1THE CENTRAL GROUP: How Customer Experience Drives Merchandising Metrics

How Customer Experience Drives Merchandising Metrics

Did you know that merchandising methods trace their roots to the industrial revolution where prod-ucts were merchandised to maximize manufacturing capability?

Does the old adage “pile it high and watch it fly” re-ally work in our current economy?

Are we merchandising what we want to sell or what consumers really want to buy?

Do we merchandise to maximize metrics or to solve our customers’ problems?

What is the paradox of choice and why do we believe that “less is more” in the new world merchandising order?

The luxury of ignorance has expired and we must create a positive experience at every point of contact with our customers. Excellence in merchandising is no longer dictated by how much shelf space you allo-cate, how deep you discount, or how frequently you promote your products. Excellence in merchandising is measured by the impact you have on your custom-ers’ experience.

How Customer Experience Drives Merchandising MetricsBy Inez Blackburn

2THE CENTRAL GROUP: How Customer Experience Drives Merchandising Metrics

How Customer Experience Drives Merchandising Metrics

When you prepare your merchandise plan, do you remember women influence over 90% of all pur-chasing decisions and over 80 million baby boomers in the United States struggle with the everdeclining font size? With these retail realities, why do we con-tinue to merchandise our products the same way we did 20 years ago? Our consumers have changed, so why is there such a resistance? The only option we have is to change or become irrelevant.

Too often we jump to conclusions based on very lim-ited information or prescribed historical patterns.We deliberately put ourselves in a position of fu-ture conflict because we did not have an accurate understanding of our customers’ expectations. For example, retailers often forecast demand for a spe-cific product based on what has sold in the past and allocate space in the store accordingly. Is the impact of unfilled demand really understood? Why are the same items consistently out of stock? Is a greater importance given to what was sold versus what could have sold?

If your perspective is flawed, then the action you take often results in conflict. I call this “failing for-ward”. Pay close attention to the insights of employ-ees who interact with customers everyday. I have frequently encountered a sales clerk mention that I was the tenth person who had requested a specific size — which was consistently out of stock. I asked if there was a mechanism in place to let the head office know about the unfilled demand, as they are losing potential sales. In almost every situation the answer was the same, “We try, but they don’t listen. We just work in the store, they are the decision makers.” I believe that you cannot claim to be customer-centric if customer-centric insights are not hard-wired into key decision-making. How many retailers leverage customer insights and demand signals at the store-level, and adjust forecasts by the number of consum-ers who could not purchase the product they wanted when they first demanded it?

Success is no longer guaranteed by producing prod-ucts targeted at a mass market, as consumers are not created equally. Today, you must consistently connect all your customer insights to effectively un-derstand and meet consumer demands. There must be full visibility across your supply chain and a culture of collaboration to connect your insights and infor-mation is crucial. The days of “if you merchandise it, they will come” is over. We have two choices: change the way we merchandise or become irrelevant.

Keep Your PromisesYou can’t promise something at one point of contact

with the consumer and fail to deliver at another. How do you think in-store consumers feel when they have a purchase in mind, and find out the discount is only available online? How would you react to a retailer who states they are customer-focused, but severely cut customer-facing staff, and negatively impact ser-vice levels?

Integrity is defined by what you do when no one is looking. What are you doing when your customers are not looking?

An example of an effective merchandising plan is a fully integrated retail strategy that prompts consum-ers to purchase products online and return them to your store. Integrity means you will support all the products and services you offer, and will stand be-hind them despite mergers, acquisitions, discontin-ued products, or employee turnover. Consumers to-day have very little patience when companies fail to deliver on their promises.

The days of using smaller plates in restaurants to make it look like there is more food or decreasing the amount of product in the same package size are over. Compromising on quality while communicating the same value will not develop categories or build last-ing relationships with customers. Failing to support the products you sell will result in consumer angst. Consumers are smarter and less forgiving; they will not accept companies who try to gain market share by misleading them. Consumers read labels and are often fully aware of subtle changes to quantity in the name of profit. Private label potato chips made their biggest gains in market share when they chose to increase the contents in their packages for a better price than a national brand that chose to decrease the value of the contents.

The Problem Of Inertia — Creatures Of HabitToo often, consumers shop from the same catego-ries and buy the same brands due to inertia. They purchase the same brand out of habit because it re-quires less effort than evaluating other options.However, if another product effectively satisfies their need because it is easier to buy, cheaper, or because their preferred product is out of stock, they will switch. Your competitor will be able to move aconsumer quite easily if there is no underlying com-mitment on the part of the consumer. This is be-cause consumers have simply been conditioned to buy based on price or promotion. Consumers will not switch as readily if they have made a conscious deci-sion to buy the brand, rather than acting from habit and inertia.

