Analysis: There’s more than one way to keep the tills ringing

Trust

As supply chains come under more scrutiny than ever before, offering what Sainsbury’s boss Justin King terms “value and values” plays an increasingly important role in shopper appeal. The horse meat scandal showed how vital it is for customers to be able to trust a retailer, as well as being provided with good value.

Waitrose, Marks & Spencer and Sainsbury’s have made strides in recent years to be transparent, and have promoted their ethical values using in-store merchandising, packaging and marketing.

They have also invested in their supply chains to support sustainable development, and give shoppers confidence that packaging states accurately what is in a product. However, ethical selling is not enough.

The tactic must be used in conjunction with strong ranges, prices and promotions - The Co-operative has arguably found in recent years that its ethical selling point has been encroached on by competitors.

High street health and beauty specialist Boots, which has a perennially high level of trust among consumers, has a rich heritage that clicks with shoppers. It promised back in the 19 century that it would provide customers - often from poor backgrounds - ‘pure drugs’, ‘qualified assistants’ and ‘first-class shops’.

Store environment

As online shopping has taken hold, retailers are increasingly using their stores to create a shopping experience for the customer.

It is no longer enough to simply sell products - shops have to provide something an online experience can’t.

Apple is an obvious leader - its stores are full of sleek wood benches that are covered in its products and which allow customers to interact with devices.

The store fits feel expensive, yet welcoming, creating a light environment, full of shoppers who feel relaxed.

The retailer has managed to create a distinct store experience by departing from the way things were traditionally done. Selfridges is another example of best-in-class stores. The retailer has created its own retail world in its Oxford Street flagship, with dramatic displays and attention-grabbing windows.

But retailers do not necessarily need expensive fittings or grand buildings to keep the customer happy.

Pets at Home manages to combine the excitement of a pet shop - by allowing interaction with the animals - with pet care services through its in-store veterinary practices and grooming salons. The retailer says its focus on service has increased store visits per customer.

Fulfilment

Although low prices and exclusive products may woo shoppers to a store, flawless fulfilment is vital across channels.

Customer expectations are growing and shoppers want to receive their items not only in the quickest and most convenient way, but when they have been promised.

Retailers such as Oasis, Warehouse, Maplin and Argos have teamed up with delivery service Shutl to offer customers delivery within 90 minutes, while others such as Next have raised the bar by offering next-day delivery for online orders made up to 10pm.

The clothing retailer is also testing same-day fulfilment along with Sunday and evening deliveries, which are charged at a premium.

Despite retailers pushing the boundaries of how fast they can get orders to customers, Next boss Lord Wolfson believes that it is delivery accuracy that customers crave.

Free delivery has been a vital marketing tool for some, particularly in pure-play etail.

Asos offers delivery and returns worldwide, which boss Nick Robertson says he counts as a marketing cost, allowing it to attract new customers.

Asos is also one of a raft of retailers that have adopted the 4,500-store Collect+ network as collection points for customer deliveries.

The service, which is also being used by John Lewis and Littlewoods owner Shop Direct, makes picking up orders as convenient as possible for shoppers, who can collect them at their local corner shop.

Convenience has become critical for retailers, as Amazon ups the stakes by rolling out collection lockers for orders within shopping centres, Co-operative and Spar stores and even offices in London.

Brand identity

The recent collapse of big names HMV, Jessops and Blockbuster has proven that brand awareness on its own is not enough to keep customers coming back through retailers’ doors. But brand identity and knowing what the retailer’s name stands for are crucial.

Luxury retailer Burberry is a prime example of a well-known brand that has been careful not to rest on its laurels. It has kept itself relevant by creating new products that retain an element of the brand’s distinctive heritage, and has embraced technology - its signature raincoats, for instance, have microchips
in them that can be scanned with a smartphone to take the shopper to a video about how the coat was made.

Despite having just 40 UK stores, premium fashion brand Ted Baker has used its signature products and store designs to develop a distinct image. It has delivered profits while rival retailers have faltered, and posted retail operating profit growth between 11% and 12% for the past three years.

But it isn’t just more upmarket retailers that have been able to engage so strongly with their consumers.

Poundland has an advantage that its whole offer is in its name, meaning shoppers know exactly what they will find — a variety of goods for £1. In addition, Poundland uses trusted branded products, such as Heinz Tomato Ketchup, to ensure customers don’t feel they are buying low-quality goods.

Focus

It sounds obvious, but relentless focus will enable retailers to connect with customers.

Argos managing director John Walden is in the midst of refocusing the retailer and not allowing peripheral activities to be a distraction.

