CREATING CUSTOMER VALUES

For several years now, I have taught a “Retail Strategy” class at SMU’s Business Leadership Center for MBA students. One of my first questions to the class is, “What is the purpose of a business?” Without exception, I get an answer of “To make a lot of money”. My reply is “That while making money is certainly a desired goal, it is more of a method of keeping score”. “The purpose of a business is to create values to the Customer that they recognize, understand and accept as having value to them,” I explain.

 

“Insanity: Doing the same thing over and over again and expecting different results”. This quote by Albert Einstein says a great deal about the current state of affairs in Retail today. When so many retailers such as Coldwater Creek, Delia’s, Alco, Radio Shack and Cache have recently filed for Chapter11, one has to wonder what changes they have tried to reverse their situation. What “Customer Values” have they offered to make their brand and products destinations for the Customer?

 

In recent visits to many of these retailers, I have seen few changes in the form of a reason to shop the store or website. They are older retailers that have had the competition and the market catch up with them. Most have only developed new updates to the same old tired products; they have added 15 colors to a commodity garment, give out large discounts or have added an array of products that one can get at the competition for 1/3 the price. This is not value added!

 

Retailers have to understand that they have to reexamine their complete strategy in terms of who their Customer actually is today, their product offerings, “Customer Experience”, channels offered and their place in the market. They need to complete a SWOT (Strengths/Weaknesses/Opportunities/Threats) analysis on themselves and their competition. In essence they have to ask the overriding question of “WHAT VALUES ARE WE OFFERING OUR CUSTOMERS?” that create competitive advantages, higher profits, traffic and loyalty