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November 6, 2006
5 Bumper Stickers For Small Retailers
I was reading an article in Inc. Magazine titled "Price Isn't Everything" (online here). The author, Ted Hurlbut (a retail marketing consultant), did a great job of making the case for not competing on price alone in today's hugely competitive retailing environment. In this article, he offered five "bumper stickers" for small retailers -- tidbits to remember based on the experience of many larger retailers (Sears, Federated, etc.) who have seen their businesses ravaged in recent years. The five take-aways were:
- If you compete on price, there will always be somebody who will be able to beat your price, unless you decide to give it away. And nobody can do that for long.
- If you run an ad this year, you’ll likely have to run an ad next year to have any hope of running an increase. And your prices will have to be sharper.
- If you think you can cut costs by cutting customer service, plan on cutting customers as well.
- Customers may go to the internet for product information, but when they need true product knowledge they will come to you.
- Customers will always pay more for customer service than for products. Products they can get anywhere, whereas customer service, true service, is a rare commodity.
- Quality never goes out of style.
The testimonial at the the start of this posting is for a retail company in Chapel Hill, NC. — A Southern Season. My sisters were always raving about it, and so, when in the area a while ago, I stopped in. To call it a retail store doesn't do it justice. The restaurant on-site had a waiting list an hour long...luckily they gave you beepers so you could shop (and spend) while you were waiting. Their wine selection, tea selection and coffee selection were all the largest I'd seen in any single store. They had demos all over, fantastic prepared foods, spectacular displays and seasonal sections that are continuously rotated throughout the year. Shelves were impeccably maintained, associates were everywhere, and checkout lines were efficient, well-staffed and friendly. In short, it was a staged experience, not a "store." People went there as a social event as well as wanting to shop. Think about other places like that...locations like FAO Schwarz in NYC. The store and the products are part of a self-reinforcing ecosystem. People don't walk in thinking about price...they walk in thinking about the experience. Increasingly frustrated consumers and business buyers are showing renewed sensitivity to this service-oriented mindset. We have been through a period of deep cost-cutting as companies sought to improve the bottom-line by reducing the cost of doing business. In the last year, many companies have refocused themselves on differentiated top-line growth as the way to improve the bottom-line. While there remains a sensitivity to price, increasingly time-pressured buyers are much more likely to seek out suppliers or retailers who can deliver "value" which means not just products...but the service to go with it. Or, they want an "experience" — shopping that goes beyond procurement. A great lesson for both retailers -- and the manufacturers who supply them products. How is "value" being created throughout the process of design, manufacturing, distribution, retail sales and support??? OR how are you working together to make the retail location a destination in itself???
Posted by jcioban at November 6, 2006 10:19 AM
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Comments
It is quite interesting that when the economy is going up, "value" beats "price", and the other way round.
The biggest challenge would be to define a "price positioning" that can adapt to the economic cycle...
Posted by: Leo Piccioli at November 6, 2006 7:40 PM
