Shops lose 88% of customers due to poor service

Despite an overwhelming preference for in-store shopping, consumers are being turned off to high street retail by low customer service levels, new research released today reveals.

In a survey conducted by customer intelligence company Market Force, electrical retailers had the lowest customer service satisfaction score of any service industry with just 2.24 per cent of shoppers left happy.

Shops lose 88% of customers due to poor service

Clothing retailers scored only 2.69 per cent, supermarkets polled 6.10 per cent, local convenience stores received 6.48 per cent backing from consumers, while department stores got the highest score of any retail business type with 9.72 per cent left satisfied.

Of those surveyed 41 per cent said that their biggest frustration with store staff is a lack of interest in their needs and wants, and despite more than three quarter of people preferring bricks and mortar shopping to online as a many as 88 per cent will leave a shop if service is poor.

Tim Ogle, CEO at Market Force Europe, commented: “Good customer service doesn’t have to be expensive. Small, inexpensive changes can have an oversize impact on whether someone buys in your shop and how much they spend.

“For example, our research shows eight out of ten shoppers want to be taken to a product when asking about its location. It’s these little gems of insight that turn a question into a sale.”

Retailers are increasingly realising that in order to make their bricks and mortar offer as compelling as their online platforms they have to improve the experience of visiting their stores.

This morning the UK’s largest retailer Tesco announced a huge recruitment drive, which in part is in reaction to a perceived drop in the supermarket chain’s service levels in recent years.

Several simple service techniques could be employed by businesses to boost trading it seems, with Market Force also finding that 59 per cent of shoppers like products to be recommended to them by staff members.

Although shoppers like to have a personal service, they also seem open to new technologies which cut out staff interaction, with 63 per cent saying they like to use self-service machine and 49 per cent in favour of contactless payments.

In a warning to retailers keen to make more transactions automated however, the research shows that 37 per cent of consumers feel they should pay less when using self-service checkouts.

Compared to other industries retail appears to be struggling to please its consumers at present, with banks (10.8 per cent), restaurants/pubs (28.3 per cent), and hotels (31.5 per cent) all scoring higher customer satisfaction levels in the Market Force survey.

Ogle added: “These findings should be a wakeup call to retailers looking for cost effective ways to grow their business.”

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Look customers in the eyes to lock them in the aisles.

Shopkeepers adopt the hard sell with some tailored software, writes Mark Russell.

IN THE film Minority Report set in 2054, a brewer’s advertising billboard identifies Tom Cruise’s character, John Anderton, through a retinal scanner. As he walks past, the billboard calls out: ”John Anderton! You could use a Guinness right about now.”

Far-fetched? Not according to retailers who believe this type of targeted advertising may well be the future of shopping.

New York company Immersive Labs is already using built-in cameras and facial recognition software in its outdoor billboards to determine the gender and age of passers-by so it can customise the advertisement on display to suit them and prompt sales.

So if a man strolls by on a cold morning, the display might change from an ad for women’s clothing to an advertisement suggesting a cup of coffee at a nearby cafe.

As Australian online shopping – expected to be worth $21.3 billion this financial year and $30.8 billion by 2015-16 – continues to threaten bricks-and-mortar businesses, retailers are using the latest technology, combined with social media, including more shopping apps, to lure customers back into their stores.

German shoemaker adidas is planning to install touch-sensitive display walls in stores from next year. The virtual footwear wall will allow customers to view the company’s entire range of 4000 pairs of shoes. If a customer likes a particular shoe the store will order it in.

Two cameras above the screen will watch shoppers’ reactions to determine which shoes are most popular. And like other companies, adidas is also gathering feedback by encouraging customers to use Facebook and Twitter to review its products.

Brisbane company Yeahpoint believes its MiMirror creation is the missing link between instore shopping and social media that will revolutionise fashion retail.

MiMirror is a touch-screen display with a camera that acts as a mirror and takes up to six photographs of customers in outfits they are considering buying. The shoppers then email the images to friends or post them on Facebook to get a second opinion.

No retailers have installed the technology yet, but the company is confident major stores will buy the device in coming months.

”The factors driving retailers’ decisions for the future are basically that the cost of business continues to increase and competitiveness in the retail environment is being challenged by the online market,” Yeahpoint’s John Anderson says.

”On the flip side, you have the time-poor consumer who wants to have a much more friendly, fun shopping experience.”

