There has been a lot of discussion around the erosion of brand value and the fact that consumer brand loyalty has been slipping for an extended period of time. Many factors have contributed to this, not the least of which is the ability to compare products and prices on the Internet.
Any given retail chain or online store also develops its own ‘brand image’ that can improve or deteriorate based on the overall shopping experience and merchandise lines. For example, in the early years of online sales there were a number of absolutely livid Web shoppers whose purchases didn’t arrive in time for Christmas – those store brands certainly suffered! Now that time has healed the wounds and the retailers involved managed to revamp their systems and rebuild their service and delivery image, online sales continues to reach record numbers.
But rather than looking at it as a single company or brand that is losing value, I would argue that when one brand is slipping more often than not another is gaining. An example of that would be the wireless handset industry – while Motorola lost its place as a leader, BlackBerry held its own and now even new players such as Dell and Google are entering the market. You might say the technology-driven cellular business bears little resemblance to your specific retail sector, but the lesson is that there is a constant need to build and refresh a brand and not remain static. While the phrase ‘death of brands’ has been used, to die could imply a sudden and specific event. Perhaps viewing a brand more in the context of a relationship might be a better way to look at it – usually a series of things happens over a period of time that gradually erode or ‘tarnish’ one’s feelings.
Although your company might not devote as much specific attention to image as some of the big names do, each of your customers has a definite impression of your ‘brand’ in terms of how they think and feel when they consider shopping at your store. The value of your image continues to evolve (for better OR worse) over time, as do those of your competitors. My key point is don’t take the relationship for granted! If each and every aspect of your retail environment is not enhancing your customers’ image of your store, then you may be giving them reason to consider shopping elsewhere.
The current economy may lead some consumers to shop smarter and consider brand substitutes, but at the same time that doesn’t mean that every single shopper’s buying habits have changed completely or gone down-scale. In fact, some consumers are actually taking this as an opportunity to compensate for reduced consumption in certain areas by improving the quality of what they do purchase and prepare for the future! This in turn may offer new opportunities for retailers who are better at observing and taking advantage of shifting consumer habits, and who can then retain those customers over the long run.
Even iconic store brands such as Wal-Mart are finding it necessary to rethink and redesign their retail environment in an effort to provide a more pleasant shopping experience and attract/retain customers, even after the absence of competitors such as K-Mart. Wal-Mart’s ability to drastically lower shelf heights without reducing the number of SKUs was possible largely due to their already-existing systems and well-honed supply chain. The reduced inventory without stock-outs helps improve their numbers and serves to reinforce their ‘low price leader’ brand! Every item in a store may have had as many as a dozen or more system and point of sale system interactions if you look across all functions from merchandise planning to ordering, stocking, and final sale, and every one of these point of sale systems works in tandem to support the store’s strategy and brand image.
The retail information system, (POS) itself has moved beyond basic operational efficiency and become a critical tool to support rapid and accurate merchandising decisions and the best possible consumer experience, both in-store and online. Although a smaller chain may not have the economies of volume purchasing, almost every other customer service feature or competitive advantage that the biggest companies have can now be matched or bettered by newer mid-tier POS systems that cost only a fraction of what the top-tier POS systems do. So while planning your strategy and company brand image, you should take into account the need to support your direction with the tools and infrastructure that will allow you to compete on an equal footing!
Retail Metrics: KPI’s – Stock to Sales Ratio
Alright, so in my last two articles, (links) I’ve covered the first two KPI’s, Days of Supply and Turn. Now it’s time to get into the third one,...
Retail Metrics: Understanding and Optimizing Inventory Turnover
In the dynamic world of retail, understanding and optimizing inventory turnover is crucial for maintaining profitability and operational efficiency. This article delves into the concept of inventory turnover, a key performance indicator (KPI) that measures how often inventory is sold and replaced over a specific period. By mastering this metric, retailers can make informed decisions that enhance their financial health and customer satisfaction.
Retail Metrics: Key Performance Indicators (KPI’s) – Days of Supply
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