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The ongoing challenge is how to innovate to find new alternatives that increase the value perception consumers have (something way beyond the simple idea of low price) and that would allow companies to run under higher margins, moving away from the “more for less” destruction route. By Marcos Gouvêa de Souza, CEO, GS&MD - Gouvêa de Souza
The ongoing challenge is how to innovate to find new alternatives that increase the value perception consumers have (something way beyond the simple idea of low price) and that would allow companies to run under higher margins, moving away from the “more for less” destruction route. By Marcos Gouvêa de Souza, CEO, GS&MD - Gouvêa de Souza
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The ongoing challenge is how to innovate to find new alternatives that increase the value perception consumers have (something way beyond the simple idea of low price) and that would allow companies to run under higher margins, moving away from the “more for less” destruction route. By Marcos Gouvêa de Souza, CEO, GS&MD - Gouvêa de Souza
Авторское право:
Attribution Non-Commercial (BY-NC)
Доступные форматы
Скачайте в формате RTF, PDF или читайте онлайн в Scribd
Marcos Gouvêa de Souza, CEO, GS&MD – Gouvêa de Souza
“More for less” seems to be the dominant mantra on the
global retail and it seems this scenario will only become stronger, specially in mature markets.
Even in the periods of forward wind, the fastest-growing
retail segments, specially in the more mature markets, have been channels, formats, stores and brands that have been able to offer a full “more for less” proposition. No question Walmart has been leading this trend worldwide, but other companies have been growing this way, as Target or Costco in the United States; Auchan and Leclerc in France; as well as German Metro’s Media Markt and Saturn, in the electronics segment in Europe and Asia.
The core question is how to escape from the market
polarization that has, in one side, companies that have built businesses and strategies to offer lower prices to customers, pressing hard on suppliers and investing heavily on IT, logistics and processes to make feasible to reduce operating costs and investments. In the other side there are exclusive brands and propositions, being luxury the best case, with shopping experience as the critical factor. Appeal and glamour are pivotal issues and it all may become feasible by charging higher prices and increasing the gross margin.
In spite of the growth of the luxury market, specially in the
developed markets, but also for some consumers in the emerging ones, generally consumers seem to have already chosen store formats, brands, channels and fascias that offer even more competitive prices and add some service, relationship and customer care, but giving up on convenience. As is the case of the warehouse clubs.
The elements converging to make this scenario pervasive
center on the growing power of digital consumers, whose attention is disputed by more and more brands, stores, products, channels and also directly by products and service suppliers.
The plethora of stores, channels and brands increases
alternatives up to the point there are so many choices that consumers, with less time available, get lost, creating opportunities to companies who help him to choose and endorse consumer’s choices. This has been used with excellence by some retailers, specially in the online world, where it is even more importance to assure the safety of the shopping process.
This is the case of Amazon, an e-commerce icon that
supports customers in their shopping decision, providing product reviews and also showing customers ones, but assuring the simple return of goods if customers are not satisfied with their purchases. Or as British apparel company Hawes & Curtis does, providing a broad assortment so consumers can purchase shirts and accessories and, even in overseas sales, all necessary instructions for eventual product changes.
The same way many apparel e-retailers with international
sales do, in the process helping to increase online sales as a share of total sales. MasterCard Advisors says in 2007 online apparel sales accounted for 7% of the total market, rising to 18.9% three years later. The digital product trial, related services and possibility of doing promotions based on behaviors and attitudes also must have helped this growth, but surely the main driver is the curve of positive customer experiences in the digital environment. It all leads to an increasing importance of value-driven store formats and channels, as a consequence of an irreversible process of maturity, increasing level of information and access and growing consumer power.
The ongoing challenge is how to innovate to find new
alternatives that increase the value perception consumers have (something way beyond the simple idea of low price) and that would allow companies to run under higher margins, moving away from the “more for less” destruction route.
In this regard, it is sure constant innovation is the only
solution and brands as Ikea, Whole Foods, Nordstrom and Container Store continue to be relevant examples that there will always be, in any situation, an innovative and differentiated way that let companies increase sales and profits and avoid the low-price sameness.