NRF’s STORES Magazine (January 2012) recently published a list of the 2011 TOP 250 GLOBAL RETAILERS. This list features a lot of familiar names; Walmart, Kroger, Target, Costco, Walgreens, and many more.
But what makes these top retailers so successful?
After taking a look at the list, I found myself asking:
How do these retailers continually increase market share and generate profits during times of economic uncertainty? How do they continue to build customer loyalty and brand awareness? Just what is it that makes these retailers so successful?
Since I did not know the answers to these questions off the top of my head, I went to the internet to search for answers. In my search, I found plenty of statistics and studies that offered various explanations about what makes dominant retailers so successful. I would like to share an article that I ran across that offers the 10 Characteristics of Highly Effective Retailers (click on the link to read the full article)
Below is the list of the 10 characteristics that the author, Michael Baker, offers:
1. They are localizing. They practice localization of both their physical formats and merchandise assortments. Except in specific circumstances where the format is largely standardized (eg. Apple stores, convenience stores or junk food outlets) it is no longer possible for a retailer to grow by replicating a one-size-fits-all box and one-size-fits-all merchandising strategy across multiple locations. Real estate opportunities and customers are now too heterogeneous to let this model work.
2. They don’t equate hiring more people with better service. One of the biggest hoodwinks in modern retail is when a retailer tries to con the public that service will improve because it increased the number of salespeople. Retailers have service in their DNA – or they don’t. Not having it doesn’t represent failure but claiming you have it when you don’t is a lie that customers will easily see through and not easily forgive.
3. They are investing heavily in e-commerce and also in stores – but more strategically and selectively in the latter than they did in the past. In fact they are closing marginally profitable stores instead of just keeping them open to fly the flag. The marketing role of their stores – as opposed to the pure selling role – is assuming greater significance.
4. They are closely integrating their online and offline sales channels to present customers with a seamless shopping experience. Click here to learn how Product Information Management (PIM) plays an important role in creating this seamless multichannel shopping experience.
5. They are leveraging social media for direct sales. Facebook, for example, is becoming a powerful new sales channel for major retailers.
6. Private label merchandise accounts for a high and often increasing proportion of sales. This protects margins and offers a natural differentiator in a world where brands have become ubiquitous and, to many, boring.
7. They don’t suffer from psychic geographic barriers. International growth is a given and can be accomplished even before domestic saturation has occurred, whether by direct store operation, licensing or franchising.
8. They deliver an exciting in-store experience. This doesn’t mean that video screens line the walls or rap music blares. It can just mean that 10 per cent of the store has a revolving merchandise assortment to drive repeat visits. Aldi and Costco are great at this.
9. They employ people who believe in what they are selling. Retailers like Lululemon and Trader Joe’s wrote the book on this.
10. Whatever they promise, they deliver, or make themselves accountable if they don’t.
Half of these characteristics (highlighted in red) can all be supported by implementing a PIM solution.
I felt like this list summed up the answers to my questions, without drilling down to statistics. The characteristics listed here are a good mix of both traditional and emerging business best practices that many retailers should try to incorporate into their strategies. After all, they seem to be working for the most successful retailers.