By Brian Walker – Retail Doctor Group

President Bill Clinton once infamously remarked “that depends on what your definition of ‘is’ is.”

Growing up in retail through the years was reasonably simple when it came to the definition of types of retail.

Previously we had:

    * Specialty retail
    * General merchandise
    * Food /catering
    * Discount department stores
    * Department stores
    * Amongst some others.

Now we see the lines between these simple retail definitions being constantly blurred. We see department stores talking about discounting as a strategy, discount department stores carrying “premium” fashion brands, specialty retailers trying to be all things to all people, lacking branded power, segmentation and focus. We witness mass merchants trying to operate out of too small a space to save on rent and small retailers operating out of too big a space in attempts to grow a revenue line.

The once simple strategic definition of the retail segment is no longer understood and the consequences are obvious.

Yes I know it’s a challenging market and I agree with the impact of price deflation and degradation of some categories, I even concede the impact (although somewhat overstated) of online retail.

Customers expect a brand to provide the targeted offer that they have grown with.  How can a premium retailer of scale who has grown a pedigree in service, quality and known precisely for this by its audience then suddenly become a “discounter”? Are they really catering to a new price conscious customer or is it simply pandering to an overzealous investor base. Isn’t this blurring the lines?

Department stores are suddenly highlighting discounting as an operating ‘strategy’ whilst their short term profit results are inordinately reliant on short term cost cutting. Customers are now calling down the aisles looking desperately for service in stores that were once known for their superior customer service. Our Retail Doctor research shows us that excellent service, and all that it contains, above all else is the critical differentiator. Aren’t the lines blurring here?

Note to CEO’s – fix /invest in staffing levels, your customers simply want service before all else. The slippery slide of reducing prices in certain lines and offsetting the margin impacts through reducing staffing levels is a sure fire way to alienate customers. This is not a response to a cautious customer. Surely it’s a response to a nervous investor base. These two audiences, regrettably, are not always compatible, despite what the board might have us believe. Its not rocket science is it?

The retail graveyard is full of short term margin tactics, businesses that spread to broadly, those that forgot the basics and those that don’t define their targeted market segment and point of difference and stick to it. Customers will buy your product, if you don’t pull surprises; provide them what they are looking for, provide exceptional service to them, and above all stay committed to your segmented position without blurring the lines.

Fit businesses typically have a broader horizon than others. They invest in staffing and training to deliver exceptional customer experiences. Their measurement of the wage spend is based on transactions and conversion ratios not sales alone. They define their position and stick to it across all customer touch points such that their lines are never blurred.

Happy ‘Fit’ Retailing

Retail Doctor Group

Contact us to discover how you can maximise your strategic positioning by aligning your strategy to operational deployment. Visit email or phone 02 9460 2882.