Retailers Don’t Want to Follow Dinosaurs and Dodos
By George Anderson
To avoid ending up on the scrap heap of history, retailers and manufacturers, need to do a better job of listening to consumer needs and then providing meaningful answers.
Paul Higham, the former chief marketing officer of Wal-Mart Stores, told an audience at the 2005 GMA Merchandising, Sales and Marketing (MSM) Conference, “You need to really
learn what customers want and be superior to competitors in order to be dinosaur-proof and grow.”
One area where opportunities for growth exists is in delivering convenience. For stores, said Mr. Higham, this goes beyond the physical location. “It’s about creating an environment
where people enjoy the shopping experience,” he said.
One way that Wal-Mart created a more appealing and convenient shopping environment during his tenure, said Mr. Higham, was by providing a place where customers could shop for
everything in one place. Stores were made more appealing to kids “with the company’s trademark smiley faces and cookie certificates.”
Moderator’s Comment: What are companies doing to listen to their customers and how is this “listening” being demonstrated in stores? –
George Anderson – Moderator
May I escalate Michael Howatt’s “chuckle” to a full-blown belly-laugh? Thanks, I needed that.
What a hollow, re-treaded set of comments by Paul Higham. Did he dust off a five-year-old speech from his Wal-Mart days? Did his audience feel that he was condescending? I would have walked out.
“Listening to customers” is such a basic concept that we should be genuinely surprised when speakers and commentators feel it requires more jawtime. Seriously, it’s right up there with cleaning the floors, opening the doors on time, and paying the electric bill. Why does it deserve further comment?
Glad you asked. It deserves further comment because it’s a basic business building-block that’s made of substandard materials. When a load-stress is applied to them, they crumble. (Sorry, too much time spent in Strength Of Materials engineering classes in college.)
“Listening” is a top-down marketing function. Unfortunately, most top executives are less attuned to listening than to being listened-to. Their lofty status (“status” is the plural of status, according to the dictionary) precludes an actual connection with their stores, store employees, and customers. Their time is spent pleasing their boards, managing their stock prices, and avoiding jail. You could look it up.
Listening is cultural, endemically infused in the early days and at the most basic levels of businesses. Attempts to artificially inject listening into existing, long-term organizations is problematic at best. And without the active involvement of the CEO, it’s impossible – with one exception: Employee-owned companies. Read it and weep, Wal-Mart.
No one told the researchers at P&G that consumers had a “need” for a Swiffer. However, they created this successful line of products by figuring out consumers’ needed. How? By watching and listening to what consumers needed. Hours were spent watching consumers clean and noting the problems, the difficulties, the complaints, and the irritations. “Listening” to consumers doesn’t just mean asking them questions and taking notes on their responses or checking boxes on surveys. Listening to consumers means learning how and what they do when purchasing your products and using your products (or your competitors’ products or performing tasks in which your products could be used). That’s the kind of consumer insight that is necessary for creating breakthrough thinking in the retail stores. The most effective retailers I’ve seen doing this activity are Sainsbury in the UK, HEB in Texas, and Bashas in Arizona. Each have distinctly different stores tailored specifically to local consumers and even different stores in the same metropolitan area serving the needs of local consumers.
Nope, this isn’t it. I’m not saying that “listening to your customer” isn’t important, it obviously is. But my observation is that most of the huge product and retail concept successes have not come from customer focus groups. They come from some brilliant ‘deviant’ thinking differently than other people do – and actually creating a ‘want’ that wasn’t there before.
Customers define needs and wants out of their current mental framework. Meeting this level of demand means you’re just catching up, it doesn’t put you ahead.
Furthermore it doesn’t matter what customers say because retail performance will always revert to the mind-set of the retailer, not the mind-set of the customer. If the retailer’s mind is set on a service level of 2, and the customer wants level 5 – the retailer may make a token effort but in short order the service level will be a 2. As we think so we perform.
The only way around that block is to change ‘how’ we think. Until we do having customers or retail gurus tell us ‘what’ to think and ‘what’ they want will result in absolutely nothing other than failure.
There continues to be a disconnect across the Value Chain – it is called Siloism. Converters/suppliers are a silo, Manufacturers are a silo and Retailers are a silo. There is just not enough collaboration to deliver superior solutions based on consumer needs, problems and wants. Each attacks in their own way and each has a different part of the puzzle. When added up now it is 1 + 1 + 1 = 2 and if the solution were integrated it would add up to 5 or more. Net is: retailers are in a great position to help develop a value chain solution that is consumer/customer based and bigger than what they are doing now. The Retailers who figure this out and act upon it will drive new and ownable growth and opportunities. Remember if you are not the lead dog – the scenery never changes!
In most retail firms, the CEO is the boss, not the customer. For many retailers, “Customer service = lip service.” Over 30 years ago, Mad Magazine published a sale flyer for “Swillmart, Where Quality Is A Slogan.” This flyer could be reprinted today, with almost no change. You can easily recognize retailers who respect their customers. They have short lines, reasonable return policies, few out-of-stocks, low staff turnover, rising market share, and better earnings.
Watching, listening, and communicating with employees and customers is a start but for most it is not enough….particularly for the smaller stores who we work with. Stores must be authorities in their market areas and must be constantly in the market shopping and staying shead of the game. The best stores (and the ones that win) are able to anticipate customer needs and know what they want before they realize they want it and through create merchandising and presentation in store enthuse customers with more than “experience” and “retailtainment” but with actual products. Art Turock wrote the book on this subject….”Invent Business Opportunities No One Else Can Imagine”
Generally, speaking “contrarian” is equated with a negative attitude versus a positive one. But it looks like my more positive outlook on our performance in this area puts me in the “contrarian camp” — at least for today.
A great example of applying the learning that comes from listening to your customer (and that’s the real trick) is Best Buy and the Consumer Centric Store. Dismissed by some as marketing hype, I contend that changing the merchandise mix, color scheme, and even the service approach of a store to match the needs of the predominant customer type who shops there is a very real application of “listening to your customer” — especially when it comes from a retailer who’s previous success is based on being the CE equivalent of Wal-Mart — where everyone got the same thing, but very efficiently.
“It is not necessary to change. Survival is optional.” Deming
I have to chuckle at Mr. Higham’s comment about creating an environment where people enjoy the shopping experience. Isn’t he a former CEO of Wal-Mart? Yes, a lot of positive shopping experience there (cramped aisles, long lines, etc.). Despite his lack of credibility, I do agree with the concept.
However, like most economics, it won’t work in reality. Most Retailers just don’t have the money or resources to be able to “micro-manage” every store to fit each individual location’s customer segments. They have to depend on the local managers using what resources are available, and that makes it difficult to be customer-centric.