Retailers are facing a series of recurring business challenges. Manual tasks and inconsistent standards are presenting serious challenges for major retailers around the globe, as are operational challenges. Collectively, these obstacles are taking invaluable time and resources away from other priorities.
As a result, many stores are struggling to focus on customer experience — an element that sits at the heart of retail success. Bain & Company’s Net Promoter Score analysis of department store brands found just one department store in the top ten last year, compared with four ranking that highly in 2018.
To reverse this trend, retailers must reinvigorate the customer experience and grow loyalty again.
The main findings of our retail industry report
Our new retail industry report, “Decoding Department Stores”, shares insights into the priorities, challenges, and strategies of major retailers as they navigate the current state of the industry.
The report is filled with generous commentary from Merchandising, Buying, and Planning executives at major retailers around the world. One of the greatest findings is that retailers have what it takes to amaze their customers with outstanding customer experiences, largely due to the savvy ways in which they execute passive and active market research. By enhancing their backend operations, retailers can bring customer experience to the forefront once again.
Why customer experience is king
Customer experience drives profitability and fundamentally ensures retailers’ survival. Retailers stand to connect better with customers if they’re willing to go all-in on strengthening customer experiences, in-person and online.
Today, shoppers want to really know and fall in love with the brands they buy before they’re willing to open their wallets. According to a recent EY study, 57% of retail customers still want to experience products in person and 68% of shoppers are looking for expert advice before they finalize expensive or luxurious purchases.
Reinventing the customer experience carried department stores through historic economic crises, like when F&R Lazarus (later acquired by Macy’s) started arranging clothing by size in 1934 so shoppers could find their fit. Sometimes, the customer experience decisions you make become legendary aspects of your brand story, as in 1975 when a Nordstrom associate accepted a customer’s return of snow tires. Changing how customers see the shopping experience creates a legacy for other retailers to follow, such as the Bloomingdale’s destination window shopping displays.
How department stores are delivering better experiences for customers
Thankfully, bold, innovative customer experiences aren’t just a thing of the past for the retail industry, and retailers are showing us how it’s done:
- VIP shopping experiences: The London-based retailer Harrod’s opened a VIP retail store in Shanghai where annual memberships cost $21k and customers enjoy luxury shopping experiences. Customers who want more than a loyalty program from retailers may be interested in elevated shopping experiences like this VIP program, even if it means paying significantly more.
- Personalization technology: New fashion technologies that allow shoppers to virtually try on clothing, interactively explore available stock, and access expert recommendations to help personalize the shopping experience. Meanwhile, smart mirrors elevate brick-and-mortar shopping experiences by incorporating some of the best customization functionality of online shopping.
- Services and add-ons expanding the retail experience: Sustainability is top of mind for many customers, and economic considerations have others seeking durable, timeless, investment pieces when it comes to apparel and accessories. Patagonia’s product resale, repair, and recycling keeps their designs in use longer while reinforcing their reputation for quality. By offering these services, retailers can establish themselves as part of customers’ responsible lifestyles.
There’s more retailers and brands can do to strengthen their customer experiences and profitability. To learn more about what we discovered in our conversations with top Buying, Merchandising, and Planning executives, download our retail industry report.
