“Retail apocalypse” makes a great headline.
There are countless articles written about the death of retail, the shutting down of brick and mortar stores, and an overall doom and gloom mentality in the retail space.
After all, haven’t you noticed large, vacant buildings that used to be department stores? Haven’t you seen anchor stores pulling out of malls?
So, is retail really dead?
For some retailers it is. But for the retailers getting it right, retail is very much alive and well. Here’s why.
Retail Isn’t Dead, It’s Changed
Retail is far from dying. It’s just been changing. And just as retail has changed, we as retailers need to change the way we look at it.
Retail is now omnichannel. It happens online, on the phone, on social media, and in stores. Retail workers are not just folding sweaters at Macy’s or ringing out customers at point of sale.
Today, retail workers are working with data in Silicon Valley to empower their customers, their loyalty programs and all their services and solutions.
Those might not be counted by the federal government as “retail jobs”, but the retail jobs that are important today are all of those together.
Because retail and how customers shop has changed so much, the same traditional tactics that retailers used years ago no longer work today. But many retailers haven’t changed with the times. Those are the retailers that are dying.
To be among the growing retailers today, we must change. A critical component of that is how we think of loyalty.
Retailers Need More Loyal Customers
In the Age of the Customer, loyalty matters more than it ever has before.
Many retailers believe that they have strong loyalty with their customers because they’re relying on the same group of customers for most of their sales. Every retailer has heard of the 80/20 rule where 80 percent of their sales come from 20 percent of their best customers.
The other 80 percent are the casual customers with little brand affinity who are going to jump from retailer to retailer to find the lowest price. That may be true, but that doesn’t necessarily need to be the way it operates.
That’s why retailers more in that best customer bucket.
So, the bottom line is that we need more customers shopping with us more frequently. How do you do that?
Loyalty is the Answer
We need to find, attract and engage better customers and loyalty helps grow that customer base.
Create a great loyalty program, create a great product, and create a great experience. That’s the formula for solving that problem.
As a retailer, I can’t imagine anyone sitting back that isn’t looking to grow their customer base because if you don’t grow your customer base, you’re not going to grow your sales.
If we look at the retailers that are focused on the omnichannel customer experience – delivering on convenience, value, unique product and more experiential shopping, you will see that retail is alive and well.
Conversely, if you look at retailers that are stuck in their ways, with the same products as everyone else, and one-size-fits-all loyalty programs, they are dying. Not retail, just those brands.
Create a better loyalty program, create a better product, create an overall better experience. Put the customer at the center.
Pull back the layers of all the things that impact your customers to discover what you’re solving to.
Those are the programs you need to be focused on and investing in.
The most important thing that retailers can do right now is differentiate.
They need to differentiate their brand, differentiate their assortment, and differentiate by service. When you can do that and say, “This is what I own, this is what I stand for”, you go to market in a very unique way.
That’s what retailers need to be focused on.
The Future is Bright for Retail
Retail isn’t dead, it’s just changing. We need to make the choice to change with it.
We need better customers and we can help with that by getting out of the sea of sameness and aligning with them.
The key for us to remember in retail is that there’s not an unlimited marketing budget.
New customer acquisition and profitability don’t intersect. So, I can spend less money to retain a customer than to acquire a customer.
We need to do a better job with the retention.
If we can retain more and reduce the churn, our customer file will grow and ultimately, we can call these our loyal customers.
If we can do that as retailers, our future is very bright.