Sean Sands, of Monash University’s Australian Centre for Retail Studies, agrees, saying many consumers are bored with traditional retail and the only way to lure them back into stores is to offer the latest technology linked to social media.

A recent report released by the centre found that online shopping was creating tougher in-store customers because they were ”better informed due to the power of the internet”.

Half the population now research their purchases online before setting foot in a store.

Many are also armed with a wide range of shopping apps that can be downloaded on to iPhones, iPod Touches, iPads and other tablets and smartphones, that allow them to hunt for the best deals.

The RedLaser app, for example, allows instore shoppers to scan the barcode of an item to get the price and then checks online to see if it’s cheaper elsewhere.

Supermarket giant Coles’ ShopMate app, which notes specials and lets you cross off your shopping list as you go, has been downloaded 400,000 times.

Rival Woolworths does not have a shopping app but has one to locate missing trolleys.

Woolies’ app-lessness is not likely to last, however, as retailers respond to consumer demand.

Russell Zimmerman, of the Australian Retailers Association, says ”every retailer has to be in the online space in the foreseeable future” or they won’t survive.

According to PayPal, 8 million Australians buy goods using the internet, and one in 10 buy them with their mobile phones.

Google Australia’s head of retail, Ross McDonald, says this increasing use of mobile phones to search for stores and products has become a noticeable trend in the past six months.

Previously, 95 per cent of online traffic for shopping searches was from computers but 16-18 per cent of online inquiries were now from mobile phones. ”What we advise retailers is that it’s not so much about the app but making sure you are visible on a mobile device when someone searches for you,” he says.

Jo Lynch from Myer – which has an iPhone app that lets you peruse and buy goods with a tap of your finger – says the company expects its online business to generate sales of $5 million for 2010-11 and be worth up to six times that in the next few years.

David Jones’ Brett Riddington says the future of shopping is all about multi-channel retailing. ”Many customers will still want to go in-store to physically see the goods after checking them out online, but we need to make that a more entertaining and engaging experience,” he says.

Stores Demand Mannequins With Personality

One size fits all no longer applies to mannequins.

With retailers fighting for customers in the sluggish economic recovery, the generic white, hairless, skinny mannequin is being pushed aside by provocative alternatives that entice shoppers with muscles, unusual poses, famous faces and lifelike bodies.

“The customer shops from the mannequin,” said Jenny Ming, chief executive of the youth retailer Charlotte Russe, where poses for new mannequins are drawn from red-carpet celebrity pictures, and feature pierced ears, articulated fingers for rings and flexed feet for high heels. “The No. 1 reason our customers come in is because they see something they like.”

The Disney Stores chain has added little-boy figurines that fly from the ceiling and little-girl ones that curtsey. Nike has made its mannequins taller, and added about 35 athletic poses. Armani Exchange has ordered models that will lie down to help shoppers imagine wearing lingerie. A new accessories-only store by Guess features glossy black mannequins in model-like poses on an actual runway, while Ralph Lauren’s new women’s store in Manhattan commissioned mannequins with the face of the model Yasmin Le Bon.

It is all part of a new appreciation for old-fashioned window dressing. During the 1990s and early 2000s, many stores cut costs by hiring inexperienced workers to outfit their mannequins, and generic was best as the dummies needed to be dummy-proof. But with shoppers getting increasingly persnickety, retailers are expecting their store displays to serve as “come on in” advertising, with the made-to-order mannequins sending a very specific message.

“They personify their brand with their mannequin statements, and they’re looking for something a little more customized or unique,” said Peter Huston, brand president at Fusion Specialties, a mannequin company in Colorado whose sales, almost all of custom mannequins, rose 48 percent last year.

One of Fusion’s customers is Athleta, the sportswear company owned by Gap Inc. It commissioned mannequins based on a catalog model, Danielle Halverson, a track-and-field athlete training for the Olympics.

Fusion Specialties digitally scanned Ms. Halverson in stationary and action sequences. Then, over about two weeks, seven sculptors created clay renderings of the 3-D digital scans that “hand-etched her from a tiny pile of clay down to the tiny delineations of the sinew in the muscle,” said Tess Roering, vice president for marketing at Athleta, which opened its first physical stores this year.
After making more prototypes, Fusion produced the Dani-quin, as Athleta executives started calling the mannequin, in five variations. The running pose, especially, looks realistic: she is in midstride, with only her left toes on the ground. The Dani-quin, by the way, is headless.

