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The Next Generation of Retailing—The Future Is Now

BY CSA STAFF

Retailers have always focused on their customers, but changes in the last three to five years have forced retailers to understand their customers on a deeper level in order to differentiate in their chosen markets, according to Jerri Traflet, director of retail solutions for Redwood Shores, Calif.-based Oracle Retail.

During the TOPSS session “The Next Generation of Retailing—The Future Is Now,” Traflet discussed how the retail industry has split into two distinct camps —one focused on price and scale (such as Wal-Mart and Tesco) and the other focused on targeting consumers and service (such as Abercrombie & Fitch and Best Buy).TOPSS is produced by Chain Store Age and Retail Technology Quarterly.

Historically, retailers with good pricing and product selection were together in the middle, and there was room for many players. But the split in the industry has been caused by several different changes in the consumer market.

Retailers often forget that consumers are extremely diverse, Traflet said. “We try to put them into little demographic categories, but that doesn’t always work. Understanding them on multiple levels allows retailers to truly focus their product, pricing and service offerings to the customer segment that delivers profitability.”

Retailers should also keep in mind that consumers are inclined to reject unwanted marketing techniques. “Spam and snail mail are usually trashed immediately,” Traflet said. “Therefore, businesses must find a way of getting through and delivering information that they will value in the shopping process.”

The Internet has changed the expectations of those who shop in all channels. “[Consumers] expect product information and comparison tooling like they have on the Web,” Traflet said. “They want access to competitive pricing information and they want to know product affinities.” Therefore, “Webifying” the store and call center is a big challenge for today’s retailer, she added.

Since it’s hard to compete against low-price retailers, Traflet also noted that this is why many companies have differentiated themselves through service. “Retailers should understand what consumers value most, from price and time, to convenience, location and home delivery,” Traflet said. “Recent studies show that the older the shopper, the less price-sensitive they are and the more brand-aware they are. They buy based on the strength of the business and the knowledge that the company will be there to service them. However, the younger shopper values brand very little—it’s all about price.”

One of the other key issues causing this shift is segmentation blurring. It’s difficult for consumers today to determine if they are in a mass merchandising, grocery or drug store—every retailer carries nearly the same goods, Traflet said.

“That’s why we have seen such success among specialty retailers in recent years,” she said. They tend to focus their business on fewer categories and they stand out for the specific trends in clothing, such as Gap or Abercrombie & Fitch, or for their specific brand of goods, such as Apple or Bose.

In order to stand out in a crowded marketplace, retailers need to truly understand what their customers want and give them the unique shopping experience they expect.

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CompUSA may get a new look

BY CSA STAFF

ADDISON, Tx. After opening a new format store last month, CompUSA may be changing the format of its other stores, depending on customer demand and product interest.

According to reports, the elements found in the prototype store, located in Texas, will be incorporated into other CompUSA locations across the United States.

The nearly 7,700 square-ft. relocation site includes an Apple shop featuring Mac computers, iPods and Apple accessories, and a full-length LCD TV wall.

Additional expansions include extended gaming, which includes an entire wall devoted to the Nintendo Wii, PlayStation3 and Xbox 360 gaming platforms, plus a PC gaming setup to test equipment and play new titles.

While businesses can get their share of support with a specialized services section, all consumers can visit the store’s redesigned IT support area.

“This new store aligns CompUSA’s vision to better serve its three core customers, the technology enthusiast, educated professional and small and medium businesses,” said Gabriela Villalobos, the retailer’s sales and operations evp.

CompUSA announced in April that it would narrow its focus to three core customer groups rather than try to serve a mass audience.

The move was part of a comprehensive restructuring, initiated last February, that included an overhaul of senior management and the closure of half its store base as the privately held chain looked to improve sales and profitability.

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Walgreens withdraws from CVS provider plans

BY CSA STAFF

DEERFIELD, Ill. After many months of talks over low and below-market payment rates by CVS Caremark for four prescription plans, Walgreens has withdrawn as a pharmacy provider from the plans.

Patients affected include members of prescription benefit plans managed by CVS Caremark for ArcelorMittal, Johnson Controls, Progressive Casualty Insurance and Wisconsin Education Association Trust.

Most of the affected members live in Illinois, Indiana, Michigan, Ohio and Wisconsin.

Trent Taylor, president of Walgreens Health Services, the managed care division of Walgreens, released the following statement:

“This is not where we wanted negotiations to lead,” he said. “We’re sorry that our pharmacy patients and CVS Caremark’s clients are caught in the middle, and we’ll do all we can to ensure a smooth transition for our patients to another pharmacy. Meanwhile, we’ll continue to work on resolving this issue with CVS Caremark.

“Leaving a benefits plan is an extraordinary step for us, but it demonstrates how extraordinarily low our payments were from CVS Caremark. We can’t continue accepting reimbursement rates that are drastically below market, while offering patients needed special services such as 24-hour pharmacy access and drive-thru pharmacies.”

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