Retailers Pick Areas in Which to Excel
By George Anderson
Conventional business wisdom says it is a mistake for retailers to try to be all things to all consumers. Now a new consumer research study confirms that shoppers feel exactly the same way.
According to the 2006 AlixPartners Consumer Sentiment Index, when it comes to the key criteria shoppers use in evaluating a retailer (price, product, service, access and overall shopping experience), merchants need to pick a couple of areas in which to excel and be satisfied with being good enough on the remaining points.
Fred Crawford, managing director at AlixPartners, told MarketWatch, “If you’re spreading precious assets, peanut-butter style, evenly across all five attributes, you’re either wasting money or, worse, condemning all five to mediocrity.”
He pointed to Wal-Mart as an example of how excelling in a couple of areas can drive business. The retailer, Mr. Crawford maintains, makes consumers’ lives easier by allowing them to, what he calls, “chore stack.”
“People might not enjoy shopping at Wal-Mart, but they can get so many things done there, they tolerate it,” he said. “Love them or hate them, Wal-Mart really dominates the consumer psychology.”
On the other end of the retailing spectrum, consumers’ perception of value in upscale goods has changed. “There was a time when house label products were obviously inferior to national brands,” according to Mr. Crawford. “Those days are gone. People don’t see enough of a difference to pay the difference in price.”
While price, or at least value, for the dollar plays a role in consumer decision-making on polar ends of the retailing world, service is still a key component in certain channels.
So-called DIY retailers such as Home Depot and Lowe’s, for example, are finding growth through “do it for me” services. Others such as Best Buy with its Geek Squad and installation services are also benefiting from helping consumers get projects done or deal with problems.
“For retailers, the margins on providing services to consumer are very attractive. People have less time, more disposable income, and they want to invest in their homes,” he said. “They also don’t want to spend three Saturdays in a row assembling an entertainment system.”
To register to download a pdf (Adobe Acrobat required) of the AlixPartners 2006 Consumer Sentiment Index report, go to www.AlixPartners.com/csi2006.
Moderator’s Comment: Beyond the usual suspects (Wal-Mart, Target, Wegmans, Costco, Nordstrom, etc.) are there retailers
that get less press that can you point to as having mastered the art at excelling in a few areas to drive business results? –
George Anderson – Moderator
- For retailers, two out
of five isn’t bad – MarketWatch
- AlixPartners Releases 2006 Consumer
Sentiment Index – AlixPartners