Retail is a competitive, high-stakes industry. According to eMarketer, total U.S. retail sales hit $4.8 trillion in 2015 and will reach $5 trillion this year. With that much money at stake, retailers need to stay innovative. To do that, more companies are turning to customer-centric retailing in order to understand the evolving customer behavior and deliver the kind of products and services people are looking for.
So, how can brands start their journey towards customer-centric retailing? These three steps should be a good start.
Prioritize customer insight.
In a profile on Inc, Under Armour shared some of its secrets for its impressive growth and its massive plans for the future. As it turns out, customer insight is a huge driving force behind the brand, which is now valued at $4.1 billion.
In its early days, Under Armour’s success was in large part due to the fact that the exercise and consumption habits of the company’s employees and its founder, Kevin Plank, closely resembled the habits of its customers. “But slowly, we got older than our consumer,” admits Kevin Haley, president of product and innovation.
That “aha” moment inspired the company to open a consumer insights department. The company started asking its sponsored athletes for product insights, sent researchers to interview customers about their preferences, and conducted surveys.
Today, Under Armour is the number two sportswear retailer in the U.S. and plans to compete more aggressively in the wearables space.
Don’t compromise the customer experience for the shiny object.
In a CMO.com article, Kelly Gilmore, vice president of retail marketing and advertising at the National Retail Federation CMO Council, shares her thoughts on the most common mistakes companies make when adopting an omnichannel strategy.
She says that companies “need to look at the overall experience that they’re delivering to the customer” instead of blindly going after new technologies and platforms.
“They need to understand what the customer wants and avoid chasing a shiny object because ‘everybody else has it, so we need to have that,’” she says. “Make sure it’s the right thing for your brand because not everything is the right thing for the brand.”
That said, Gilmore said that experimentation is a natural part of customer-centric retailing. “With the speed of technology and the access that today’s consumer has to information, retailers need to test and learn. Smart retailers learn from mistakes and move on.”
Hone in on your target market.
Despite serious challenges from companies like Under Armour (see first example above), Nike remains a market leader in sportswear. For instance, it controls 48 percent of marketshare in the U.S. footwear category—way ahead of competitors like Adidas.
What exactly is the secret to Nike’s success?
“Everything we do starts with the consumer,” CEO Mark Parker told investors during an earnings call in early 2015.
“It’s our obsession with serving the consumer that sharpens our focus and drives our growth.”
– Mark Parker, CEO of Nike
In particular, the company is focused on three main customer segments: women, young athletes and runners. Indeed, many of the company’s recent innovations and initiatives—from its line of athleisure wear to its grassroots and sponsorship campaigns—are focused on these three segments.
“It’s our obsession with serving the consumer that sharpens our focus and drives our growth,” adds Parker.
As these tips show, successful customer-centric retailing is all about knowing your customers. Retailers that are serious about putting customers at the center of what they do need to commit to customer engagement. Retailers must continuously listen to and learn from their customers. Building stronger customer relationship is the key to winning in the trillion-dollar retailing industry.