The most significant impact cross-shopping has had on the retail industry is the shift of apparel purchases from department stores to the discount and specialty stores. Department stores, once the dominant purveyor of apparel, became intensely competitive as the industry entered maturity. In this environment, lowering prices became the line of least resistance to winning the consumer’s dollar.
As this strategy squeezed profits, it forced cost reductions (usually at the expense of service and quality). Other means to offset the squeeze were pressing suppliers for assistance, or “marking up to mark down,” or a combination of all three.
And, of course, a lot of stores that couldn’t compete on that basis started going out of business.
While this was happening, consumers were getting smarter about everything, including apparel, and how to shop for it. They learned how to wait for the inevitable “sales.” More women started to work and had less time to shop. Most of them were “boomers,” had kids and also started to think about spending money elsewhere (e.g., mortgages, saving for kids’ education, cars, etc.).
So, the stores were focusing on a pricing and cost-cutting strategy (sacrificing credibility, service and quality), while the consumer wanted a pleasant, quick and convenient shopping experience, along with the promise of a quality product offering specific benefits and at fair prices — that were believable. This was not a positive scenario for profitable department store growth. Enter the other store types.
Discounters, specialty stores, off-pricers and factory outlets emerged, and have been gaining ever since.
They simply filled changing consumer needs. And as consumers have become more confident in their value needs, where to find them and how much they should pay, the identification with one store or store type becomes increasingly less important. Thus, cross-shopping.

Even as cross-shopping is occurring, the industry is transforming itself, yet again. As discounters trade up, and specialty stores become brands unto themselves, and both continue to increase their share, the department stores are staging a comeback.
As they consolidate, their value strategies are changing. Speed, efficiency, productivity, differentiation, Quick Response, service, quality and credible prices are everyday strategic terms.
However, there are inherent dangers in these new value equations. Increasing productivity, efficiency and profitability are also the strategies of low cost, volume-driven businesses.
Further, they tend to limit the retailers’ choice of vendors to those who can deliver equivalent values. Thus, the matrix system, an arguable erosion of fashion, more look-alike “vanilla” and a surging tide toward the middle are driving the department stores, and it’s in the middle, where, ironically enough, they’ll probably meet head-on with the discounters, as they move up to the same arena.
While private label apparel used to be synonymous with inexpensive, it has taken on an entirely new role. Many private labels have become national or store brands competing with traditional brands.
Discounters, on the other hand, are trading up to brands, to enhance their value equation.
With their lower cost structures, they will have greater pricing flexibility, which could erode the consumers’ higher value perception of the department stores. The implications of stores and vendors restructuring to match a multiplicity of consumer demands are enormous.

How to Keep Them Happy
This is fairly easy to explain and enormously difficult to do.
Both vendors and retailers must:
Identify the consumer they can serve better than anyone else.
Learn and understand exactly what benefits the consumer wants.
Determine how, and where, and how often, the consumer wants those benefits served up to them.
Know how much the consumer is willing to pay.
Be able to deliver all of it, over and over again, without fail.
What cross-shopper wouldn’t be happy?
Essentially, this is the successful value equation for any manufacturer or retailer, regardless of channel.
However, a major shift in mind-set must happen to understand and execute. The equation must go from thinking about the product or store as something to sell to a specific consumer to thinking about a specific consumer that wants to buy the product in a particular store. Part of the good news about these changes is that consumers are now destination shoppers. They don’t have the time or inclination to simply shop.
So, retailers cannot depend on high traffic strategies to grow their businesses. They must make themselves destinations for consumer value.
Most successful branded manufacturers have a clear understanding of what consumers expect from their brands; they not only deliver those expectations, they continually strengthen the equity or franchise through communicating those promises. Consumers wanting those brands will seek them out regardless of the store carrying them. In most cases, the brands value package expected from the brand. The same holds true for private labels that have become brands.
Conversely, products may not carry the perceived benefits of the brands, but may focus on delivering very basic, more functional and real benefits. Accordingly, consumers will also seek out and, in most cases, pay less for these products. In either case, the total supply chain from product design to store counter must be focused on a specific consumer’s needs. The cross-shopper has many needs. So, there’s a place in her heart for a lot of suitors. However, she’s very selective and knows she can get what she wants.
Her future fidelity may belong to many, but to only those have who figured out what she desires, and who can provide it better than anyone else.