You can have the most unique, creative and different store on the planet, but if doesn’t conform to what your customers want and expect, then it is of no value. Retail has always
been, and will always be, about the consumer. Your entire store concept must be built around your target customer. Succeed at satisfying this shopper and you win the game. Build and design a store that looks beautiful but doesn’t fit the marketplace and the only people who will be happy are the architect and contractors.
Is your store “customer-centric”? What does being customer-centric even mean? Most specialty stores would say that they were focused on customers, and would point out that without customers their store would not exist. And they are right. However, simply being there, opening the store, stocking products, and having staff to collect money is not the same as being customer-centric. Being customer-centric means that everything we do—from the products that we carry, to the environment that we place them in, and the staff that we have to serve those customers—is centered on and about customers and their experience in our store. There is a huge difference between simply serving a customer and centering everything you do on the customer’s specific needs and satisfaction. We’ll talk about lessons stores have learned when becoming more customer-centric and provide a checklist to help you make your store more customer-centric.
Students of your customers
Customer-centric stores are “students of their customers,” which means that they literally “go to school” to learn as much as they can about their customers. Every customer is different. A customer-centric retailer recognizes this fact, and also recognizes that it cannot create a different environment for each individual customer. This means that it has to find a way to group similar customers together, and create solutions and environments that are relevant and work for those segments. This is called customer segmentation. When you segment your customers, you identify clusters of customers that have similar needs, wants, demographics (age, sex, education, lifestyle, and so on) and, in response, you create environments, policies, services, price strategies, and product groups especially for the customers in each segment.
The Best Buy experiment
A good example of a major retailer who has adopted a customer-centric approach is Best Buy. About three years ago, Best Buy determined that it could not continue to operate on price as its major strategy and message to its customer. Brad Anderson, chief executive officer (CEO) of Best Buy, said, “If we do nothing, Wal-Mart will surpass us by the simple fact that they open more stores than we do each year. There is no point in trying to compete on price” (emphasis added).
How Best Buy became customer-centric
With that statement in mind, Best Buy launched its customer-centric strategy. During 2005, Best Buy spread its customer-centric message to selected North American stores (110 in all), and allocated more than $50 million (U.S.) in capital expenditures to those stores. The initiative was two-pronged: getting customers to buy what was already in stock; and asking them what products they would like to see the company offer. Best Buy identified key customer segments in five areas of its customer-centric program: affluent professionals seeking the best technology experience (internally identified as “swinging single professionals”); younger males wanting cutting-edge technology and entertainment (“gadgeteers”); fathers looking for technology to improve their lifestyle (“cherry pickers”); mothers seeking technology to enrich their children’s lives (“affluent soccer moms”); and small business-people using technology to improve their bottom lines (“small business”). The way Best Buy adapted the stores to target each segment is interesting. For example, for the soccer mom, the stores feature brightly colored signage, play areas for children, educational toys, and in-wall appliance displays, and provide personal shopping assistants. For small businesses, the stores have signage that reads “Best Buy for Business,” and have an expanded computer section and a stronger “Geek Squad” (Best Buy’s in-home/office technology assistance team) presence, as well as central help islands staffed by associates wearing blue-collared shirts (as opposed to knitted golf shirts). Part of the strategy also included giving employees closest to the customer some of the more important decision-making responsibilities. In addition, Best Buy store associates received customer-centric training to be able to really deliver on the promise at the store level. “People come to specialty stores because they are looking for some service or selection that they can’t get from the mass market,” Anderson said. He went on to say that “for those reasons, Best Buy intends to invest more heavily in customer service, and position itself as a solutions provider for consumers of high-tech entertainment products. Best Buy’s customer service initiatives will mean a more decentralized structure for the business. We are moving power from Minneapolis [the company’s headquarters] to wherever the engagement is with the customer. Instead of head office telling the store what to do, it would be the store asking what it can do in assisting its customers.” Internally, Best Buy has also worked extensively on its customer database. The company wanted to identify who its best customers are, as well as who the customers are that are costing them money by abusing their customer service policies.