Successful Retail is about making PAR (part 2)

THE STORY
Many, many years ago, I did some consumer research to try to understand the difference between a Wal-Mart customer and a Target customer.

The people who loved Wal-Mart thought that Target customers were stupid, because:

1) Target shoppers are were paying too much (and that’s wasteful—which is a bad thing). They could get the stuff cheaper at Wal-Mart.

2) Target shoppers were seduced by all the frills and glamour, which at the end of the day is worthless, because the only thing you get to take home is the product.

At the same time, the people who shopped Target thought that the Wal-Mart shoppers were stupid, because:

1) The Wal-Mart shoppers were putting up with a dirty, undesirable shopping experience when they did not have to.

2) Don’t the People who shop at Wal-Mart realize that by going into those stores they are associating with the undesirable people of society, so by association they would be considered an undesirable person?

So in the end, both sides thought that they were the smart shopper and that the other shopper was stupid.

THE ANALOGY
We tend to patronize those companies that reinforce the way we look at life. The Wal-Mart shopper tended to have a moral code which was against wastefulness. Many of them saw wastefulness as an indicator of being a bad parent, since money wasted at the store was less money they could spend on their family. Since Wal-Mart seemed to waste the least amount of money, that’s where these shoppers went.

Conversely, the Target shopper saw shopping as more than just a task to get a product as cheaply as possible. They also valued the shopping experience and how that experience would influence how others thought about them. Whereas the Wal-Mart shopper was more directed by an internal moral compass, the Target shopper was more influenced by external direction from the culture around them. Since the external culture thought more highly of Target, Target became the store of choice.

Therefore, when creating strategic direction for your brand, one must take into account how the customer integrates this purchase into their larger view of life and self worth. Otherwise, they will miss out on some of the key motivators of purchase and perhaps end up looking like the “stupid” choice for a large sector of people.

THE PRINCIPLE
This is the second of two blogs looking at how to be successful as a retailer. Once you get past mastering the basics of retailing (right product, right price), there are three more areas one must master. We called it mastering PAR, because this acronym spells out the three areas:

1) Personality
2) Advocacy
3) Respect

In the last blog, we looked at personality. In this blog, we will look at Advocacy and Respect.

2) Advocacy
If one assumes that most stores in a particular sector sell about the same stuff at roughly the same prices, then what becomes the tie-breaker to get you to choose one over the other? Often, it has to do with which store is doing a better job of being an advocate for your way of life.

One way a store can be an advocate is by helping its core customers get more of what they want and less of what they don’t want. Most people do not want to wade through acres of stuff they are not interested in so they can find the stuff they are interested in. An advocate store will know its customer type well enough to pre-select only those products important to their customer. This can be a great time-saving service.

Walgreen’s recently found out from its customers that they would enjoy the experience more if the selection was reduced, so that is what they are doing. In the area of food, Trader Joe’s and Aldi have been successful by narrowing the choice to just what their customer is looking for. In fashion, specialty stores tend to do well if they focus on a particular type of fashion statement rather than trying to be too many things in the same store (such as the successful focus of American Eagle Outfitters versus the muddle of the Gap).

For additional selection options to become meaningful choice, it needs to be relevant to the customer’s way of life. Otherwise, it no longer represents choice, but only clutter. Advocates get rid of the clutter on behalf of their customers.

Another way to become an advocate is by reinforcing the fact that you endorse the lifestyle of your customers. These retailers seem themselves as more than just sellers of goods, but also as outfitters of a lifestyle. Whole Foods is about more than just product. It is trying to advance an entire way of healthy living. Hot Topic makes the Goth teen feel like their lifestyle is welcomed, understood and appreciated. Christian bookstores are not just selling books, but endorsing and supporting a particular spiritual lifestyle.

A third way to be an advocate is to be a fighter for your customers. It is sort of like being a concierge for your customer, looking for special ways to help out your customer. This could include anything from special ordering product to lobbying for the rights of the customer. It’s going that extra step to make the customer’s experience special.

Finally a store can be an advocate by supporting the same causes which are important to their customer. More than ever, customers want to patronize stores which direct some of their profits to help make the world a better place. If the causes which are important to the customer are also important to the store (and the store puts their money where their mouth is) the store will tend to be patronized more. This could include environmental causes, neighborhood causes, or helping those less fortunate.

