The relationship between retail and consumers is evolving, and the long-held principle of customer centricity is no longer sufficient to confer loyalty or advocacy.
As a result, retailers need to find ways to integrate themselves into the everyday lives of consumers by delivering both tangible and intangible value.
Success will be defined by their ability to build a trusted, long-term relationship, as it is no longer enough to only focus on selling products.
This transition may prove difficult for incumbent retailers who have created vast businesses spanning channels, categories and continents, with legacy infrastructure from which it will be difficult to disentangle.
Although efforts to change are evident, the scale of change required is substantial.
Present-day key performance indicators (KPIs) built on sales per square metre will not be fit for a consumer base that increasingly blends its shopping habits between stores and online.
Promotions designed to increase basket sizes are less resonant with consumers who want to buy ‘better’ products, rather than ‘more’ stuff.
Generic layouts in stock-heavy stores ignore the serendipity and enjoyment that consumers crave in a shopping experience.
Changes in customer expectations are accelerating and are unlikely to revert to how they used to be.
According to the latest data from the EY Future Consumer Index, 54% of consumers believe that their lifestyle will change further in the long term, and 45% think that the way they shop will improve in the coming years.
Therefore, retailers need to revisit what their value proposition means to the customer they serve and examine how they are making customers’ lives easier, better, or more fulfilling.
It is also essential to consider how businesses are differentiating themselves from the multitude of other sellers from which consumers can choose.
For more information, read EY’s report titled How Retailers’ Value Propositions Need To Evolve For Success.