The world is changing

No, it is not

There cannot be any reader of this column who thinks that retailing is the same as it was twenty, thirty, forty or more years ago. For one, the quantity of choices for a consumer has gotten out of hand. Think about the average consumer and the landscape of brick and mortar stores.

If we were to look at the residents of the United States and compare them to Europeans, we could use a measurement of square foot of retail space per person. Residents here have nine times as many choices as their European counterparts. That is a lot of choices; we think too many choices.  When you see businesses closing, we would refer to this as a “thinking of the herd”.

Add to that the availability of many items on the Internet, and customers have more choices than they have ever had. What’s a business to do to compete?

What we notice most are the groups of businesses that decide “item and price” is the way to attract customers. It starts with the weekly newspaper ads which are simply a mass listing of items along with their discounted prices. If the store gets the customer’s contact information the store is likely to continue to send multiple emails to the customer, again with multiple items and a discounted price for each.

Discounting in smaller amounts, 20% or less, has been shown as a legitimate way of attracting customers and building your sales. However, when the discounting gets larger, in the area of 30%, research shows the customer is less likely to return to shop at the business. This is because the customer who is attracted to the larger discounts has shown how they select where they shop; it will be the store with the bigger discounts. And when it is not your store, it will be another store with a large discounted price. There is no loyalty to any store as price is their leading factor in choosing stores.

Then there is the other group of customers. They have something else as their leading factor in choosing stores; they want customer service, information, value, and a great shopping experience. Not that they don’t want a good deal; it is just that price is not the driving factor for them. There must be something to the value of each of these as we see even Amazon, the Internet giant, opening stores. We see Wal-Mart creating and experimenting with new formats for their stores. It is not that they need something to occupy their time; they know the “old style” is very important.

So, we look at customer service, information, value and a great shopping experience. Each of these four ingredients have one thing in common; they require a human being. The question at this point, for those businesses that want to focus on this group of customers in place of the price shopper customer is, “What are you doing about the human being you are providing for the customer to experience?”

It comes down to having the right employee and making the right choice when you hire. You probably have some of the “right choice” employees already working for you. Along with them you have some employees you wish would become “right employees”. Here are our best tips for getting every employee into the “right choice” category.

The first is that your best employees should be doing the interviewing and hiring. As the owner or manager, we often have a habit of taking someone less than ideal. Your best employees must work with that poor choice more than you do, and they like it less than you do. When the best does the hiring, they are less likely to lower their standards. They will do a better job of hiring.

The second task is that of education; product knowledge and sales skills.  Have a bi-weekly one-hour staff meeting in which every employee attends and your best employees are the teachers. As other employees improve their skills, you gain new teachers for your staff meetings.

The world is changing; no, it is not. There are always customers who shop by price and there are others who shop according to the four ingredients. One comes with lesser margins and a constant battle for customers; they become a commodity business. The other hires the right people and becomes a unique selling business.

The business that becomes a commodity last is always the winner.

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