots story

Do you remember the recent earthquake in South East Asia? Most major earthquakes are followed by after shocks. Mild tremors that have the potential to create as much damage as the main one. While many experts across the industry have been screaming that the worst is over, many retailers will be tempted to step on the gas. One needs to stay focussed on the current challenges while anticipating mild tremors in the short term

Create value for the customer

Many retailers continue to run around in circles trying to get away from the current tsunami. Many are struggling to survive thus pulling all plugs to stay afloat. Not many times in the past have we faced this tremendous challenge to create even more value for the customer. Senior leadership across organisations in Dubai needs to foster creativity among its people and look at every possible way to add value. Every 'extra' will go a long way to built customer loyalty as against the easier route of discounting the price even further. Many of the retailers in Dubai are in fact in a precarious position today because they chose to take the price route when the crises hit us. In the longer term, customers remain loyal to retailers who treat them as special and do that little bit extra.

Manage your inventory

Nothing costs more than money these days. I know of a few organisation that either survived or perished the recent conditions entirely based on the way they managed their inventories. Review your buying and product ranging policies. Focus on the high margin and footfall drivers. Put in place very effective policies to drive inventory turns. How is your organisation structured to manage this key area that many times gets the least of your attention.

Underestimate the competition

It is important to track and monitor the competition effectively. You will be surprised with the results. Many competitors are probably on the brink. It is the time to clean up the desk and put together a completely new strategy to tackle the competition. The competition is vulnerable. The competition is reeling. Dig deeper into those pockets and wait for the opportunities. In the next few months, we will be confronted by numerous and exciting opportunities to take over competition and quickly ramp up growth. If we have not prepared our organisation for this scenario, we will have let go of a kind of opportunity that comes only once in several decades.

Customer Service

When I arrived in Dubai several years ago, one of the most important tasks at hand was to purchase a mobile phone and a connection so that I could keep in touch with my family. I remember dropping in at one of Dubai's better known retailers of mobile phones located at a shopping mall.

One of the other customers was certainly not in a very good mood as he tried to sort out his problem. Apparently he had purchased an expensive mobile phone only 3 days earlier but his execited was shortlived as the device failed to turn on. This was his second visit to the outlet and he was yet to recieve a satisfactory resolution from the sales person. His case had been handed over to the 'customer service' department at the head office and the retail outlet was awaiting further instructions. Needless to say, I waited for several minutes before leaving the outlet to continue my hunt for a new mobile handset.

So who exactly is 'customer service'? As a customer, my only touch point with the retail outlet is the sales person and hence my only access to customer service is the sales person too. Let us therefore pause and look at the role of the sales person, not from the perspective of the retailer but from that of the most important person in the entire chain - the customer.

Over the years, several studies have been done to understand why we shop at particular outlets and why we do not at others. I need to mention here that I have never shopped again at the mobile handset outlet mentioned above. As retail markets mature and the competive advantage earned from product and location begins to erode, the area of customer service will play a key role in the choice that customers make. If one were to look around the retail landscape of Dubai, you will find more cases of poor customer service than otherwise. Despite the fact that the best known retail brands have set up shop in Dubai, the standards of customers still lag way behind. In the last few years, greater emphasis was given to the physical aspects of the operations and the product itself.

Recent developments within the retail arena point to subtle changes happening in the area of customer service. While training has received a fair share of focus in the last few years, there is a conscious shift happening at retail organisations. The leaders are willing to deploy expensive technology to identify and resolve customer service opportunities. I know of several organisations that have made some dramatic changes to standard operating procedures to empower the frontline teams to reach out more effectively to the customer.

This is an important and exciting time in the evolution of customer service in Dubai and we are all privileged to be part of this historic transition.

Retail Read

Browse through our collection of retail industry related articles contributed by various industry experts.

• Using scent, sound and taste to create value

• Using sight and touch to enhance value
• The Lost Art of the Loss Leader
• The 10 rules of Sam Walton
• The experience economy
• Sam Walton's Simplified 5 P's of Retail
• Customer Service
• Retailing after the recession
• Customer Experience Checklist