Customization for the Masses

By now, retailers have heard about the importance of building relationships with shoppers, improving loyalty to stores and brands, and doing it all by customizing offerings and services for shoppers.

To accomplish this, many already are customizing their offerings based on past experience, but they might be missing out on more forward-looking opportunities to deliver solutions to customers' current and future needs.

Currently most retailers focus on leveraging the data collected and mining it for insights. They use various applications to optimize merchandise assortment by considering the following factors:

What sells: They determine what merchandise is selling chainwide, per banner or cluster, even down to the store level.

Who buys: They consider demographic data on shoppers' purchases of particular brands, sizes, flavors, etc., combined with data on who shops at what stores, to determine assortment.

Frequent shopper insights: They consider loyalty card data revealing what specific shoppers purchase in store or online.

By melding point-of-sale and syndicated data, panel and consumer data and retailer loyalty purchase data, retailers can gain insights to guide their assortment decision-making.

Planogram Options

Other applications focus on correctly arranging the merchandise assortment on store shelves, pegboards, in coolers, and so on. By understanding the "psychology" of how the shopper makes a purchase decision (sometimes referred to as the Consumer Purchase Decision Hierarchy or Consumer Decision Tree), the retailer can customize the shopping environment according to category dynamics reflecting that insight. For example, some planogram options include brand block, where a single brand is grouped together on the shelf, versus "ribboning," where the planogram is designed by flavor or ingredient, so that all of the chocolate chip products from multiple brands are together on the shelf.

Many of these applications also allow retailers to manage inventory levels based on sales performance so that factors such as number of facings, units available for sale, and products on order but not yet delivered are considered in the equation. A store can further customize its selling strategy by reducing the amount of nonproductive stock, leveraging the space available for sales and maximizing the number of turns in any given category.

Missing Progress Points

While these approaches are productive and have proven successful, they overlook important opportunities for customization in building relationships with shoppers. These approaches focus on the belief that "past performance is the best indicator of future behavior." In most situations, that is an accurate gauge for planning and has proven quite successful.

However, some elements of the shopping experience run counter to that strategy. Shoppers do not remain static in their pursuits. They seek to make improvements and progress in their lives. In that effort, they want to engage with the retailer to learn about new opportunities, be educated on different capabilities and seek assistance in better performing their "jobs" in their lives. Shoppers "hire" products to meet the needs of their life requirements.

What Needs To Be Done

To ensure customization occurs in a way that resonates, retailers need to change the way they approach communicating with shoppers because it is part of the overall impression that consumers form. Besides the fundamentals of what to carry and where to place merchandise in the store, retailers need to look at the jobs-to-be-done component of the product. The same product can be marketed differently based on what job the shopper is trying to accomplish.

To ensure customization occurs in a way that resonates, retailers need to change the way they approach communicating with shoppers.

It is helpful to look at constructing "touchpoints" within the shopping "ecosystem" (online messaging, direct mail, email, store layout, aisle characteristics, displays, etc.) that emphasize the eight points of information and educational support. Accomplishing the outcome matters, not the dogfight that currently occurs between brands and products that are still wedded to the Porter's Value Chain of product feature comparisons, operational efficiencies, etc.

The late Harvard business professor Ted Levitt famously said, "People don't want to buy a quarter-inch drill; they want a quarter-inch hole." Yet, our customization efforts do not completely address the performance or the job. We stop short of helping the shopper make progress (on his or her terms) and assume that the shopper can complete the journey because they know what they want and need, and our role is just to provide the products to allow them to make their own decisions.

Retailers sell food items, but the shopper is purchasing nutrition, convenience, budget-fitting meals and opportunities to delight family and friends. The products that currently exist in the store can be customized as offerings and options for the shopper based on the jobs to be done, and aligning the messaging supporting those products (and the retailer more generally) as being consistent with the pursuits of the shopper. By understanding the jobs to be done, a retailer can customize and tailor the relationship with the shopper based on progress to be made that's specific to that shopper, and do so without having to necessarily tailor layout, assortment and pricing to each shopper.

David Zahn, president of Zahn Consulting LLC, is an industry consultant who has worked with retailers, manufacturers and service providers both domestically and internationally to help them meet their business potential.