Customer Experience Impacting Retail Management: Study of Customer Centricity Strategy by Retailers

Customer Experience Impacting Retail Management: Study of Customer Centricity Strategy by Retailers

DOI: 10.4018/978-1-4666-9894-9.ch008
(Individual Chapters)
No Current Special Offers


The customers' profile is evolving at an enormous pace. The differences between retailers are not significant in terms of value delivered; hence it is important that they understand the customer profiles and create differentiation by fulfilling the customers' needs. Looking at the shopping orientation of the shoppers, it indicates that the shoppers seek emotional value more than the functional value of shopping. Over the years, the shoppers' orientation towards this routine activity has been changing. The innovations brought by retailers and marketers in the practice of retailing have been providing new paradigms in the way shoppers have been disposed towards their act of shopping. This has also led to a body of knowledge that aims to understand the orientation of shoppers towards shopping and utilize it to develop typologies.
Chapter Preview


Its 2015, customers are changing, their expectations are changing and so are their shopping pattern and requirements. Retailers need to stop using an old customer experience model to serve new customers with their new expectations. The millennial generations of shoppers include those who have been raised online. They have smartphones, are active on social networks and have low tolerance for bad service or anything that come in their way of shopping pleasure. Gone are the days when customer experience started when a shopper entered into the store and ended when he or she stepped out of the store. Now customers are always in the system and always connected, hence retailers need to think of novel ways to satisfy their customer.

Early Days Retailing

In the 80's and early 90's Walmart pioneered new approaches to supply chain management and human resource management. They also influenced other major firms like P&G to change their approach towards supply chain management. Dell has revolutionized the supply chain for PCs and prompted many firms to consider the direct model. Another retailer which is credited for changing the way business was performed is Amazon used internet and influenced the way business was conducted. In all these examples, a pattern emerges that shows there are many different ways of doing business but the reason why these strategies were successful were because these companies had put their customers at the center of their strategy.

Retail Supply Chain

The retail supply chain tends to change every year as provided by the supply chain management executive. The results show that the retail supply chain managements for the past 2-3 years and that for the upcoming 2-3 years will see a great number of challenges, capabilities and priorities. The senior executives bring together the leading public retailer’s and examine the supply chain management as a critical component to the success of the retail organization. The chief executives are concerned about the economic recovery that is speeding up, and are pursuing strategies to undergo the economic challenges while grabbing the opportunities to increase efficiencies.

Millennial Shoppers

In today’s world, shoppers have the power and are in a controlling position to drive the way retail business is done. When these millennial customers are in retail stores, they review the products and share their opinions with their family and friends using the smartphone. Competitors are also not far behind and they get easy access to all the reviews and comments. Retailers, thus face the challenge to create a pleasant in-store customer experience that entices such shoppers to come back again to their stores. This has created a rapid need for customer experience analytics that can give unprecedented insight into the in-store experience from the shoppers’ perspective.

Customer Service

Retailers have now understood that their customers are always in the channel even when they are not in the store. Hence, they want their customers to spread the positive experience they received rather than the complaints. Customers have the power of social media to reach out to whole world making the retailers take a serious note of their customers’ feedback. Creating superior customer experience in today’s retailing environments has become one of the central objectives in providing customer service. Global retailers have embraced the concept of customer centricity management as of prime importance and are seeking to incorporate this notion into their mission statements.

Many reports have identified customer experience incorporation as a key factor for companies to use in building loyalty to brands, channels and services. For example, Valero Energy Corporation is committed to ensuring a positive retail experience for customers by focusing on convenience, value and quality. Toyota has incorporated following words in their mission statement – “sustain profitable growth by providing the best customer experience and dealer support”. Starbucks is based on creating a distinctive customer experience for their customers (Michelle, 2007).

