Three Things Retailers Must Do To Compete

Customer satisfaction leads to customer loyalty. Here are three factors that are key.

What do shoppers care about?

“In retailing, customer loyalty cannot be achieved for long by keeping customer interactions online distinct and separate from those offline,” argue Rolph E. Anderson, Srinivasan Swaminathan and Rajiv Mehta in the Flynn in the Summer 2013 issue of MIT Sloan Management Review.

The authors note that many consumers go back and forth between online and offline retailers, looking at things in person in a store and then buying online, or visa versa.

In “How to Drive Customer Satisfaction,” the authors look at the challenge of building customer loyalty through the lens of a marketer: Anderson and Swaminathan are both professors of marketing at Drexel University, and Mehta is a professor of marketing at New Jersey Institute of Technology.

Anderson and Swaminathan conducted a survey and in-depth interviews about e-commerce with shoppers and executives, and identified six significant drivers of customer satisfaction in e-business. They say these drivers of customer satisfaction “may be relevant not only to e-businesses but elsewhere.”

Here are three of the six drivers that are especially relevant to retail operations:

1. Product assortment must be well curated.

“Customers are interested in a selection of products and services tailored to their lifestyles and personal preferences,” Anderson, Swaminathan and Mehta write. Too extensive a selection and a store risks being confusing, which can cause customers to put off or cancel a purchases. Too narrow and customers go ho-hum.

One company that the authors say gets it right: the grocery store chain Trader Joe’s. “In contrast to typical grocery stores, which may carry 50,000 items, a Trader Joe’s store typically has only about 4,000 items, which are selected to match the demographic and psychographic profiles of its customers.”

2. Transactions must be easy.

“Consumers respond positively when the purchasing process is simple, intuitive and user-friendly,” the authors note. “A brick-and-mortar store that doesn’t provide information and prices at product displays or one that tolerates long checkout lines may frustrate customers, causing many to abandon their shopping carts and leave the store.”

Prime example: Amazon, which puts the rule into practice with its “1-Click” purchase system. The system allows registered shoppers to complete a transaction in one click, without confirming their addresses or credit card information. The take-away: “All merchants, whether online or offline, who make the purchase transaction process faster and easier increase the likelihood of customers making repeat purchases and moving toward loyalty,” the authors write.

3. The shopping environment must be appealing.

“Customers appreciate and respond to a stimulating shopping environment that offers attractive store layouts and engaging displays or websites” write the authors.

For instance, shoppers at the 250 stores of WE Fashion, headquartered in Utrecht, the Netherlands, can try on clothing, shoes, bags and accessories and take photos at the store’s “Tweet Mirror.” They can immediately send the photo to their Twitter account or to a friend by Email, allowing them to get immediate feedback on whether the item is a buy or no-buy. (See the mirror in action at YouTube.)

 

For more about the research and the other three drivers identified by the authors, see the full article “How to Drive Customer Satisfaction.”

2 Comments On: Three Things Retailers Must Do To Compete

  • Stephen Karel | November 8, 2013

    With all due respect to the Messrs. Anderson, Swaminathan, and Mehta I do not think that they know what the hell they are talking about. As an astute follower of both the retail and manufacturing industries for over 20 years (Div. Pres. of DVF, help started Perry Ellis, Div. Pres. of Manhattan Ind’s, and started the contemporary sportswear business), these gentleman have some ambiguous, and I think erroneous information.
    1. Product assortment. What do you mean by “curated” stock assortment? Limited? To use a chain grocery store as an example is in itself obviously very short sighted. Assortment has and will always be a major reason for a customer to shop. In fact I find Trader Joe’s or Costco for that matter very frustrating places to shop because they assortments that they carry are never constant, and very short of variety. What about Macy’s, Nordstrom’s, a sporting good s chain store, etc.
    2. I totally agree with the assertion about easy of shopping and fast check outs.
    3. Shopping environment. Again, I agree with a store must be appealing. However their example of using the store in Utrecht is mind boggling. Although, in the very near future a customer will be able to see themselves (clothes) in almost anything.

    The example of the Apple store employee is again very short sighted, they only sell Apple products.

    I personally find their investigation and proof in this article very weak. They only way to make a customer happy is to give them what they want, a good assortment, a good price, and make it easy to buy; whether it be in a store or on line.

  • Leslie Brokaw | November 9, 2013

    Thank you for taking the time to comment, Stephen. The word “curate” was actually mine and not the authors. This blog post is a relatively short summary of just some of the authors’ arguments. If you get a chance, take a look at the full article that this blog post draws from. In it, you’ll get a fuller sense of their research and findings. For instance, the authors also discuss the importance of adaptability, commitment to customers, and connection with other customers.

    Their research is drawn from data from 851 questionnaire respondents and multivariate data analysis. The questionnaire was developed after conversations with 20 online shoppers and 10 e-commerce executives. Further details about the authors’ findings were published in the Spring 2011 issue of Journal of Marketing Theory and Practice.

    Hope this information is useful.

    Leslie Brokaw
    Contributing Editor
    MIT Sloan Management Review

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