Changes within the retail market as well as the economy have undoubtedly impacted the consumer and their shopping behaviour. Loyalty due to location and convenience has decreased. Consumers are educating themselves on product knowledge, pricing, and are exposed to merchandise options they may never have known existed. (McKay 2010) This new customer is looking for retailers to change with them, offer new services, ranges, and channels. (Zhang, 2009).
Consumers are leading increasingly busy lives leaving them feeling time constrained and the recent economic recession has left them . Various social, economic and demographic changes in the consumer population are causing major ...view middle of the document...
Products are researched and prices compared outside of traditional stores. Often this online research occurs outside retail channels, via professional product review websites, customer generated reviews, blogs, and even online social sites. (Bjork 2010)
For retailers, it is not always enough to increase the bottom line by offering ranges for your biggest customers. Slowly, there is an increasing realization that the traditional way of thinking about the customer may be flawed. “The customer is always right” may not in fact be a valid statement. Today, the informed consumer has placed downward pressure on pricing and gross margins by selecting what to buy and when – often based on price comparisons found shopping online. (Coughlan and Grayson, 2012)
For leading retailers the question is not who are my customers, but which customer groups are profitable. Many retailers have discovered that some of their “best” customers are the least profitable. (McKay, 2010) Volume alone should not be used to decide on which customer groups the ranges should focus. Additional insight into the behaviour and purchasing patterns of consumer groups is needed to provide adequate input for shaping range and service strategies.
The Conflicted Consumer
Consumer expectations for retailers also continue to evolve due to a variety of social, economic, and cultural factors. These factors include a greater degree of social responsibility, a pressing need for convenience and a new awareness of shopping local in a global marketplace (Murray, 2011). In order to stay competitive and respond to new consumer demands, some forward-thinking retailers have developed innovative new business models. The result of this mutual influence is an ongoing dance between customer expectations and new business models (Stross, 2010). This has helped to encourage the rise of the conflicted consumer, a development that has become more noticeable as startups, boutiques and niche retailers populate the marketplace and highlight these new consumer inclinations and points of tension (The Boston Consulting Company, 2012).
Everything vs. one thing – Consumers appreciate the wide assortment and one-stop shop aspect of the everything for sale approach made popular by department stores. At the same time, they also find that niche retailers like Lululemon provide them with an opportunity to display their sophistication. AS a result, the growth of both long-tail models and specialized niche retailers in the age of e-commerce has led to an increasing polarization in retail business models.
Permanent vs. occasional retail – Work pressures due to a challenging job market, along with a variety of related time constraints means that consumers are demanding an increasing amount of convenience when they shop. One of the biggest attractions of online retail is an always open shopping environment. While convenient, e-commerce can also decrease the urgency of the purchase. One response to this is the...