Valentyna Melnyk
It is natural to look ahead at the start of any New Year, and the retail sector is no different.
What are the changes on the horizon? What trends will affect retail businesses in 2015 and beyond?
Technology is bringing change at increasingly rapid speed, making New Zealand a part of the global community where international trends can be easily identified.
In many areas, including big data collection, communication with customers and creating brand loyalty, retailers in Europe and the United States of America are leading the way.
Global trends
Kiwi retailers should be aware of the following global trends.
Smartphone apps are one of the fastest-growing developments in overseas retail.
Many supermarkets in Europe have developed their own apps that consumers can download onto their phones, enabling them to be contacted at several key times.
For example, they can receive a ‘Product of the Day’ offer while they are at home; or, upon entering the store, they can be sent a personalised offer that can be redeemed during their visit.
American upscale department stores communicate with their customers through similar apps, but the process can be even more elaborate because the customers are segmented and get offers matched to their segment profile.
Successful approach
This approach has been hugely successful for two reasons. Firstly, it delivers an element of surprise (‘What will today’s offer be?’) and a large number of shoppers have said this increases the enjoyment of their shopping experience.
Secondly, by being able to register the moment a customer enters the store and sending an offer at that time, the app engages the customer at the moment of their purchase, rather than through the flyer.
I believe that the first retailer to introduce this in New Zealand would enjoy great benefits, including the first mover advantage.
Loyalty Programmes
Internet and loyalty programmes are also going through a period of change as retailers find their effectiveness reducing over time.
On the one hand, loyalty programmes have created the expectation of more personalised and customised offers but, at the same time, consumers often have huge concerns about privacy.
They are also turned off when, upon signing up for a programme, they are subsequently ‘bombarded’ with emails.
For example, research has shown that asking questions about income really puts consumers off; questions that merely present customers with a choice about membership level enhances their trust in the company, which is the building stone of loyalty.
Positive involvement
Retailers need to find their way around these issues and develop loyalty and communication programmes that engage consumers in a positive way.
One option is to offer two levels of sign-up – generic membership without personal data (‘no-questions-asked approach) and a more personalised programme that requires collection of some personal data.
A more modern option may be downloading (or not) the store’s mobile phone app.
Quality perception
Another significant development in retail is the introduction of ‘levels within supermarket house brands’ to increase quality perception (as their quality, actual or perceived, may differ among categories).
In New Zealand, Foodstuffs has its ‘Pams’ and ‘Budget’ ranges, while Progressive Enterprises has its ‘Signature’ Range.
If we translated European practices to the New Zealand market, we would see ‘Pams’ dividing its offerings into, say, ‘Pam’s Premium’ and ‘Pam’s Everyday,’ with stores still stocking a ‘Budget’ range.
In Europe, this move has increased the percentage of house brand products sold by retailers.
Associate Professor Valentyna Melnyk is Marketing and Consumer Behaviour Specialist at Massey University Business School. The above article appeared in ‘Massey News’ and ‘Retail News, a web-based newsletter and communication service from Wellington.
Pictures Courtesy: Massey News
