The media's current focus on Wal-Mart's gains in this economy leaves the impression that the chain's sole focus is to cut prices. What slips under the radar is the giant retailer's intensive, behind-the-scenes research and testing to further set itself apart in the realm of customer experience. Wal-Mart is convinced that having the best price proposition won't be enough to ensure its long-term growth.
The SN article "Wal-Mart Focuses on Improving Customer Experience" (see link at right) outlines the lengths to which Wal-Mart is going. Segmentation research has turned up a range of Wal-Mart shoppers who have different needs but are all interested in value, including the “price-sensitive affluent” and the “brand aspirational,” according to a presentation by Candace Adams, senior director of insights and consumer strategy at Wal-Mart. The retailer uses segmentation to understand the different needs of each group, and it further refines the insights with demographic research.
The chain also learns about customer in-store needs using a “virtual shopping platform” and conducts research into how employee behavior impacts consumers.
Another retailer long known for its price focus, Food Lion, is also using advanced tools to boost the customer experience. Food Lion's extensive use of customer segmentation and clustering, and its efforts to communicate shopper metrics to suppliers, has put the chain in a leadership position.
In another effort, the retailer is sharing a range of retail data and scorecard information with suppliers in return for their promise to partner on a number of initiatives, including shrink reduction and promotional planning. Called “Vendor Pulse,” the program has helped lift the chain's operational performance, but it also fosters a better in-store environment for shoppers through results such as reduction in unsalables and better forecasting of product-level needs for promotions. It should be noted that Wal-Mart also has a well-known data-sharing initiative called Retail Link.
The efforts of Wal-Mart and Food Lion show a variety of tools being used that can benefit customer experiences. Price is only one of those tools.
But these chains' experiences raise another important point: Retailers need more help from suppliers than they are getting. Here's how Wal-Mart's Adams put it to vendors: “You can help us be more successful if you help us drive category growth and not focus on the brands so much.”
Meanwhile, Food Lion's supply chain manager, Troy Prothero, said that, despite his company's successful record of vendor collaboration, Vendor Pulse prompted some suppliers to “act like we're trying to burden them with another program, although we're giving them information and tools that can help them leverage their relationship with Food Lion.”
It's a pity that after years of collaborative efforts there are still suppliers not willing to fully partner. Retailers are determined to build their relationships with customers and need vendors to bring them collaboration and insights. But retailers will only ask for help so many times before they seek other solutions.