Being relevant to your customers should be a key objective for any retailer. Customers have ever increasing expectations and find it much easier to switch between brands and retailers. In order to become or remain relevant, retailers need to exceed customer expectations and secure a place in the daily life of the customer.
Being and staying relevant is more complex than it seems, and many retailers question themselves how they could achieve this in practice. In this article, we will share a few key insights on how to become more relevant to customers, based on our own experiences at retail clients and a recent study amongst Dutch customers.
Consumer relevance
We can broadly distinguish 3 key elements that contribute to the concept of being and staying relevant:
Purpose – the retailer’s reason for existence. This is where the company stands for and describes the key message it wants to convey.
Customer expectations – the ability of the retailer to fully understand the expectations and needs of their specific target customer
Proposition – the actual touch points with customers; encompassing a clear and distinctive set of products and/or services offered
Relevance can be achieved through successfully aligning purpose, customer expectations and proposition. Aligning the purpose and customer expectations requires connecting with your specific target customers on an intrinsic level. This means that customers need to be able to identify themselves with the purpose through shared values and objectives (self-identification).
The purpose should be substantiated by the actual proposition, and both need to match the customer’s expectations. In cases where the three elements are misaligned it is likely that the retailer is either offering products/services customers do not really need or customers are unable to identify themselves with the brand, resulting in less relevance.
Relevance in practice: the Dutch retail market
To further illustrate the concept of relevance we applied the model to a selection of key (online) retailers, supported with data from our study. We asked 450 Dutch customers why they shop at these retailers and whether they would recommend it to others. Results show that customers reward Action and Bol.com with the highest Net Promotor Score (NPS). Amazon, AliExpress and Blokker are less recommended by the sample group and close the ranks.
The Net Promoter Score (NPS) is a method to measure customer satisfaction and loyalty. The higher the score, the more satisfied and loyal customers are. The NPS is based on the question how likely it is the customer would recommend the brand/retailer to others.
Let’s take a more detailed look at what contributes to these scores:
Bol.com is the leading online department store in the Netherlands. With an assortment of over 15 million articles and a fast and reliable fulfilment network they uphold their claim to be the ‘store for everyone’. Our study results confirm that customers recognize and value precisely these two aspects: broad assortment and fulfilment, and therefore award Bol.com with a high NPS score.
Bol.com is currently working to expand their fulfilment proposition called ‘Select’ by adding more products and fulfilment options, like same day- or Sunday deliveries. We are interested to learn if and how this will further strengthen their position in the market and whether it will be appreciated by customers and if it will translate into an even higher NPS.
(Surprisingly complete, amazingly cheap)
With over 1150 stores in seven EU countries Action has shown exponential growth over the past few years. Since day one their ambition is to surprise customers with a broad and continuously changing assortment for the lowest possible price.
Results from our study confirm that customers find price and assortment the two most important reasons to shop at Action and award them (together with Bol.com) with the highest NPS.
Action continues to grow in Europe, supported by new distribution centres. In addition, they are looking to expand their assortment with sporting gear, becoming a competitor to the ‘to-beat’ Decathlon in that segment.
(The surprisingly smart household store of the Netherlands)
According to their website: “Blokker has a wide and complete household assortment, with the best pre-set choices in relevant Premium brands and a complete range of smart private labels, surprisingly cheap prices and promotions.”
Over the past years, Blokker has been struggling to reinvent its proposition, and is currently trying to catch up with the competition. Looking at their proposition, one could notice that Blokker is concentrating on both assortment (premium- supplemented with low-end and private labels), low prices and promotions. This could make it difficult for customers to really identify with- and understand Blokker’s purpose; what do they really stand for? Our study confirms the lack of a clear focus as customers did not convincingly recognize any of these elements as typically Blokker.
Amazon, the world’s largest and one of the most innovative retailers is continuously in the news with new offerings, technology and game changing ways of doing business. The success of their ‘Amazon Prime’ proposition is a proven example of being super relevant for their customers in the US.
Despite their enormous assortment (564 million articles available in the USA alone) and competitive prices, Amazon has not yet been able to fully live up to its purpose and relevance in the Netherlands. The lack of a high-performing fulfilment network in the Netherlands – one of the key aspects that make them stand out in other markets – is contrary to the expectations of the Dutch customer, resulting in a lower NPS.
Amazon has recently launched a Dutch translation for their website, even though fulfilment is still done from other countries, and is building new fulfilment centres close to the Dutch border in Germany. We are following these developments with great interest to learn if and when Amazon will realize it’s purpose in the Netherlands and roll-out their proposition, and how this will affect their NPS.
Conclusion
Being relevant to customers is key for retailers in today’s marketplace. Successful retailers like Action and Bol.com demonstrate that they are able to align their purpose, customer expectations and proposition, which results in higher NPS scores. Still, there seems to be enough room further improvement as none of these retailers scored above 50 on their NPS.
At IG&H – together with our customers – we deal with these cases on a daily basis. We find it fascinating to study and understand how retail is developing in today’s rapidly changing environment. How does this impact Dutch retailers and are foreign players like Amazon and AliExpress gaining a foothold? We’ll write more about these and other developments in the “IG&H Retail Monitor”, which we are planning to launch by winter 2018.
Feel free to reach out to us if you are interested in discussing your case with us or have any questions.
Joris de Bruin, j.debruin@igh.nl and Evelien Kip, e.kip@igh.nl.