Back to basics for survival

Although many retailers are now engaged in heavy combat to keep business ticking over, they should keep one eye on their eventual recovery and wean customers off deals.

The price war, while great for drumming up trade, could undermine profitability and devalue brands if they become known as bargain-basement places.

The situation has been exacerbated by increased competition from a raft of new players and the pressing need among shoppers to save money.

Last month the US diner chain Denny's offered free breakfast to its customers, enticing two million people through its doors to claim the offer and in turn, prompting marketers across the globe to investigate the feasibility.

However, rather than furiously studying giveaways, slashing prices and embarking on severe cost-cutting exercises, retail bosses should go back to basics, ramping up their customer service standards to achieve repeat business.

In this month's hard-hitting feature Survival of the Fittest, the managing director of the UAE's leading service quality consultancy and measurement firm Robert Keay reveals that some well-known retailers are not investing in adequate staff training.

Priyanka Lakhani, planning and business development director for Dubai-based ICLP, the agency specialised in maximising the profitable impact of retail loyalty marketing initiatives, says that "in such a competitive market, it is not difficult to see why retailers turn so often to discounting as a way of propping up turnover and matching their zealous rivals."

The "discounting war" has resulted in more and more products leaving stores at narrower margins, she says, and "the public is now well trained to seek out the bargains. Therefore it becomes virtually impossible to maintain higher price points based on brand image when there are a number of discount channels available for the product."

She warns that many loyalty programmes have been launched with poor consultancy.

"Though there has been a shift in perceptions, very few retailers have taken any active steps to realise true loyalty initiatives that exploit customer data to deliver customer-centric marketing," she adds.

Sir Stuart Rose, executive chairman of Marks and Spencer, admitted last month that the UK retailer made "basic shopkeeping" mistakes when launching its first store on the Chinese mainland, where trading has been affected by shortages of the smaller-sized clothes required in the country.

"We had a screw-up," Sir Stuart said, referring to the supply chain problems that left the Shanghai food hall sparsely stocked for the crucial early months of trading.

The example of M&S' basic, yet huge, mistakes highlights the need for retailers to example the finer details of their operations, which could prove a much more powerful step in the battle to win over customers.

Lynne Nolan is the editor of Retail News Middle East.

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READERS' COMMENTS

Fan economy
Posted by Khaled El-Shaer, Dubai, United Arab Emirates on Saturday 7 March 2009 at 12:00 UAE time


I happen to agree with the fact that a place like Dubai had it easy for a while. Retailers and their sales & marketing strategies often worked and are untested. We can see this evident especially with the current economic climate, with retailers taking shots in the dark thinking that sales and bargains ONLY will help increase foot fall and drive sales, and at the same time failing to realize the pressing need of converting customers into fans, simply because customers come and go, but fans will fight for your survival.

Retailers need to realize and utilize opportunities, everything doesn't have to be big or extravagant to work. Sometimes attention to details and a well thought off shopping experience will have your customers and eventually your FANS recommending your brand over others.

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