3THE CENTRAL GROUP: How Customer Experience Drives Merchandising Metrics

How Customer Experience Drives Merchandising Metrics

Marketers and category managers struggle with the problem of differentiating their brands when there are limited points of difference. Consumers may see competing brands merely as substitutes for one an-other, resulting in a zero-sum game where one prod-uct will eventually win and one product will lose.

• How many brands offering the same flavor are required?

• How much is too much?

• How do you stand out in an abundance of con-sumer choice?

Consumer-driven promotions focused on short-term sales or market share must be replaced by longer-term strategies that result in a stronger share-of-heart. Traditional consumer promotion tools such as samples, coupons, rebates, price reductions, loyalty rewards, displays, contests, and games will still bring attention, but it is important to make sure these tactics are aligned with your overarching corporate strategies and goals as they relate to developing strong consumer relationships.

Surviving And Surpassing InertiaTo avoid the trap of consumer inertia, you must be dedicated to consistently communicating the val-ue your products. You must leverage current and emerging modes of communication to create aware-ness. Rather than focusing your message on a key product attribute, focus on the solution you are of-fering. There are essentially three opportunities to communicate your solutions mix to your consumers: before the buy, during the buy, and after the buy. The challenge lies in meeting consumer expectations at every point of contact. Effectively communicating your category solution mix can be achieved by in-cluding the entire buying experience in your solution strategy.

Pre-Purchase CommunicationCreate and deploy advertising and awareness cam-paigns that identify potential consumer problems and how your products and services address them.

Purchase Experience• In the store and online: ensure all points of con-

tact meet customer expectations

• On the shelf: provide solution-driven assort-ments

• At the checkout: make the purchase convenient, efficient, and provide a high level of service.

Post-Purchase Response• Using the product: the consumer is satisfied and

happy with the decision

• Using the product again: re-purchase is highly likely.

Products and services with a strong value proposi-tion demonstrate and reinforce benefits at all points of contact. If you fail to deliver at any one point of contact, the chain is broken and you send a personal invitation to your competition. Selling once is easy, even if you have a poorly designed product, but luck is needed when it comes to creating loyalty and trig-gering repeat purchases.

Effective merchandising is dictated by a greater share-of-heart rather than share-of-shelf. Did you connect with your consumer at an emotional level by solving their problems or did you get theirattention with a temporary price discount or promo-tion?

How did you make your customers feel when buying your products? Do you have a librarian approach to merchandising where you collect and archive infor-mation, or do you approach merchandising by lever-aging customer insights for a better customer expe-rience?

4THE CENTRAL GROUP: How Customer Experience Drives Merchandising Metrics

How Customer Experience Drives Merchandising Metrics

About the AuthorInez Blackburn is a globally recognized speaker and industry leader, innovator and pioneer in launching global brands with over 25 years’ experience. She has worked with many Fortune 500 companies and led numerous executives through her Positioned for Profit Seminars and Marketing to the Max Workshops. She has been on the Dean’s list for excellence in teaching for 10 years and is a featured trainer at numerous executive events. Her first book Pride Passion Profit – 7 Steps to Category Development has sold over 5,000 copies and is well positioned to help companies take their category plans to the next level.

Inez Blackburn is currently the Director of Research at The Institute for Retail Innovation and Education (The Central Group) and an Adjunct professor at the University of Toronto, Wright State University, and S.P. Jain University in Singapore and Dubai. Inez conducts both quantitative and qualitative research in a State of the Art Research facility and ROI Lab leveraging best in class technologies and research protocols.

Prior to becoming addicted to research and an Adjunct Professor, Inez held numerous executive positions for numerous CPG Companies for National Brands and Private Label. She was the Vice President of Marketing for Cott Corporation where she was responsible for developing and launching Private Label Brands for major retailers in Canada, the United States and Europe. Inez also held progressive positions at Nabisco, Robin Hood Multifoods, Red Lobster Canada and for those of you who remember Consumers Distributing.

The Central Group is an award winning marketing at retail company sepcializing in packag-ing & display. We offer innovation that goes beyond the confines of packaging and merchan-dising towards a total marketing solution at retail. The Central Group doesn’t just read about the next trend in shopper insights or retail technology. We search the world for what’s new and what’s next and validate our solutions in our ROILab* creating the perfect balance between a Retail Environment, Emerging Technologies and Shopper Insights.

The Institute for Retail Innovation and Education is a research and education knowledge bank created to bridge the gap between marketing-at-retail theory and practice. The Institute is an industry focused research and education facility with strategic alliances with academia and industry leaders. We are committed to research and education programs that will chal-lenge, inspire and create a valuable opportunity to unlock the key drivers of marketing at retail innovation.

*ROILabTM is our state of the art research facility where clients and our in–house design teams develop innovations in packaging, merchandising, display and technology