Building materials retail is shifting from price to value, and retailers need to be a part of the customer’s journey, explains Vikas Marwah in this #ExcellenceinRetailinBPHI series.
What should be the vision of retailers who wish to achieve excellence? Can excellence be pursued deliberately, or is it an in-borne attitude?
This is an interesting question, and I would break it into two parts while responding. The first is about vision, and the second is about excellence. No organisation, big or small, has ever progressed without having a vision. Even retailers, be they a two-person setup, should have a vision for themselves and their business. The vision may be written out as a statement and displayed at their place of work or could be in their mind, but that’s the first step in the quest for excellence. A vision statement could simply explain the impact that the organisation wants to make. Read these vision statements, and you will find that they match the image their companies have or the image you have of them in your mind.
- Amazon – to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online.
- Ted Talks – we believe passionately in the power of ideas to change attitudes, lives and, ultimately, the world.
- Ikea – to create a better everyday life for many people.
So, vision is like a guiding principle, and it always helps to have a guiding principle. Though experts are divided on this topic, my take is that excellence can be pursued; it need not come just from instinct. I have seen many players rise to the top with sheer discipline and hard work because they had the vision to achieve excellence in what they did. I often recall Walt Disney’s words, “If you can dream it, you can do it.”
According to www.boardsource.org, “A vision statement describes the future aspirations of the organisation. It defines the dream, the long-term goal, and the unconditional direction where the organisation is heading.”
Every retailer should try and form a vision statement and in fact, involve their team members in this process. Once the team starts owning the vision statement, results can be drastically different.
Retailers who don’t have their vision mapped will find it difficult to achieve excellence. Goalposts will keep changing for them, and often they will be in situations where they will try a Hail Mary pass, in a desperate last-ditch attempt to get lucky at achieving their goals. On the other hand, those who have made a vision statement will find it relatively easier to move ahead. For them, the goal post will be clear, and they would already be forming systems and processes to reach the goal rather than hoping to get lucky. This would be the first and biggest step towards achieving excellence, though it is an ongoing process.
How can retailers collaborate with brands to achieve a leadership position in their business?
Brands act as a catalyst. The right combination of brand power and retailer’s zeal to encash this can result in a complete paradigm shift. Though brands can get them the initial customer traffic and eyeballs, retailers need to ensure that they latch on to these customers and build a loyal base. Building loyalty can be the biggest game-changer for them, whereas a myopic view and desire for quick gains through shortcuts can be counterproductive.
For brands, the retailer is one of the four Ps of their marketing mix – product, price, place (distribution) and promotion. In building products, we have seen that retailers manage contractors and designers, and they act as a bridge between the company and its stakeholders. So, brands are always interested in working with those retailers who have clear goals, who are achievers, and who operate through systems and processes. They put in extra effort and resources to help such retailers win. My tip to retailers is – build your loyal customer base, and good brands will come looking for you.
Brands leverage the retailer’s strengths to create better reach in the market.
Collaboration between brands and retailers can have several positive outcomes. They can jointly work on improving the customer experience at the retail counter. Brands can help retailers upgrade through training and transfer of knowledge about digital modes of business and local level marketing. This list can be extended to any length, but the point here is that collaboration can create a win-win for both.
What are the new approaches to customer experience and customer satisfaction, which can play an important role in modern-day retail?
In the Covid-19 world, consumer habits are going to transform. The definition of customer experience and satisfaction is bound to change too. Customers will look for more digital options while they are in the research stage, or the first three stages of the sales funnel (lead, prospect, qualified prospect). So digital tools like website, Facebook business page, Google My Business, Instagram, etc. are what will provide the customers with their experience, and thus satisfaction while dealing with retailers.
Then their quest will be for a place to buy from where hygiene and social distancing are assured. Therefore, retailers will have to revamp their stores and sampling processes to fit into the new normal. It would become important to market the store and assure the customer that it is safe to visit. Displays would have to be revamped, and the shop floor decluttered so that the customer is not forced to spend unnecessary time and yet can make good choices. Samples too would have to be sanitised.
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What role can digital play in increasing sales?
For brick-and-mortar stores, e-commerce will become an added advantage, though touch and feel will still be the king, particularly for high involvement products. Such stores can create a cost-effective module for lead generation via digital and still operate in their current fashion. Here also partnerships can result in a win-win for both, retailer and the brand. In fact, at Everest Industries, we do form partnerships and help our channel partners in ramping up their business through digital modes. In this dual-mode, retailers can generate leads through digital and then divert the traffic to their stores.
