Greg Petro, chief executive officer of First Insight Inc., and Oliver Chen, managing director and senior research analyst for retail at Cowen and Co., shared the stage at the summit to break down the dual meanings of the word “value” while offering insights into reports focusing on diversity and inclusion, and customer lifetime value.
Petro opened the session discussing the “principles” definition of the word value and by sharing results from a just-launched report that revealed challenges in being inclusive and delivering products that shoppers want, but without offending them. Petro cited recent examples of products that were insensitive from a cultural competency perspective.
“Retailers and brands are making unnecessary and offensive blunders,” Petro said, and noted that First Insight’s recent research showed most consumers want brands and retailers to make hiring chief diversity officers a top priority — while just 25 percent of executives polled said they planned on doing so.
“Nearly all senior retail executives surveyed felt that consumers would continue to buy from their company even if they created and offered a controversial and offensive product, as long as they pulled it from the shelves quickly and issued a public apology,” Petro said. “Far fewer consumers, compared to retail executives, responded that they wouldn’t mind the offensive incident and would continue shopping at that retailer. A much higher number of consumers said they would stop shopping at that retailer altogether than predicted by senior retail leaders.”
In regard to the importance of cultural inclusivity, “which includes modest styles, hijabs and head coverings,” First Insight said in the report that 38 percent of executives found it “very or somewhat important,” which compares to 46 percent of consumers.
There were other “disconnects” revealed as well. Petro said the research found that when it comes to the perception retail executives had of consumers making purchases on mobile devices, it was far from what shoppers said. Of executives polled, 75 percent thought shoppers used mobile for purchases more than six times per month. This compares to 42 percent of consumers surveyed.
Petro said companies need to do a better job of listening to consumers, and knowing what they value.
On the “price” side of the value definition, Chen said retail is going through “high-and-low bifurcation” with just a few companies having success in the middle. Regardless of where retailers fall on the spectrum, Chen said to build customer lifetime value, they need to focus on “connection, context and community.”
Chen cited from his most recent report where he noted that “underpinning this pathway to value creation is our 2019 3Cs framework that Cowen believes is necessary for retailers to embrace in order to maximize customer lifetime value,” he stated. “Our framework includes: a seamless and ‘connected’ customer and supply chain experience, interactions that understand ‘context’ and yield thoughtful personalization, and branding that creates a ‘community.'”
Chen said in the report that a connected retail experience “requires inventory accuracy, customer-specific transaction identification and related supply chain investments.”
“Next, driving context is possible through data interpretation post the data collection,” he noted. “Finally — or possibly earlier — a community can come together. In a community, customers have conversations regarding the brand or retailer among each other or with the brand or retailer. A community can also drive crowdsourced content, which can lower acquisition costs and/or inform an innovation pipeline.”
During the presentation, Chen said the “connect” part of the model creates convenience. The value for retailers is an increase in the frequency of consumers shopping. Improving the context (i.e. greater personalization) means better customer engagement, which translates into higher loyalty rates and lower churn. With crowdsourced demand (community), customer acquisition costs are greatly reduced.
“In this new customer-centric retail, ‘connected’ retail incorporates a seamless experience across channels and understands customer ‘context’ to correctly decipher a customer’s needs and preferences,” Chen said. “The most envious retailers and brands become not just lifestyles but also participatory ‘communities.'”
Other trends Chen revealed included the growth of recommerce and mobile devices as “the new mall.” Sustainability and the influence of “socially conscience” shoppers is also impacting retail today.