Retailers are killing value. With consumers having more choices than ever before, mistakes that retailers make can be costly.
Insight: As the financial conditions remain under pressure, customers are spending less.
Data: According to Deloitte, retail growth is expected to slow from 2.2% in 2018 to 1.5% in 2019.
Key Action Point: During this period of slow growth, retailers need to think about developing a solid customer value proposition to compel people to buy.
How Retailers Are Killing Value
Losing focus on the customer will make you lose customers. You know you’re losing focus when customers complain of poor service, when there’s lack of trust with data, and even when you’re putting too much emphasis on products. This can end a buyer-seller relationship, fast.
Take Lululemon and Target, for instance. Lululemon blamed customers for the mistakes in its sheer yoga pants, and they made the mistake of fat shaming. Target had to leave the country of Canada because it failed to recognise that what has worked for them in other places won’t necessarily work in a new market.
Both companies put far too much focus on real estate and products while forgetting that the heart of the business is the consumer.
Bringing the Customer Back in Customer Value Propositions
A value proposition is not the rambling About Us page that most companies use to talk about random company facts. Until you give context to the statements, there is no reason for a prospect to take it seriously.
The value proposition is more than a statement of fact — it is a reason for your customer to buy. It’s the promise of the value a retailer guarantees to deliver.
A retail business needs a value proposition because more and more customers are becoming more value-oriented. Before they even purchase items, they are checking out the store itself. In other words, the customer is buying into the store as well as the product.
Customer Value Proposition for Retailers
Retailers need to realise that buyers have changed the way they see value and they consider different factors when it comes to deciding to purchase a product. According to McKinsey, price is just one of them.
Buyers also consider factors like the following:
- Quality - “I go to this store because they sell durable items”
- Identity - “This store’s values align with mine”
- Experience - “This store allows me to easily find the items I need”
- Trust - “I can always trust this store to sell quality items”
- Assortment - “I go to this store because it has a good range of prices and quality levels”
- Return policy - “This store’s return policy process is reasonable
When thinking about your value proposition, ensure clarity before creativity and focus on the benefits and implications, not just the features.
So what unique value are you offering your customers? What value does your brand represent? By first being able to define your value and understand why customers buy from you, you can then communicate to them in a compelling way and have a value perception that rationalises your price.
Examples of Customer Value Proposition for Retailers
Here are a few examples of companies with a winning retail value proposition:
Walmart: Save money. Live better.
Walmart was perhaps the only brick-and-mortar retailer that truly survived the Amazon onslaught of the past few years. It did so with a customer value proposition statement that spoke right to the heart of Middle America.
Although Amazon was seen as the retail store for Millennials and Generation Z, Walmart kept its place with Baby Boomers looking for a deal.
IKEA: A better everyday life
When you think of the average first-time homebuyer, you naturally think of IKEA as the supplier for the furniture in that home. This is a result of some incredibly good marketing from the company, marketing that includes the value proposition of low-cost, value-oriented fulfilment.
Zappos: Deliver WOW through service
Zappos the unquestioned leader in shoe retail because they deliver a customer experience that is associated directly with the Zappos brand, not the brand of the shoe.
People trust the service experience at Zappos just as much as they trust the shoe brand, which relieves the customer of having to stress about the particulars of buying the shoe. The easier you make it to buy things, the more people will buy from you.
Amazon: The everything store
Amazon has achieved global success because it lived up to this value proposition, which is no easy task. If you really want to be impressed by Bezos and company, think about how much they had to believe in that proposition before Amazon became profitable (it took more than a decade).
As they amassed the funding to really become the primary retailer of everything, they had to sell that notion to customers and investors alike.
Over to You
Customers have changed the way they see value — perhaps it’s remarkable customer service or high quality or value alignment. To win customers, you need to define their value proposition and be able to communicate it effectively.
To begin your journey towards perfecting your value proposition, you only ever need to base it on a single question: what unique value are you offering your customers?