Shoppers’ loyalty on diversion

Good service is determined by customers not business. Shoppers’ expectations change, and sometimes businesses adopt inaccurate perceptions as a result.

Business is about cause and effect. The main “effects” you seek are increasing sales and profit. This is not a passive process. You need to optimise those sales and profits. So you measure the separate components or “causes”.

A new Harris International Marketing report – Why don’t people buy?” – examines which retailers consumers believe have a strong record on “green” issues.

Chains such as Marks & Spencer, Boots and Sainsbury’s are credited with high levels of concern. Their brand image undoubtedly boosts this, and possibly beyond justification. Which can amount to living on borrowed time.

But it is also a chance to live up to and then raise expectations. This nourishes brand strength, differentation and, finally, loyalty.

Simply, loyalty means retaining customers and increasing share of their spend. Most retailers do not know how many customers they have. They know their transaction numbers but these can increase even when the number of customers declines, because of increased visit frequency.

Loyalty is a subtler matter still for non-grocery retailers, where there is a big difference between visitors and customers.

Only 20 per cent of clothes shop visitors actually buy something. But it is imperative to attract their visits, otherwise you have no chance of an occasional sale.

As Goronwy Rees said years ago in his book on Marks & Spencer brand St Michael: “When you put on a bog-standard V-neck Botany wool pullover from M&S, it just feels better than the same one from Bhs or Littlewoods.”

Availability should be a “basic” too, but it is sometimes sadly referred to as the first fundamental of added value service.

We regularly monitor shopping motivations and attitudes, and find a solid ten to 20 per cent of shoppers leaving stores because something they wanted – which they know the store normally sells – was unavailable that day.

But a greater number of potential sales are lost where the goods are available than where they are not. Some retailers, such as Sainsbury’s, are so proud of their own brands and so conscious of their larger gross margins, they may give them more space in better quality positions than they deserve, based on their past appeal.

It is critical to compare the levels of importance shoppers attach to all the key elements: product range; brand selection; retailer brands; price; staff numbers, knowledge and helpfulness – and more.

Take “atmosphere”. It is a woolly composite of space, lighting, colours, staff uniforms, staff manner, music and layout. All blend into a subconscious sense of atmosphere.

Shoppers often cannot articulate why they like one store more than another, but the feeling is there. It is part of the loyalty make-up. Which brings us to cards.

Loyalty is already high. In any given week, the average house hold only uses two different gro cery outlets. Obviously, this repertoire can increase but shopping around is definitely not a national preoccupation.

If a time-pressured buyer, who doesn’t enjoy shopping, is increasing shopping frequency, it is because smaller trips are more acceptable than a two-hour excursion.

And, with a minority believing that where they shop is the cheapest, it is clear that the majority go for convenience, speed, familiarity and loyalty.

So, while loyalty programmes will continue to contribute to the grasp a retailer has on a portion of its customers, it may come down to a matter of valuable purchasing information for range refinement, range presentation and higher margin product promotion.

After all, apart from the odd blip – currently at Tesco and Asda – traffic density has been steadily declining for years.

That means there are less selling opportunities per square foot of cost commitment than before, so a greater amount must be sold just to keep the figures static.

Will more goods be sold? Or will the purse share of existing customers hit a ceiling? Will profit increases, or maintenance, be down to new categories, higher-margin added value variants and squeezed margins?