Architects and designers are important influencers in the building products and home improvement trade. What best practices can retailers adapt to work professionally with influencers?
In the building industry, I have seen that retailers who have a successful bond with influencers have a common denominator of service, trust and value addition. They form partnerships with influencers and become their ‘one-stop’ for their respective product categories. Category Captaincy is what they believe in.
Influencers are hungry for knowledge, and they can engage with retailers at any stage of the discovery-consideration-conversion-advocacy journey. This engagement is a derivative of what stage of the product life cycle (PLC) the category is in. Some niche products can attract influencers early on, while for regular products, the stage can come a little later. Brands play an important part in the dispersion of knowledge, and hence the major responsibility lies with them for fostering this engagement. And to remain in the game, retailers must keep upgrading their skills and knowledge too.
Retailers who become well known in their catchment areas are seen to attract more loyalty from customers. What does it take for a retailer to become a brand?
As I have already said, retailers have evolved a lot in the last decade. To further strengthen their positioning, they need to research their target audience and their habits, and accordingly reposition their offerings and services. They should use platforms like Facebook and Insta along with print media for visibility. They should identify what is it that makes them different and what their competition cannot do, and work on that aspect of the business. Then make a mission and vision statement and set a goal for where they want to see themselves in the next three years. Lastly, they should invest in workforce training and focus on productivity, since service is the biggest differentiator for successful brands.
Traditionally, education has not been an important attribute for becoming a successful retailer. Is this belief changing? What approach should retailers have towards education and skill development?
With the new generation taking over the baton in the retail business, this thinking is fast changing. Retailers are realising that the competition is not the same as it used to be a decade ago. Things have changed and new skills and education are required to stay afloat and grow. The basic understanding of customer engagement, merchandising, financial management and team building is something that every retailer must-have. It is quite easy to get this knowledge from online learning platforms. Personally, I have found Udemy to be a good platform.
How can retailers be financially prudent, so that their operations remain sustainable in the long term?
Crisis teaches us a lot. The present scenario has shown that those who had poor financial management are struggling. To be financially prudent, it is vital to rationalise inventory, reduce human resources cost and make available resources more productive, and use digital tools for promotion and management. Most important is customer profiling. Not all customers are profitable. So, weed out non-profitable customers to stay afloat and nurture the ones that are good for the business. The retail business needs to shift from the traditional profit mode to return on capital employed (ROCE) mode.
How can retailing shift from being price-oriented to being value-oriented? Will this shift require additional investment and long gestation?
Value comes from the trade-off between the benefits a customer receives from a product, and the price he pays for it. This trade-off is critical when retailers define their marketing mix. They need to identify what their competitors are offering and how they can change the paradigm. Brand image and service can be the biggest differentiators, and this might require additional investment, but the results will offset such investments multi-fold. The gestation periods can be medium to long.
The simplest and most successful marketing mix for retailers is driven by the 4Ps:
- Product offering
- Price vs value equation – Customers should feel that they are getting more for what they have paid. This does not mean only discounts, but can be non-price related things like in-store experience, service, bundle pricing, extended warranties etc.
- Place – In this case, it is about the location of the store and things linked to location like approach, parking etc. Digital presence is also a part of location nowadays.
- Promotion – The method to draw customer traffic or footfall. I have already spoken about the main techniques in the digital and non-digital modes. Loyalty and engagement programs are also good tools for promotion.
Earlier customers were less demanding, but now this paradigm has changed. Customers are checking you out through your digital presence, so their digital footprint can help in solving this issue. This makes it even more critical to have strong digital visibility and be part of the research process of the customer.
How would you rank the following in terms of importance for a retail operation, particularly in the building products and home improvement sector?
- Technology – 8
- Inventory – 7
- Talent – 9
- Customer Experience – 3
- Marketing – 6
- Location – 2
- Display – 4
- Brand Alliance – 1
- Inhouse Brand -5
About the author
Vikas Marwaha is a senior sale and marketing professional with three decades of experience. He is considered a thought leader in building materials industry and has been instrumental in disrupting the wood panel industry (medium-density fibreboard – MDF). His is presently Head of Sales & Marketing at Everest Industries Ltd (B&P). As a hobby, he runs a blog for the sales and trade fraternity. He holds an MBA degree and has also studied strategic management at IIM-C.