Last month it emerged Argos is axing its TV shopping channel and pulling back from its Chinese joint venture just four months after opening its first stores in the country. Walden is in the process of reshaping the multichannel retailer to cement its future and tailor its offer to changing consumer habits.

Conversely, John Lewis revealed last week it is to expand its supply to overseas department stores after a successful trial in premium South Korean department store Shinsegae.

John Lewis has been careful to get its core UK business in order online and in store before branching into new areas.

Grocer Sainsbury’s has also been cautious about overseas expansion in recent years.

After failed ventures in the US and Egypt, the grocer has focused on expanding its store presence in the UK and building a broad online operation, which now includes an entertainment arm.

This has allowed Sainsbury’s to focus on domestic factors including range, quality, store environment and price to entice shoppers and increase loyalty.

In the past few years, Dixons also intensified its focus, coming up with a renewal and transformation plan that gave it new direction and a distinct purpose for its stores.

Exclusive product

Customers queuing to get their hands on exclusive product is perhaps the most graphic illustration of the importance of selling wares no one else does. H&M pulls it off regularly with its designer collaborations, including most recently Marni, and River Island near enough sold out of its range designed in partnership with songstress Rihanna on the first day.

Shoppers will keep coming back if they know that they can’t get the product anywhere else. Other examples include John Lewis’ successful collaboration with Alice Temperley. Debenhams has taken exclusive tie-ups to another level with its Designers at Debenhams ranges, a key differentiator for the retailer. Partnerships include collections from fashion designers Henry Holland, Jasper Conran and Matthew Williamson, who all create product that can only be bought at the department store.

Outside fashion, Boots has pulled in shoppers with own brand No7, which many believe is as high quality as branded goods twice the price. And it drives footfall. Whenever the retailer releases another iteration of its Protect and Perfect Beauty Serum, which is scientifically proven to reduce the appearance of wrinkles, it flies off the shelf.

Value

Delivering value for money in customers’ eyes is often no mean feat because demand for quality goods at low prices continues.

Tesco’s new Price Promise promotion complements a raft of other ventures it has used to keep prices low, including sourcing more fresh food products directly from producers. Asda’s Everyday Low Price strategy has also allowed it to use the buying power of parent Walmart to offer low prices. Amazon has combined comparatively low overheads and buying large volumes to offer the same products as high street rivals at lower prices.

But it’s not all about being the cheapest. Premium chocolatier Hotel Chocolat has persuaded shoppers to spend by investing in product quality and packaging. Likewise, John Lewis has long drawn footfall with its high-quality products and Never Knowingly Undersold value pledge.

Majestic Wine has taken measures to ensure it offers value for money, including dropping its minimum online order to six bottles last year.

Omnichannel

Creating a consistent experience across shopping channels is critical for the customer these days.

There is rarely a consumer who shops solely online or in store. The consumer shops by brand rather than a channel so retailers must make the shopping experience seamless.

That means if a customer orders online, they must be able to both pick-up and return from stores. Also, for shoppers who want to see and feel a product in store but not have the hassle of carrying it home, ordering online in store must be quick and easy, be it through kiosks or free wi-fi. A fifth of all online orders from multichannel pioneer Next are collected in store while 59% of unwanted items are returned to its shops.

John Lewis Partnership has broken down barriers between its brands as part of its omnichannel strategy by pushing click-and-collect across its estate, both John Lewis and Waitrose. Shoppers can collect their purchases alongside their weekly shop at Waitrose, and 27% of online orders were collected via click-and-collect in 2012/13. The initiative has widened the catchment of John Lewis, which has fewer than 40 stores nationwide.

Customer service

If there’s one thing that will get consumers back to a shop, it’s great customer service. The Americans are famous for it, and the best example in retailing is probably Nordstrom, the US department store.

There are many tales of the retailer going above and beyond, including the time an employee at the Connecticut store drove across the state to the airport to deliver shopping to a customer who had left her bags behind in the shop.

Apple is also known for its legendary customer service. From its Genius Bars to emailing receipts, the whole process of buying potentially complex technology products is made easy.

Electricals retailer Dixons put service at the heart of its turnaround, launching initiatives including Knowhow, a unique installation and aftercare service that has become a brand in its own right.

Pets at Home also puts great emphasis on customer service, through training its employees who are highly knowledgeable in their product categories.

Most (92%) of the retailer’s staff are pet owners, and on being recruited, new staff are trained to an expert
level. Pets at Home commercial director Peter Pritchard once told Retail Week that staff are “so knowledgeable it’s scary”.