3) Respect
Closely associated with advocacy is respect. Customers do not want to be taken for granted. They want to be appreciated for their patronage. About a week ago, MSNBC ran a web page asking people to write in about how to improve Wal-Mart. One of the biggest complaints was the long lines at the store. People felt that those long lines showed no respect for the customer’s time. If you do not respect a customer’s time, then they will shop at a place where they get the respect. One of the reasons for the success of Carmax is the fact that they do a better job than the competition in respecting the time of their customers.

Customers want stores that respect the choices their customers make. Don’t be patronizing or judgmental. Believe in what you are selling and be proud of it.

Finally, show respect for the customer beyond the store experience. The relationship shouldn’t end at the cash register. If you sell poor quality junk that breaks down shortly after purchase, you have not shown respect for your customer. Stand behind what you sell and make sure the post purchase satisfaction is just as important as the in-store satisfaction. Repeat business creates profits. If you let down the customer after the transaction, you might not get another transaction from them.

SUMMARY
Customers have too many choices of where to spend their money. To get them to choose you, a retailer must go beyond just having the right goods at the right price. Instead, they must form deeper relationships which reinforce the lifestyles and moral codes of their customers. You must stand alongside your customer and become an advocate for the things most important to their way of life. In addition, you need to respect their time, their choices and their post-purchase experiences. Otherwise, you are seen as just a cold-hearted business. And it is difficult to excel high enough on the retailing basics in order to overcome this bad impression.

FINAL THOUGHTS
Sometimes, I think many retailers spend too much time defining themselves in terms of what they sell rather than who they serve. If a retailer were to focus more on pleasing a particular type of customer, they may find many more opportunities to profitably sell many more things which they would never dream of doing if they defined themselves by some narrow product category.

Successful Retail is about making PAR (part 1)

THE STORY
According to the Online Etymology Dictionary, the origins of the English word “par” comes from the Latin word par, meaning “equal” or “that which is equal.” In 1632, the word par in English still had this original meaning.

By 1767, the meaning of the word in English started to get modified. Par now was also used to mean “average or usual amount.” Its still similar, but not exactly the same meaning. Now, par was being limited to equality with normalcy.

The first reference to using par in reference to golf can be found in 1898. The idea here was that this was the normal amount of strokes it would take the average golfer to make the hole.

This golf usage then broke away from golf around 1947, when people started using the phrase, “that’s par for the course,” referring to that being normal behavior for someone.

Of course, nowadays professional golfers have gotten so skilled that to accommodate them golf courses have become ever more difficult to play in order to achieve “par.” As a result, par is no longer what a typical golfer achieves. Heck, even the great professionals of golf often have trouble achieving par these days.

So the meaning of par is morphing into more of an ideal state of performance, rather than an average performance. In other words, achieving par on the course makes one better than the masses. And so now, par is starting to imply that you are “unequal” and instead superior. So, in the span of less than 400 years, the term has moved from “equality” to “inequality.”

THE ANALOGY
In retailing, it used to be that if you did well on the basics, you would be successful. The basics of retailing are to have the right items in stock at the right price with enough efficiencies so that your cost of doing business was less than your markup from wholesale.

However, just as golfers have gotten better over time, so have retailers. Similarly, just as golf courses have become more difficult, so has the playing field for retailing. As a result, merely being good at the basics of retailing is no longer enough to win. Mastering the basics of retailing is merely the minimum level needed to make the cut and survive to play another day. It does not ensure success.

To get to the higher performance of the newer, more stringent retail par, one must add to the mastery of basics additional skills. It is the only way to achieve the superiority required to be a winner.

THE PRINCIPLE
What are the additional skills required to achieve this more stringent level of par? Well, I used the term “par”, because it is a useful acronym for the three skills one must add to basic retail mastery. Those three skills are:

1. Personality
2. Advocacy
3. Respect

In today’s blog, we will cover personality. In a subsequent blog, we will look at Advocacy and Respect.

1. Personality
When I first went to work for Best Buy in the late 1990s, I was given the results of some research that had been done a few years earlier. This research was asking consumers their opinions of various consumer electronics retailers. At that time, there were a large number of good-sized consumer electronics retailers in the US, including Circuit City, Best Buy, Highland, Silo, Fretter’s, and so on.