Key Terms in this Chapter

5G: is the coming fifth-generation wireless broadband technology based on the IEEE 802.11ac standard. 5G will provide better speeds and coverage than the current 4G. 5G operates with a 5Ghz signal and is set to offer speeds of up to 1 Gb/s for tens of connections or tens of Mb/s for tens of thousands of connections.

Space Management: Management of selling space, based on consumer demand and shopping habit in order to achieve enhanced business results.

Supermarket: According to the Webster International dictionary (1993), a Supermarket is a self-service store or independent retail market offering a wide variety of food and household merchandise, organized into departments. It is larger in size and has a wider selection than a traditional grocery store and it is smaller than a hypermarket or superstore.

Gross Margin Return on Floor (GMROF): Gross margin or profit returned per floor space usually measure in gross margin per square foot.

Gross Margin: A way to measure gross profit calculated as the difference between selling price and cost price.

Softlines: Softlines is the retail store department or the product line which primarily consists of merchandise such as clothing, footwear, jewelry, linens and towels.

Category Captain: Category Captain is the retailer preferred vendor, who advises the retailer on a certain category of merchandise offered by them.

Fad Merchandise: Fad merchandise is the merchandise items that generate a high level of sale for a short period of time.

Backup Stock: Backup stock is the buffer stock or the safety stock which retailer holds to guard against stockouts, when there is a mismatch between supply and demand.

Out of Stock (OOS): Also known as Stockout. It is a situation where the retailer does not physically possess a particular product category, on its shelf, to sell to the customer. It can be estimated from store inventory data.

Impulse Buying: Any unplanned buying is called as Impulse Buying. An individual might not require a particular product but picks it up out of mere emotions and feelings.

Markup: The amount of money added to the wholesale price to obtain the retail price.

Variety: Variety is the number of different merchandising categories within a store or department. It is also called breadth.

Hypermarket: According to the Webster dictionary (1993) a hyper market is a superstore which combines a supermarket and a department store (where usually are sold products like apparel, furniture, appliances, electronics, and additionally select other lines of products such as paint, hardware, toiletries, cosmetics, photographic equipment, jewelry, toys, and sporting goods), being the result a very large retail facility which carries an enormous range of products under one roof, including full lines of groceries and general merchandise.

Assortment: Assortment is the number of SKUs within a category. It is also called depth.

Gross Margin Return on Inventory Investment (GMROII): Gross Margin $ returned for every $ invested in inventory (and inventory costs).

Private Label: Private Label brands are the retailers store brands which are developed by retailers and available for sale at only that specific retailer.

Millennials: (Also known as the Millennial Generation or Generation Y) are the demographic cohort following Generation X. There are no precise dates when the generation starts and ends. Researchers and commentators use birth years ranging from the early 1980s to the early 2000s.

On Shelf Availability: One of important metric every retailer’s performance is measured is using On Shelf Availability (OSA). OSA is defined as availability of product for sale to a shopper, in the place he expects it and at the time he wants to buy it. It is impacted by a host of different factors, all along the supply chain.

Point of Sale (POS): POS refers to materials, brochures, signs at point of sale, or can refer to point of sale or cash register.

Point of Sale Activation (POSA): POSA is a process by which software becomes activated, useable, at the point of purchase.

Markdown: The difference between the original retail price and the reduced price.

Category: The category is the basic unit of analysis for making merchandising decision.

Stock Keeping Unit: A stock keeping unit (SKU) is the smallest unit available for keeping inventory control. In soft goods retailer, for instance, a SKU usually means size, color, and style. For example, a pair of boys’ size 10, navy blue color, boot-cut Levis is one SKU. In some cases, a buyer is responsible for several classifications.

Footfall: Footfall is the count of shoppers entering in to a retail store on a given day.

Point of Purchase (POP): POP refers to all materials and physical setup in a retailer, in and around where the product is displayed.

Visual Merchandising: Visual merchandising is the art of implementing effective design ideas to increase in-store traffic and sales volume.

Complete Chapter List

Search this Book: