Unlocking Retail Success: The Power of Value Beyond Price

14 SEPT – OCT 09

It is virtually impossible to pick up a newspaper or magazine or listen to a speech these days without seeing or hearing the word “value.” Recently I have read several articles quoting retail CEOs as saying that their customers are more “value-conscious” than ever before. “Value coupons” pop up daily in newspapers and on websites throughout the country. “Good value” is what we all want when spending our money.

What are we really saying when we talk about value?

According to my dictionary the word “value” has several meanings. The two that are of most meaning to retailers are:

1. A fair return or equivalent in goods services or money for something exchanged.
2. The monetary worth of something.

So what creates the “value”—or what your customer perceives as “value” or “added value”? In layman’s terms “value” is receiving something above and beyond for your money—simply put getting something extra. Since the current economic climate is rapidly accelerating the consumer’s mindset from his or her usual shopping behaviors toward value-based purchasing the conscientious retailer must find ways to present value in every aspect of the shopping experience.

Product & Service PLUS

Recently my wife and I visited a restaurant in our community that was new to us. We mentioned to our waitress that it was our first visit. The food was good and the service was fine. We were pleased with our “purchase” and we talked about the likelihood that we’d return. When the bill was presented it was accompanied by a package of the company’s freshly baked muffins. Since it was our first visit our waitress had wanted us to have something extra to thank us for coming and she said she hoped we would return soon. She provided “value”—she gave us something above and beyond what we were expecting. Although there are several restaurant choices in this particular area her value-added service separated this one from the others.

“It’s not just about deals or price”

Marshal Cohen’s Insights on Retail Strategy

Marshal Cohen told retailers during NSRA’s First Annual Conference “it’s about giving customers what they want —and what the customer wants is better value.” Cohen went on to say that the new deal in selling is finding the best value —not simply looking for sales but looking for added value on what the customer really wants.

The Shift in Customer Expectations

Retailers in the past have always been able to attract customers with deep discounts. Make no mistake: There will always be a “sale” customer who buys on price alone. The new reality however is that there will be fewer of them. Today’s customer isn’t shopping price alone and she demands more from the shopping experience. I periodically receive calls from store owners concerned that frequent price promoting will “train” their customers not to buy unless something is on sale. Personally I think that bus has already left the station. The big boxes and the department stores have seen to it that any customer “training” relative to discounting has been completed. Simply pick up any newspaper in any major city on any given day if you need additional proof.

A Consistent Message

The value message throughout needs to remain consistent regardless of whether we are discussing value in our pricing or in our customer communications. What your customer is searching for today is not much different from what you as merchants do when you go to market. Certainly price is a component but most merchants I know are buying from resources that offer value in the form of dating freight or advertising allowances stock balancing and trunk shows to name just a few examples.

Value Pricing and Buying

Value pricing originates with value buying. Call it what you will—off-price promotional closeouts or opportunity buys—the point is to seek out the best deals that your vendors have to offer and negotiate your store’s own “value” items. It makes sense that perhaps a greater portion of each classification’s OTB be reserved for just such items. To take this further…

One Step Further

Instead of waiting for what might be left at season end begin planning for these purchases at the beginning of the season. Mother’s Day graduation Easter Father’s Day Independence Day Back to School Sidewalk or crazy days Christmas Labor Day and Memorial Day as well as your store’s anniversary are all examples of events that value-priced goods should be purchased for.

Price Is Just One Component of “Value”

Ritchie Sayner

The National Retail Federation analyzes end-of-year holiday spending patterns. Following are a few fast facts from NRF’s 2008 “Holiday Survival Kit.” The Kit is published annually.

• On average holiday sales have increased 4.4 percent each year for the past ten years. Forecasters expect less than 2 percent during 2009.
• One in four shoppers is at stores by 5 a.m. on Black Friday the day after Thanksgiving that is the traditional start of holiday shopping.
• On average consumers spend almost $400 during the long Black Friday weekend (Thursday-Sunday) and the items people most often purchase are clothing and accessories.
• Cyber Monday is the Black Friday of e-commerce. It is the Monday after Thanksgiving and began in 2005 when retailers saw that many consumers who were too busy or tired to shop on Black Friday or during the weekend shopped online from home or work.
• Approximately 72 percent of online retailers offer specific Cyber Monday promotions.
• Forty percent of consumers start holiday shopping before Halloween and another 40 percent begin in November.
• Approximately 60 percent of consumers begin online shopping at a specific retailer’s website.

Holiday Prep: Notes from NRF

When communicating with your customer maintain and emphasize the value theme. This can be accomplished through advertising email blasts and direct mail when you are creating campaigns that go out to the customer; you can also carry the theme through with store signage window displays and other promotional materials.

Dow Displays and Impact Displays Within the Store

Don’t forget that product knowledge and customer service are essential value components that help distinguish the progressive independent merchant from the rest of the pack.

Get Creative with Value

There was a time not so long ago when value meant simply marking down remaining inventory at season end. News Flash: Times have changed for retailers—and those days aren’t coming back anytime soon if ever.

The big boxes and department stores continuously market with price promotions throughout any given season. This relentless discounting has created a numbing effect similar to that of a narcotic. After a while the consumer builds up such a tolerance to markdown pricing that deeper and more aggressive markdowns are needed to achieve the same effect. There was a time when 20% off meant something. Nowadays most customers won’t walk across the street unless the discount offering is much greater.

As you fine-tune your fourth-quarter marketing calendar get creative and see what you can do to add value to your customer’s shopping experience this holiday season.

Ritchie Sayner is vice president of business development at RMSA Retail Solutions which works with retailers to improve performance. He can be reached at RSayner@RMSA.com.

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Ritchie Sayner

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