The key takeaway of Customers are at the centre of it all

  • News
  • February 17, 2016
  • Elly Strang
The key takeaway of Customers are at the centre of it all

Hundreds of industry figures gathered under one roof at SkyCity to hear from the likes of Foodstuffs North Island CEO Chris Quin, Freedom Australia managing director Tim Schaafsma and US National Retail Federation (NRF) CEO Matthew Shay.

The mood throughout the day was a positive one, with most in good spirits about the current state of retailing in New Zealand.

But one message came through loud and clear, time and time again from each speaker: the customers are the ones in power in retail, more so than ever before.

Shay, the keynote speaker, kicked off the event by saying retail is a much more consumer-centric environment than ever before.

He said this environment had been created by retailers now focusing on “distributed commerce” rather than omnichannel.

He defined distributed commerce as a retailer being agnostic with their channels and placing the consumer at the centre of the experience.

“I had an interesting conversation yesterday with a CEO of a large company in Auckland. He articulated it as once upon a time, merchandising, inventory and marketing was very much a push strategy,” Shay said.

“Retailers would go out, purchase the inventory, then they’d look at the merchandising, set the pricing and market it and say this is what we have, this is what you can buy. This has been completely flipped on its head now.”

Shay says retailers now have to use a “pull strategy” to get customers’ attention, as the world is now so distracted by technology, such as smartphones.

This means the customer is now in control about how retail sales go, he says, rather than the retailer.

He also said distributed commerce is making retailers use their real estate more efficiently, such as Walmart closing some of its stores and Amazon’s expansion into physical stores.

“As customers decide how they want and when they want it, sometimes they want to go to the store, sometimes they want it online and I think that’s what’s driving the rethinking of how much real estate do you need and which places do you need it.”

This was perfectly demonstrated by an experience the host for the day, television personality and TV3 presenter Hilary Barry, shared with the crowd.

When Barry’s favourite top-dollar muesli sold out a couple of times at her local supermarket, she decided to cut out the middle man who wasn’t getting the stock levels right and went straight to the supplier.

She rung up the muesli company and asked if she could buy direct instead, and they told her she could so long as she bought in bulk.

To this day, she says she still buys in bulk straight from the source, and the supermarket has lost her business for good.

There was a mixture of laughs and murmurs in the crowd following this admission.

It seemed most were a bit shocked at the idea of a customer going straight to a supplier, but they acknowledging this was evidence of what Shay had led in with: fulfil customers’ needs, or they’ll take their business elsewhere.

This theme continued with First Retail’s Chris Wilkinson’s presentation.

He said how important omnichannel is as “purposeful consumers” now exist, with research done and decisions made well before they go to a shop.

“Consumers have all the power,” Wilkinson said.

Later that afternoon, Massey University professor Jonathan Elms and Doctor Sean Sands of Monash University presented the preliminary findings from the Big Issues in Retail survey.

A key finding was that most retailers interviewed felt that customers were becoming more demanding.

“Retailers are preparing themselves for more complex consumers going forward,” Elms said.

Sands echoed this, saying customers are demanding more than ever before, and want all the boxes ticked: speed, value, experience and convenience.

Customers want the lowest price possible, he said, but they also want excellent customer service.

Another international addition to the line up, Freedom Australia managing director Tim Schaafsma, spoke of the importance of retailers being able to adapt as to their changing customers.

He said Freedom used to have a rule that customers couldn’t photograph instore ranges, in case their competitors saw their ideas and stole their IP.

Now with the rise of technology and prevalence of smartphones, they’ve abolished the rule and encourage customers to take photos and share them on social media.

“Our customer has completely changed and we’ve had to change with that customer,” Schaafsma said.

​ ​

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