AT YOUR (our) CONVENIENCE

The word “convenience” permeates across nearly all aspects of daily living as well as in business. Some people may argue that we exist in a “convenience” –dominated world. We do not have the time to study, work and pursue our leisure activities any more. We are in many cases, “time-poor” and anything that raises obstacles in terms of slowing us down, putting systems and procedures in our way and generally making things awkward for us can incite anger and frustration.

Organisations have had to respond by re-thinking how they engage with us.

In the context of retailing, I was reminded of the importance of “convenience” last week when I read an article in Retail Week called “What will convenience look like in 2017?

The reality is that retailers are constantly grappling with ways and means of delivering their business proposition as conveniently and as cost-effective as possibly.

Therein lies the rub in my view.

While they undoubtedly have to address the issue of convenience, it also represents an opportunity to potentially drive cost out of the system so that they can become “leaner and meaner” in relation to their engagements with the customer and in terms of their competitive profile. There is nothing wrong, per se, in reducing costs and becoming more efficient. It can be argued that in such circumstances, retailers can deliver an even more effective value proposition, create more loyal customers and generate more profit in the process.

However there is a tipping point where continued “convenience-related” improvements can begin to work against the shopper and in favour of the retailer.

For instance as we discussed in a previous blog, self-regulated check-outs eliminate the need for store personnel to staff the tills and deal with payments. This can generate savings to the organisation in terms of less staff. However it can upset many customers such as those that are “technophobes” and older and potentially more vulnerable people. It forces the shoppers to perform a task that was previously delivered by the retailer. This can work in the shopper’s favour of course if it speeds up the process and means that they can exit the store more quickly. In many cases it does not achieve this objective. Shoppers take longer to figure out how to start the electronic process on the machine, find it difficult to insert the required notes, coins or banking cards, call over the one retail assistant who may (or may not) be nearby, antagonise shoppers in the queue and generally screw up the system.

Of course it can be argued that such innovations take time for shoppers to adapt and over time, such problems will disappear as they become more familiar with such technology.

Harking back to my earlier observation about the article in Retail Week, what are the main conclusions that it makes?

Firstly it reinforces the often-made point that the traditional late opening hours associated with the corner shop have disappeared and morphed into many retail formats such as supermarkets.

Convenience also extends well beyond opening hours and covers critical issues such as the preferences from shoppers for specific forms of delivery: in terms of both speed and the location of the actual delivery.

The article notes that “customers today are disappointed if the fastest you can deliver something to them is 24 hours”. This highlights the increased expectations of shoppers in many instances.

It is estimated also that in the context of the UK market, 80 per cent of shoppers regard a five-minute queuing experience as being unacceptable – again recognising the changing demands expressed by shoppers.

Such attitudes as these have forced retailers to reconsider the role that the outlet or retail store plays in the shopping process.

A recent study by Retail Week (Smarter Checkouts in a Digital World: 2016) examines some of the responses currently being implemented in order to address the specific aspect of managing convenience in a way that benefits the shopper.

In this context it highlights innovations such as the following:

  • Customer-facing screens
  • Digital receipts
  • Contactless payments
  • Mobile tills

Specifically in the context of contactless payments, Sainsbury’s hopes to have the system up and running in all of its convenience stores by Christmas 2016.

The move by the “Big Four” UK supermarkets into the convenience store space is not without its problems however. One problem is the danger of cannibalising sales across its other more traditional larger formats.

Interestingly and from a consumer behaviour perspective, commentators note that since around 2008 (the start of the global recession in general and the UK downturn in particular) shoppers, the concept of “repetitive top-up shopping” has risen exponentially. This has occurred at the expense of the traditional “big weekly shop” that has been the favoured approach of many households in the UK.

The increase of convenience store openings by the “Big Four” supermarkets at the expense of larger formats also threatens to undermine their overall profitability. For instance it is estimated that it can take up to fifteen stores to generate the same level of sales as a large supermarket format.

The fact that the convenience store format typically stocks only around ten per cent of items that feature in the full-line store.

Thus it can be argued that in the quest to address convenience, such tactics have changed the behaviour of shoppers for the worse (from the perspective and performance of the retailers).

The repetitive top-up shopping also arguably has conditioned shoppers to engage more fully in comparison shopping. This has worked in favour of the shopper in my opinion. In the period since the recession, shoppers (in many cases due to declining real income) have become more value conscious in general and price aware in particular. They are more knowledgeable and more proactive in terms of their engagement and interaction with retailers.

Comparison shopping has forced the large retailers to “up their game” in terms of offering more relevant and competitive promotions and introducing innovative practices that address the issue of convenience.

The above observations identify areas where the shopper has arguably benefited from the focus on convenience.

Those innovations that are based on technology in my view have yet to take effect and resonate with shoppers. This takes me back to my observation about the “tipping point” phenomenon. Shoppers have to become familiar and comfortable with aspects such as contactless payment and electronic receipts and self-administered tills.

Wearing my “shopper” hat, I continue to be frustrated and angry when asked to engage with these remote and featureless tools. I prefer to hand my money over to a sales assistant as opposed to inserting, typing and interacting with technology.

Wearing my retail marketing outfit however I recognise the potential benefits that can accrue to retailers in the form of improved efficiency and reduced costs.

It is the inevitable way of the future and as shoppers we will simply have to put up with it.

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