Page 134 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 7: The Customers and the Retail Business: Knowing Your Customers

7.1 Need for Studying Consumer Behaviour Notes

Retailers who are in touch with their customers and their needs and wants are more likely to
find retail formulae that are relevant to consumers.

Example: In the late 1990s, the electrical retail group Dixons launched The Link, a new
chain of stores that focused on personal communication products and services, in response to the
growing market. Although there was a degree of overlap in this product category with the
existing Dixons stores, the new stores allowed the retail group to respond positively to an
opportunity presented by a change in consumer lifestyles.
A retailer’s role in the arena of personal consumption is that of distributor and facilitator. A
retailer provides a convenient point for a consumer to obtain goods and services, either by
being in a location that is closer than that of the producer and by selling in quantities appropriate
to the needs of the consumer, or by providing added value in the offer such as range assortment
or additional services. In a developed society, retailers play a greater role than the distribution
viewpoint would imply. They provide an information service, they provide an environment in
which he products can be discovered, new fashions followed and lifestyle patterns endorsed.
Retailers have the benefit of a direct interface with the final consumer, therefore they should
have an advantage over producers when it comes to gathering information about customers in
terms of who they are and how and what they buy. However, all too often retailers make too
many assumptions about their customers and do not have a thorough and researched awareness
of how their customers’ needs, wants and preference can change over time.
Marketers need in-depth knowledge about the various dimensions which link retailing and
consumer behaviour. There is research required to handle retail decisions in a competitive
context.

Example: McDonald’s found that a major chunk of its consumers decide to eat a few
minutes before they make the purchase decisions and hence it is building small outlets in large
supermarkets such as Wal-Mart and Home Depot. It is providing play areas to ensure a number
of families visit its outlets with children. A few companies also operate through kiosks in
airports, malls and high-traffic areas. Sunglass Hut is a brand which operates kiosks at various
places which displays about 1,000 different models along with their prices. Consumers could
place an order through these kiosks and the product is home-delivered.

7.2 Focusing on Consumer – The Changing Consumer

It is claimed that modern societies are increasingly organized around consumption (Abercrombie,
Hill and Turner, 1994) and so the trends in the pattern’ consumption that emerge over time are
very important for retailers to observe and understand. Consumer trends describe how the
body of consumer changes over time and make predictions about how those people will consume
in the future. The retailer can therefore build up a ‘customer profile’ that gives an indication of
who might ‘typically’ use their outlet. A retail customer profile is affected by the macro (general)
business environment; for example the macroeconomic policies a government pursues in relation
to personal taxation and interest rates affects the spending power of retail customers, and the
extent to which we are familiar with technology will affect our propensity to use technologically
based retail formats to undertake shopping activity.
A retailer’s customer profile is also influenced by the microenvironment, the specific business
arena in which the individual retailer operates.

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