October 09, 2018

Product is not enough. Retail chains build their strategies based on customer experience

Product is not enough. Retail chains build their strategies based on customer experience

Customer-oriented strategies are the foundation of business in the retail trade. The growing expectations of customers are forcing retail chains to create holistic, personalised shopping experiences, based on the knowledge of behavioural psychologists and on the latest technologies. The basis for building an effective brand strategy is consistent communication with customers in the intermingling offline and online worlds, at every touchpoint. First and foremost, it is a human-oriented approach towards business planning.

These conclusions come from the latest report “Shopping full of emotions”, prepared by Colliers International in cooperation with Kate Nightingale, the founder of Style Psychology Ltd., an advisory company that operates in CX, Nanovo and architecture studio A+D Retail Store Design. The publication is based on interviews with industry experts, retail chain representatives and customers, and it shows the current trends in the retail trade, such as changing functions of stores, both bricks-and-mortar and online. Experts say that stores are becoming more like “places for services”, offering other added values in addition to quality goods.

“Seeing the world through the lens of a service is simply inevitable. ‘Service thinking’ is thinking through the whole process: analysing step-by-step the consumer’s decision-making map, the consumer’s touchpoints with the brand, predicting the future, describing service algorithms, and the proper communication of brand values,” says Grzegorz Młynarski, CEO, Nanovo Consulting.

The customer experiences, technology helps

One of the most important issues currently in the retail industry is customer experience (CX), which is the subjective reaction to each action of the brand, revealed through emotions, behaviours and decisions. Retail chains are becoming aware of the importance of positive customer experiences when building brand strategy and its impact on sales results. This issue is, however, very complex.

“There is still no common understanding of what customer experience is and, more importantly, how it is created. One of the basic principles from consumer psychology says that humans act predominantly subconsciously. The decision to walk into a specific store or buy a specific product can often be made within less than a second. A quick look at a store’s facade or a product allows us to decide whether they match our needs and budget, or not,” says Kate Nightingale.

The authors of the report analysed this phenomenon and they point out that overall brand recognition is influenced by many various factors, some of which can and should be controlled.

“For example, in the fashion industry, CX includes not only the highest standards of services but also other components such as product packaging, visual merchandising, lighting, smell, music, and even the type of floors used at the stores. Everything has to be coherent, carefully designed, and implemented with the utmost care and precision. This comprehensive approach translates into customers’ trust and loyalty,” says Artur Kazienko, CEO, Kazar Footwear.

The basis for understanding customer experience in a store area is to know what the intention of the visit is, as this determines the expectations. Consumers interact with a product, staff, a store’s design and visual merchandising, and build their experiences in this way. Different impressions appear while visiting a store to buy a clearly defined product and when visiting to browse. Building customer experiences in the physical area of a store is also supported by technology.

“Great importance for building and enhancing CX is played by RFID, NFC, AL and the Internet of Things. Many brands and stores are currently thinking about which technology to implement in their stores. It is a very individual case for every brand, and there is no one general solution that fits them all. Primarily, we should think about how a given technology is going to be used, what needs it responds to and how it will integrate with a brand’s values. The starting point for the investment in the new technologies are customers and their expectations, not the drive to apply most sophisticated solutions,” underlines Marta Machus-Burek, Senior Partner, Director of Retail Agency, Colliers International.

Customer experience is an important element in the process of building a brand’s competitiveness advantage. The time when the products, with their features, functionalities and qualities, were used for that purpose has already passed. Now, the competition between brands takes place at the customer experience level.

“Nowadays, just meeting customers’ needs is not enough to retain customers and make them come back and to recommend a store to their friends. Customers need to be surprised if we want to not just maintain the number of customers but increase them. The bigger the surprise, the easier is to maintain customers and get the new ones in the future,” says Dariusz Gocławski, commercial interior architect, A+D Retail Store Design. “Apart from obvious parameters such as price, quality, a product’s appearance and customer service, an increasingly important role is played by more sophisticated tools, like for example: active lighting systems, store projections, additional functions, collaborations with personalities or brands, styling, the opportunity to attend meetings and specialisation,” he adds.

In a traditional and modern way

The Colliers report shows that despite growing internet sales in Poland, for many customers this method functions more as a complementary rather than a primary shopping channel. Consumers appreciate bricks-and-mortar stores for the wide range of products, which they can try, touch, smell, etc. Brands realise that a store, as a physical place, still plays an important role in building good customer experience. What counts is the atmosphere of the interior, the comfort of shopping, the proper display of products and many other factors that make that it pleasant to be in a store.

There is no doubt that the demand for traditional stores will remain, and the growth of e-commerce is an opportunity not a threat as online shopping may complete the customer experience in a significant way.

“Our interviews undermined the myth that shopping online is only for young people. It turns out that both young and older customers who buy online pay attention to similar factors – the quality of display, flexible payment methods and an easy product return policy,” says Katarzyna Michnikowska, Director in Research and Consultancy Services, Colliers International.

According to the opinion of the report’s authors, the goal is to create an environment where the customer can smoothly switch from offline to online, and the other way round.

“When you are in a store, you should be able to use the same features when using a computer or a phone. It is also important to provide a common returns and pricing policy wherever possible,” sums up Sylwester Nowalski, Head of CRM, CCC.

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