The slowdown in the economy has created a more demanding, more discriminating customer.
Consumers are thinking more carefully about what and why they’re purchasing. In turn, this means retailers have to work much harder at interpreting and delivering what customers want and value. Unfortunately, this task has been made much more complicated by the fragmented and multichannel nature of the shopping process.
Demand chain management
Demand chain management is a term not often heard in retailing. It is a simple concept which means putting the customer at the heart of all retail decision making. Perhaps surprisingly, customers have not always been the focus of retail organisations. Traditionally, the industry has been organised around the supply chain and around operations. In a more competitive, slower growth environment, this old model is no longer sustainable.
A saturated market
From a demand point of view there are plenty of reasons why retailers need to be fully focused on the consumer. Foremost among them is the fact that people today are saturated with goods: we all have many more ‘things’ than we used to. With most of our needs satisfied, the key to successful retailing is to make people want things. However, that requires a much more sophisticated, consumer centric model of retailing – mainly because it relies upon a more detailed understanding of consumer preferences and desires.
Consumers of today are also far more demanding and choosy than they once were, so understanding them better is a fundamental prerequisite to meeting their needs. The bottom line is that a retailer than has a closer relationship with its customers will ultimately find it much easier to attract footfall, stimulate spend and sell products at full price.
Understanding customer journeys
Unfortunately, thanks to the rise of the internet and other routes to market consumer behaviour is far more fragmented than it was 10 years ago and gathering comprehensive information is extremely challenging. As this image shows, from the moment a need to purchase arises the consumer has a multitude of channels and options they can use for researching and buying.
How they move through this complex web of choices will vary from consumer to consumer. This in itself makes understanding customer journeys, and joining up that journey to create a single customer view, very challenging. Having proper insight into consumer behaviour is critical if retailers are to develop successful propositions and sustain loyalty.
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