Your top retail competition may not be who you think it is
Today’s competitive set is broader than retailers may be accounting for. A retailer’s real competition transcends the boundaries of industry as they compete for consumers’ attention and engagement.
Conventional wisdom says retailers must focus on beating their next-door competitors to win consumers’ dollars – Target must beat Walmart, Home Depot must beat Lowe’s, and Papa John’s must beat Domino’s. And smart operators recognize that Papa John’s must not only beat Domino’s, but all the burger barns, chicken places, and taco joints as well. But even that view may not be broad enough going forward.
Current attitudes, opinions and behaviors suggest that a consumer’s definition of ‘competition’ is more expansive
In our most recent wave of the Magid Motivations study, many consumers say they’ve changed their priorities over the past year with more than a third (37%) changing how they spend their time, and nearly half (47%) changing how they spend their money.
What’s more, just getting consumers into physical retail stores has become tougher, as 45% of consumers say they are spending more time at home over the past year, and one in two are making online purchases once a week.
And consumers are raising the bar, with 63% stating they want more out of life. They’re ready and open to new experiences (66%) and want to live vibrant lives.
- 42% are seeking out more experiences that bring inspiration
- 43% are seeking out experiences that bring relaxation
- 42% are ready to treat themselves
In today’s retail reality, the real competitive landscape includes experiences and engagements beyond shopping. It’s Netflix, Planet Fitness, and TikTok. The real competition for consumers’ attention – and their dollars – includes any other business who can provide customers with a compelling and entertaining experience.
Customer experience is the ultimate driver to build traffic and increase revenue. Carrying the right products at the right price – that’s what Amazon is for. Retailers must present a shopping experience that is a worthwhile engagement that is exciting, fun and creates a connection. Time is limited, which means consumers can’t do it all, so you need to give them a reason to come in beyond what is in stock or on sale.
Improving the in-store experience to capitalize on consumer needs
Retailers have numerous options to enhance their in-store experience and attract customers. It’s crucial for each retailer to assess and prioritize initiatives that align with their specific business requirements and market position. Here are a few examples of how to win in today’s competitive set:
Re-evaluate the product assortment, considering its appeal and alignment with the brand and the target customer, rather than solely focusing on inventory turnover and profit per square foot optimization. Many consumers cite stores not carrying the items they want (35%) and not having as great product variety as online (30%) as top reasons for not shopping in-store more frequently.
Train all your in-store associates to become engaging, knowledgeable product experts who can ensure a supported and personable shopping experience for your customers. 71% of consumers say they want employees who take the time to listen to their needs and be able to recommend a product. A positive employee interaction is a key predictor of good retail experience.
- Discovery: With almost half (49%) of consumers saying the ability to discover a new product is one of the top five things that matters the most to them when shopping in a physical store, make sure to elevate your store layout and employ effective merchandising techniques to captivate shoppers’ attention and entice them to explore the full range of offerings available in your store. And give what is new and different the right attention – treat your new items like a TV commercial, not an additional SKU on the shelf.
The world has changed, and the role of the brick-and-mortar store is evolving. To stay ahead of retail competition and in step with the consumer, it’s critical for retailers to understand their consumer holistically. This goes beyond merely knowing their shopping journey and brand perceptions, but also delving into their identity, values and preferences in terms of how they choose to invest their time and money. As retailers compete for consumers’ limited time, it is essential to identify and implement initiatives that effectively meet their evolving needs and desires as a person, not just a shopper.
Retail experts from our Consumer & Commercial Brands group contributed to this piece. If you want to learn more about what your target customers are looking for and how to improve your in-store experience, reach out to LetsTalk@Magid.com.