Retail customer retention is a key goal to success for retailers and a key focus of retailers.  I think that the retailer must change to focus on a loyalty through relationships strategy as a key to customer retention.  It’s a very simple equation; in order for a retailer to maintain success their customers must return to purchase on a regular basis.  You can see that every program and strategy revolves around new customers purchasing for the first time and existing customers returning for more purchases.   When I think about this from a retail program perspective every program revolves around cost of the product and some type of discount for the returning customer.  Think about the retail strategy and you will see that everything revolves around price and discount, every retail strategy either offers the product at the lowest price or promotes loyalty programs that provide discounts based on purchases.  


Retailers are finding that the lowest cost and price discount strategies are not sustainable for the long term and while they realize this logically they have also been severely punished by customer flight when they try to change this strategy.  The problem that I see with this effort is that while the retailer professes a ‘low cost everyday’ program, the customer has been programmed to look for sales and discounts.  The issue as I see it is that the retailer is attempting to change the consumer focus on price through a price program and the consumer sees through the strategy.  In order to break free of the price demands of the customer I think the retailer must focus on a completely different reason for the customer to return.  This is where the loyalty through relationships strategy comes into play to subsidize the low price strategy with a goal of replacing the low price strategy as a primary focus.


Larger retailers should take a queue from small local retailers that flourish because of the relationship they develop with their customers and because of the quality and unique factors of their product mix. Small and local retailers are able to achieve success because they develop a relationship with their customers; they know them by name and they remember their purchases and are able to suggest based on past purchases.  Shopping in a successful small retailer is a social experience with the retailer and other customers in the store.  Large retailers would do well to re-introduce that concept across all channels.  I say that large retailers should re-introduce this concept because they dropped the concept in the past due to a focus on cost reductions.  Now, in order to break out of the negative cost strategy they must introduce the loyalty through relationships strategy all over again.


And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?