Consumer-centric retailing

Being a retailer isn't easy.
As the daughter of a grocery chain owner, I understand long hours, distribution challenges and feisty customers. But as more people embrace social media, today's retailers have an opportunity like never before to deepen customer relationships, drive loyalty and increase basket turns.

Extending relationships with and among customers is the new norm. It's time to move away from product-centric category management and toward consumer-centric shopping management. It's also time to explore collaborative marketing and merchandising.

More continuous customer feedback is among the trends noted in the Forrester Research report, "Voice of the Customer: the Next Generation." As more shoppers use social media to communicate with retailers, companies are changing their customer feedback programs. But that can go only so far. Retailers need to use the advice they're receiving from consumers on the front end as they develop, refine or confirm a product mix.

With any new initiative, it's critical to involve early adopters, who often are engaged in social media.

The Stage-Gate Solution

Following the lead of CPG manufacturers, retailers can profit from adapting Robert Cooper's Stage-Gate approach to incorporating customer input when developing new products and initiatives:

  • In the Preliminary Investigation phase, consider and identify what your customers really need. Why do they choose your products and store over others? How do they shop your store? Do they start with the center store or the perimeter?
  • For the Detailed Investigation phase, consider starting a beta program in a few stores to test your concept or layout. Secure feedback from customers, and use their input to refine your go-to-market strategies.
  • In the Development phase, craft your messaging and refine your value proposition with input from customers.
  • In the Testing and Validation phase, reintroduce the reformulated concept to the customers who provided feedback to validate it. In addition, consider the services you offer and the partnerships and alliances required to achieve the vision. For example, if you are considering in-store health clinics, bring in a panel of local influencers, such as nutritionists or fitness experts, to help support the launch.
  • While you implement the concepts and changes for the Manufacturing Production phase, provide your in-store managers and associate team members with the training and tools they'll need to discuss the changes with customers. Educate your in-store associates to be brand ambassadors about the new concept so they can create buzz among their friends and family. By making associates–and management–part of the launch strategy, you can expand your reach through positive word-of-mouth.
  • In the Market Launch phase, involve customers to help create the launch strategy. These external brand ambassadors are another great source of buzz. Since they've been involved in shaping the changes to your product mix or merchandising, they often feel ownership and are happy to tell others.

Insight in action

Several retailers are already using customer input throughout the investigation, development, testing and production process to ensure success as they launch initiatives and products.

Take Meijer's new Order to Store program, which offers free shipping to a store location for online shoppers. Customers told management they wanted to designate one store as their pickup location. So after the order is received, the customer is sent an e-mail saying his or her order is ready to pick up at the store of choice.

When Fresh & Easy Neighborhood Market launched Gourmet, a new line of upscale fresh prepared and frozen meals, the retailer leveraged the feedback it heard continually from shoppers. Customers said that they loved Fresh & Easy meals, so the company created the Gourmet line of affordable meals to give them more options.

Giant asked more than 250,000 customers to test the quality of their private label offerings. Based on their input, the retailer reformulated hundreds of products to improve taste and quality.

Getting engaged

With any new initiative, it's critical to involve early adopters who often are engaged in social media and can be found on Twitter or through their check-ins at your store on Foursquare. Ask associates to name their favorite and most loyal customers. And find a few potential customers who may be loyal to the competition to hear why they aren't shopping your store.

By involving your customers before you make product or merchandising decisions, you can acquire new customers and keep existing customers engaged with the product mix in your stores.

Julie Hall is executive vice president of Schneider Associates, a full-service marketing communications agency in Boston. Hall is a thought leader and frequent speaker on the subject of Customer Calibration, which involves customers throughout the product development process to ensure a successful launch.