I recently had a conversation with Professor Barry Berman of Hofstra University about the retail industry and his book, Competing in Tough Times: Business Lessons from L.L. Bean, Trader Joe’s, Costco and Other World-Class Retailers.
This must-read book provides an in-depth examination of how ten retailers achieve and sustain success and features a host of useful applications for anyone involved in the retail arena.
I really can’t do this book justice in a blog post but here are some highlights from our conversation about a business topic we are both passionate about.
1) How did you decide to enter the retail area of business when you started your academic and consulting careers?
I had two professors who I worked for as an undergrad assistant at Baruch College, David Rachman and Houston Elam. Both were retailing specialists, and one was a noted retail consultant. Hanging around their offices as a 19 year old and hearing them converse with one another was like getting a master’s degree in retailing. That passion continued throughout my career. Our retailing text is in its 12th edition and has been published in Russian, Chinese, Indian, Philippine, and Canadian editions.
2) In Competing in Tough Times: Business Lessons from L.L. Bean, Trader Joe’s, Costco and Other World-Class Retailers you encourage managers to “think like a shopper” to assess a store’s differentiation strategies by having them consider a series of questions including “Would you recommend this store to your best friend?” and “Would you serve the store’s private label brands at a dinner party?” What are some of the benefits to managers if they think like a shopper?
Thinking like a shopper puts the retail experience in a very different light. It removes whatever bias is associated with the notion the “my store is best.” It also looks whether the buyer sees the shopping experience as dreadful, satisfactory or outstanding.
From the buyer’s perspective, a retailer can assess the total retail experience of the shopper including: how easy it is to locate the item, how knowledgeable the sales staff is about a good, the adequacy of parking, the queue at the register, and the ease of returning goods.
3) The term omnichannel receives a great deal of attention in the retail industry. Using the definition of omnichannel as the mix of all physical and digital channels to create an innovative and unified customer experience (Smartinsights.com), what is your advice to retailers and marketers about how to approach the omnichannel experience for the customer?
We need to look at all channels as complementary. For example, I recently found two dress shirts I wanted in an ecru color online. When I went to the closest retail store to purchase them I found they did not stock them. The salesperson offered to order them online, and I was given the option of having them delivered to my home or to the store. Was that a web or a store based purchase?
From an omnichannel perspective, goods should be priced at the same level in store and online. Consumers should be able to see the store aisle location of a good on the retailer’s website and should be able to confirm inventory at neighboring stores. In addition, online buyers should be referred to a store location, and store shoppers should be encouraged to visit the retailer’s website via special incentives. The web and store purchases should be combined into a customer database that combines purchases at both locations.
Retailers also need to stop thinking of web sales; it should be web influenced sales and sales increases.
4) During store checks for clients, I have noticed a lack of awareness and education on behalf of the store associates about how their retailer is supporting merchandise in other areas (mobile, online, social media). How can retailers better educate in store associates about activity happening across all of their channels?
Retailers need to spend more time training their associates about the impact of the web on price transparency, customer knowledge from social media and product reviews, etc. It is easy for customers to feel that they have greater product and pricing knowledge than many store associates.
As price comparisons are so easy to implement, retailers need to develop different competitive strategies such as value compelling private labels, free extended warranties (this also is an important quality cue), special hot lines for technical support, etc. These initiatives require additional sales training.
5) In your book, Competing in Tough Times you evaluate what ten diverse retailers (Aldi, Amazon.com, L.L. Bean, Costco, Nordstrom, Publix, Stew Leonard’s, Trader Joe’s, Wegmans and Whole Foods) have in common in terms of operational cost structures and differentiation. Since writing your book, is there a retailer (or retailers) from this list who continues to stand out as best in class? Are there any you would consider removing or adding to the list of ten?
My main point is that great retailers are consistent; it’s not a year by year evaluation. For example, this year Consumer Reports evaluated supermarkets customer satisfaction using a huge sample. Remarkable consistency with earlier studies. Best national supermarkets were Costco, Trader Joe’s, and Whole Foods. Best regional are Wegmans and Publix.
My secondary point is that the best retailers are not complacent. Amazon now offers its Prime members free books, free music, and expanded streaming videos. Amazon has begun to experiment with home delivery of groceries through its Amazon Fresh operation, and has expanded its Subscribe and Save program that offers discounts on goods purchased periodically such as Pampers, shave blades, etc.
Costco has expanded into offering its members low cost new car purchasing. It makes no profit on its referral to car dealers; it views this an additional reason for its members to renew their memberships.
Whole Foods current issues with honesty of weighing on seafood, baked goods, nuts, and dairy items need to be resolved properly. A simple resolution in my mind is if its not weighed accurately its free, with scales located in strategic places at the store.
I’d like to thank Dr. Barry Berman for sharing his insights about the retail industry. For more information or to purchase Dr. Berman’s book, please visit Amazon.com