1 May 2009

In today’s tough trading conditions, speciality retailers cannot afford to give anything less than exceptional levels of customer service, and this means making sure that the shelves are full. Argility’s Andrew Blatherwick tells us more.

In these difficult times retailers around the world are taking different approaches to ensure their survival. In the US they believe that they should trade their way out of a recession, while in the UK retailers batten down the hatches and stop spending until they know they can survive. Despite these differences, there is one thing that all retailers can do to stay ahead, and that is to give outstanding customer service.

Customers have choice, and when they have less money they will use that choice even more judiciously to ensure they get what they want for their sparse resources. We all know that when you do not have much of anything you are more careful how you use it, and customers are the same when shopping. If you do not provide excellent service then they will simply vote with their feet. This offers a real opportunity to speciality retailers, which should present themselves as specialists and experts in their field. The major stores will always win on price, so the speciality retailer needs to find a different platform on which to fight. Great customer service can be that platform and provide the competitive edge necessary in these tough times to get their share of the wallet.

What can have a devastating effect on customer service is out-of-stock situations. A friend of mine recently asked me if a particular retailer was going out of business. I asked why, as I had not heard any news about the company. My friend replied: “Because they had very little on their shelves and looked as if they were closing down.” Now, this is a very large electrical retailer in the UK that is still in a strong financial position, but would you buy a technical item or any high-value item that you were at risk of not being able to return if it was faulty? I know I wouldn’t. What’s more, talk of a company being in trouble because it has no stock spreads very quickly, whether true or not, and before you know it the firm is in trouble – it is self-fulfilling.

When money and margins are tight it is very tempting to reduce stock – in some cases it is essential to maintain cash flow – but there are better alternatives. During difficult times retailers, particularly speciality retailers, need to be more efficient, and more conscious that every penny invested is giving maximum return. If your operation is inefficient then you are at risk, and if you do not sort it out it will sort you out.

Customers have choice, and when they have less money they will use that choice even more judiciously to ensure they get what they want for their sparse resources

Andrew Blatherwick , Argility It has been said for a while now that retailers can use their supply chains to compete and gain advantage, but this can be an issue for speciality retailers, which do not have the same economies of scale in the supply chain as the major supermarkets. However, by working closely with the supplier base and using shared resources from third-party distribution companies, speciality retailers can actually turn this to their advantage. If a general merchandise retailer is looking to reduce capital outlay, it will concentrate on core merchandise areas. Speciality retailers only have core merchandise, but this makes it even more critical to ensure that they have the right merchandise and the levels of inventory to correctly service customers coming into the store.

The same is true in store operations. Once again it is tempting to reduce operational costs and staffing, but at what cost? If all you do is reduce the service you provide for your customers it is a very dangerous game. If, however, a retailer makes sure that it has the very best processes, and solutions to support those processes, it can run more efficiently in store and still provide that great experience the customer is looking for. An intuitive solution that guides staff through the sales process, prompting them at appropriate points to make a comment or ask a pertinent question, will show the customer a much more caring, connected service that makes them feel wanted and valued. This will enable speciality retailers to focus on ensuring that their staff are true experts in their field, another potentially invaluable advantage in a tough market. If a customer has to give careful consideration to making a purchase then they will want to spend more time to get it right, and getting the right help and advice is critical.

I often hear retailers state that they are ‘simple retailers’ and do not need all the modern technology. However, it is good solutions that let a retailer operate simply while providing the customer with amazing service and value. Retailers cannot afford not to give great service, and to do that they need the help of great solutions, not cuts in staff and stock.

This article first appeared in the Summer 2009 issue of Retailspeak magazine.

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