According to this research, most consumers saw these retailers as all pretty much the same. They felt they all had about the same variety of products at about the same price. There was very little to make anyone stand out from the crowd.

When asked to ascribe a personality to each of the retailers, most of the people surveyed drew a blank. The stores were viewed as so bland and similar, that they did not have any distinguishing characteristic on which to base a personality. The one exception was Best Buy. At the time, their advertising included a character dressed up in a costume to look like a giant Best Buy price tag. This character did some silly things interacting with customers which made Best Buy (the company) appear more human and more likeable.

As a result, Best Buy was the only retailer in the survey to get a meaningful number of positive personality responses. (Note: the survey comments showed that many respondents referred to the guy in the price tag as the reason for giving Best Buy the positive personality) So with everything else being relatively equal, Best Buy got an edge in “likeable personality” which became a sort of tie-breaker to shift business towards Best Buy.

I believe that this edge in personality was one of the key factors which started to shift the momentum towards Best Buy. Best Buy was able to take advantage of that momentum to build an even stronger business. Conversely, most of those other retailers (who were relatively competent at the basics, but had no positive personality) no longer exist.

Customers have a large number of choices of where to purchase products. All of these choices are fairly good at meeting the basics of retailing. The weak players have already been eliminated. To stand out from the crowd, a retailer needs to develop a positive personality which they can own to differentiate themselves from the crowd.

Target spent years refining its cheap chic personality. It’s the cool kid on the block when it comes to saving money, and people like hanging out with the cool kid. This has made Target very successful and helped it survive the shakeout when nearly all of the other discount store chains went away. At the teen level, American Eagle Outfitters has built a strong, positive personality which resonates with that age level. Whole Foods is another great retailer with a great personality.

Conversely, many of the retailers that are struggling today have poor or non-existent personalities. The Gap has tried to be too many things to too many people in too bland of a way. As a result, it really doesn’t have a strong, identifiable personality. And I’ve personally done some research on the personality attributes given to K Mart. Let me tell you, they describe the personality as being like a classless bum with bad breath (along with a lot of other negative attributes). This is the type of personality you do not want to be associated with (and their sales trends reflect this).

And this gets to the crux of the issue. People like to hang out with people who are similar to themselves or are like what they aspire to become. The same applies to the stores people want to hang out at.

The personality of the store reflects upon the people who patronize the store. If the store is cool, then my being there makes me appear more cool. If the store is considered wise and caring about the environment, then my shopping there will make me appear more wise and caring of the environment. If the store is considered rebellious, then I am more rebellious if I shop there.

The idea is that people prefer stores whose personality reflects their own personality.

We make a statement with our choices of where to spend our money. We want our peers to think better of us (and we want to think better of ourselves) based on these statements. The personality of the store impacts those statements. As mentioned in a previous blog, the personality of the name on the shopping bag you carry in public reflects on you and changes behavior as well (see "Pride of Bag").

Finally, if a store has a positive personality, it tends to create greater store loyalty. If you are seen as just a bland store selling what everyone else sells at about the same price, there is little reason for the customer to remain loyal. It is easier to walk away from a lifeless store than it is to walk away from a store that seems alive—like a friend—because it has a personality. There is more of an emotion bond when there is a personality. That bond helps keep people more emotionally attached to your store.

SUMMARY
In today’s world of retailing, the stakes are very high. Practically all the retailers who are left are pretty good at mastering the basics of retailing. Just being good at the basics is not enough. If you are a retailer, you have to elevate your game to a higher level in order to create the kind of superiority which makes one stand out and become a winner. That requires a mastery of PAR (personality, advocacy, and respect).

Regarding personality, the creation of a strong, positive personality for your store will give you an edge. People prefer shopping stores which have a personality which reflects well upon their own personality. The old saying is that you put your money where your mouth is. It is also true that you put your money where your personality is. Personalities also increase store loyalty, since emotional bonds are harder to break than rational ones.

FINAL THOUGHTS
One of the great things about personalities is that there are a variety of personalities to choose from. This variety allows you to choose a personality not already taken in the marketplace, so that you can stand out and be unique. This can be a lot easier than if there was only one desirable personality and you had to continually fight everyone else to gain temporary superiority in that same area (which, by the way, is a good reason not to pick the same personality as the leader when choosing your personality).