Winning in retail with a targeted store service model

Published: August 20, 2008

Executive summary

In a competitive retail environment, with numerous players trying to reach the same pool of consumers, it’s important for retailers to be able to differentiate themselves to keep attracting customers to stores. New products, competitive prices, and convenient store locations have traditionally been elements critical to rousing shoppers’ interest and driving them to stores. These factors continue to be important, but in-store service has become a vital dimension for retailers that want to deliver a superior, differentiated experience that customers will remember the next time they shop.

In the pursuit of such memorable service, many retailers have tried to address all aspects of the consumer experience in the store without a clear strategy regarding which services to emphasize. This confusion is especially endemic among the retailers that find themselves in a middle position in terms of service — between the model of factory outlets and warehouse clubs, which have virtually no service, and the full-service model of some high-end retailers, which may offer personal shopping, concierge services, product setup, alterations, layaway, and gift wrapping. The retailers in this no-man’s-land tend to jump on trends they observe among competitors and offer the same services without a clear understanding of which ones matter most to their customers.

This confusion has often yielded a mediocre overall service experience as resources have become stretched in too many directions. Clearing up the confusion and getting in-store service right is critical. In this article, we review the services that really matter to customers, dissect the hidden costs of trying to be all things to all people, and offer a framework for choosing the best service approach.

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Conclusion

Store service is a key success factor in the current retail environment, but retailers have to carefully pick and choose a select number of service activities in which to invest. Trying to act on all aspects of in-store service is both costly and inefficient, with distracting complexity in store operations. Enhancing the store service model does not mean increasing the level of service in all dimensions of the customer experience. It means investing in a focused way in the service activities that most powerfully drive customer satisfaction and purchase decisions, and striving for excellence on these key levers. To achieve this goal, it is critical to understand what actually determines the purchasing behavior of consumers. In addition to targeted customer research focused on what customers want, retailers must conduct instore experiments to fully assess the benefits, costs, and risks of high-potential ideas for store service improvement. If these efforts are executed well and in alignment with other dimensions of the retailer’s sales proposition, strategy, and culture, they can have a major impact on store performance.

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Winning in retail with a targeted store service model