Canada’s largest grocer recently released its fourth quarter numbers for 2012. The company reported a profit drop of 17.8 percent over this period, and stated that they are considering consolidating some of the company’s many well-known banners. So what accounts for this significant drop in profit? Is a declining customer experience to blame? And if this is the case, what can other retailers learn from it?
In the consumer packaged goods arena, the customer experience plays a crucial role in acquiring and retaining the consumer, and if retailers do not take the customer experience seriously this will have a considerable impact to both the retail brand’s bottom line as well as the brands who list their products there.
Many of this company’s banners are known for their appealing store layout but when it comes down to it, that may draw consumers in but does it keep them coming back? Not necessarily. Once the customer is in the retail environment continuing a positive customer experience is critical. Long line ups, poor customer service, lack of staffing and substandard retail merchandising can all lead customers away from your store, regardless of how great the store looks aesthetically or how it is laid out. If product is not in stock, or not located in the appropriate place, customers will quickly realize that an appealing store layout accounts for little when it comes to their needs.
Employees play a major role in overall customer experience. Being knowledgeable about the products, their location in-store, and their ability to provide assistance when necessary all lead to higher levels of customer satisfaction. But what about those employees who see their jobs as little more than a stepping stone? Or what impact does protective unionization have on the level of service provided? If the incentive to perform is not there and the retailer is not creating an air of accountability the results can be damaging. These things all need to be managed correctly to ensure that the customer experience is not declining.
We recently had a customer tell us that they attended a store on a Sunday (a prime shopping day) and that there were significant line ups, only four check-outs open, and when they approached a manager to complain they were told what do you want me to do, our employees are union? That is not good customer service and it is not a good reflection of the brand. The individual who reported this to us will never return and so not only is the retail brand impacted but also the CPG brands who list their products there.
CPG brands looking to improve or build on their existing customer service levels need to recognize the importance of retail merchandising. When your product is listed at a retailer you still do have some control. Having a plan in place to tackle things and put your own feet on the ground. Retail merchandising companies proficient in these types of issues can help establishing a plan for effective merchandising that will get real results. They can also have their merchandisers go into retailers on your behalf to ensure that everything is working the way that it should be and alert you to challenges at the retail level that need to be addressed.
The Canadian grocery chain has listed several different tactics that may be used in the coming months in an attempt to regain their profit lead, but if declining customer experience has played a part in the declining profits, improving it will be essential. The same rings true for any retailer, and in order to keep sales up, the customer needs to feel satisfied with their overall experience.
For more information about how merchandising services can improve customer experience, please contact Storesupport by calling 1-877-421-5081 or visit www.storesupport.ca.