By Richard Baum, ACG Board Member and Managing Partner at Consumer Growth Partners
Way back when, the most common mantra in retail was: “It’s about the right product, for the right customer, in the right place, at the right price, at the right time.” Like many things in our world, the fundamentals of retail haven’t changed very much over time. However, what has changed and continues to change at an increasingly rapid rate are the tools available to retailers to fulfill that mantra.
Arguably the two biggest equalizers that have leveled the playing field for many retailers in the past twenty years are the internet and the smartphone. Not only have they revolutionized the way products move to market, but more importantly, they have shifted the balance of power from manufacturer to retailer to consumer. Today the consumers are kings and queens, and they make retailers better at fulfilling the mantra of “right.”
The Right Product: At the end of the day, the customer is buying a product or service that is intended to fulfill a certain want or need. Whatever the retailer does to sell that product or service will not make the customer happy unless what the customer is buying functions in the manner that the customer wants it to. Putting lipstick on a pig simply will not get the job done. Whether the problem is poor quality, poor fashion, or a poor price/value relationship, consumers are often faced with many alternatives and will not give a retailer a second chance. It’s critical to get it “right” not just the first time, but every time.
The Right Customer: There are few products or services that can be all things to all people. With the advent of Big Data, retailers simply have no excuse for not knowing who their core customer is and as much information about that customer as is legally possible. Putting merchandise out there and waiting to see who comes will lead to disappointment. It is far better to target customers, and see how many bees come to the honey pot. The Field of Dreams (“Build it and they will come”) was a great movie but not a great retail strategy.
The Right Place: There is no longer the right place; there are the many right places. Omni-channel is here to stay and for many product categories, the price of admission. With a rapidly growing percentage of transactions being executed on a mobile device, retailers can no longer confine their channels to bricks-and-mortar and/or catalog and/or online (desktops, notebooks or tablets). The smartphone is rapidly becoming the weapon of consumer choice, if not to purchase, then surely to make their owners smart about product characteristics and prices.
The Right Price: Once again, the internet has become the big equalizer. Retailers can no longer fool consumers by using “original” price or “regular” price. The only relevant price for any item is what any consumer can buy it for. Why in the world would a consumer pay more than the lowest price for an item, if it’s equally accessible from a variety of sellers, unless there’s some element of urgency or availability for which the consumer must pay more?
The Right Time: Supply chain time lines are shortening as technology has enabled communication time lines to rapidly compress. From design to market can be as little as two to three weeks in some cases, even if the product is designed in one part of the world, manufactured in another, and shipped to a third. The consumer will tell you the right time. If it’s beyond the purview of what is deemed accessible, they will simply cancel the order or go elsewhere. “Back orders” are the best way to break the back of a retailer.
These are some of the important themes that will be discussed in depth at ACG New York’s upcoming Retail Conference: “Investing in Retail” on Tuesday, November 18th at F.I.T. from 3:30pm to 8:30pm. If you haven’t already registered, now is definitely the Right time.
You can register for the ACG New York Retail Conference at bitly.com/ACGNYRetail
Richard Baum is a Board Member of ACG New York and a managing partner of Consumer Growth Partners, a private equity firm with an exclusive sector focus on specialty retail and non-perishable branded consumer product companies.