Berry on Retailing

Notes from The Old Pillars of New Retailing
Leonard L. Berry in Harvard Business Review

The best retailers create value for their customers in five interlocking ways. The key is focusing on the total customer experience. You have to offer customers superior solutions to their needs, capitalize on the power of respectfulness, and connect with them on an emotional level. You also have to set prices fairly, and make it easy for people to find what they need, pay for it, and move on. These pillars sound simple on paper, but they are difficult to implement in the real world.

Pillar 1: Solve Your Customer’s Problems

Customers usually shop for a reason: they have a problem — a need — and the retailer hopes to provide the solution. Focusing on solutions means employing salespeople who know how to help customers find what they need or desire, and having people on staff and at the ready to meet special requirements.

Pillar 2: Treat Customers with Respect

Disrespectful retailing is pervasive. 68% of consumers believe that most of the time, the service people that they deal with don't care much about them or their needs. It’s not just about bored, rude, and unmotivated service workers. Cluttered, poorly organized stores, bad signage, and confusing prices all show lack of respect for customers. The best retailers select, prepare, and manage their people to exhibit competence, courtesy, and energy. They institute policies that emphasize fair treatment of customers. They create a physical space, both inside and outside the store, that is carefully designed to value the customer’s time.

Pillar 3: Connect with Your Customer’s Emotions

Great retailers reach beyond the model of the rational consumer and strive to establish feelings of closeness, affection, and trust.

Pillar 4: Set the Fairest (Not the Lowest) Prices

Prices are about more than the actual dollars involved. If customers suspect that the retailer isn't playing fair, prices can also carry a psychological cost. Excellent retailers seek to minimize or eliminate the psychological costs associated with manipulative pricing. An uncomfortable truth for many retailers is that their "lowest price anywhere" positioning is a crutch for the lack of value-adding innovation.

Pillar 5: Save Your Customer’s Time

Many consumers are poor in that they lack time. Retailers add to the problem by wasting consumers' time, from confusing store layouts to inefficient checkout. 83% of women and 91% of men have ceased shopping at a particular store because of long checkout lines.