“We wanted to make sure that our customers weren’t worrying about the hair, or anything else,” Ms. Roering said.

Michael Steward, executive vice president of Rootstein USA, which makes mannequins for stores like Ralph Lauren, Chanel and Neiman Marcus, said the newfound appreciation for specialty mannequins came as many retailers reassessed the market.

“A lot of people have decided they have to specialize,” Mr. Steward said. “Nothing sells the clothing like a mannequin: it’s a subliminal message from the retailer, the first thing people see in the window or in a department when they go into the store.”

When mannequins first were used, they were basically molded dress forms to which clothing makers pinned garments. By the 1920s, they had developed into torsos with joints attached, and slowly started to get wigs, makeup and glass eyes. By the 1960s, when some women stopped wearing bras, “you started to have nipples on mannequins,” said Linda Scott, a professor studying consumer culture at the Said Business School at Oxford. “That was a big shift,” she  said.

But in the 1970s, as retail chains expanded nationally and cost pressures increased, mannequins shifted back toward the generic. “That’s when you saw mannequins that did not require makeup, did not require wigs, or so much attention to detail, to reduce the costs,” said Mr. Huston, the Fusion executive.
During the recession, companies curtailed spending wherever they could, and mannequin sales slowed. But after shedding unprofitable brands or merchandise during the recession, the retailers are focused on a specific customer and a particular brand position, and they want their windows to reflect that with custom mannequins.

“Over the past two years, everyone has really had to reassess their business and their client base,” Mr. Steward said, “and the market is so competitive that people are just focusing on what they do well, and what they sell.”

Prices of custom mannequins run from about $400 to $1,200 a mannequin, not including the $15,000 or more that places like Fusion charge for development. A mannequin makeover can cost a national chain millions.

Is it money well spent? Not always, said Professor Scott, because shoppers are an unpredictable lot. “Sometimes they’re imagining themselves in the clothes, sometimes they’re just entertaining themselves on an evening walk, sometimes they’re standing there with a girlfriend talking about how stupid the clothes look,” she said.

And Mr. Steward, the executive at Rootstein, said retailers sometimes ask too much of their mannequins.“Everyone thinks they’re going to reinvent the wheel,” he said. “As I always say, there’s only so many things a mannequin can do: would you like two heads with that, madam?”

Retail Software Market to Grow in Emerging States

Despite unfavorable economic conditions all over the world, the prospects for the retail software market look particularly promising in the emerging Asia Pacific and Central and Eastern European markets. A Frost & Sullivan analysis on world retail software market, finds that the retail software market earned revenues of over $9.31 billion in 2007. Of this, software licensing accounted for $3.07 billion in 2007 and will reach $5.88 billion in 2014.

The increased penetration and the transition toward organized retail in several countries across Asia Pacific, Central and Eastern Europe, Middle East, and Latin America, coupled with increased liberalization and disposable incomes, present huge opportunities for the growth of the retail software market.

“The primary driver of the growth of the retail software industry is the growing focus on business integration and optimization,” said, Frost & Sullivan research analyst Prasanna Prakash.

Retailers have been substituting their legacy systems for modern day solutions built on industry-leading platforms facilitating the flow of business information across the entire value chain. As these solutions offer extensive performance enhancements, there is a wide scope for the uptake of advanced end-to-end solutions.

Retailers are mainly turning to customer-centric solutions and Business Intelligence (BI) to build customer loyalty and improve the customer shopping experience. Solutions such as customer relationship management (CRM) enable retailers to target premium customers using customized promotions and advertisements, thereby increasing the customer lifetime value (CLV) involved. Investing in cross-channel solutions can also result in effective understanding and management of their business.

Besides reducing total cost of ownership, retail software also assists in providing uniform brand communication across various channels. Optimization across the various processes and channels allows the retailer to respond quickly and more efficiently to customer requirements.

Retailers are hesitant to invest in solutions such as point-of-sale (POS) upgrades and other additional expenditures on hardware as investments have taken a backseat to cost-cutting during the current economic slowdown. SaaS can help counter this by reducing upfront capital expenditure. It is leased out to retailers on a yearly basis and its SOA, allows the software modules to be used as middleware once SOA has been deployed in the store.

“The growing popularity of the SaaS model and packaged solutions in Asia Pacific and Latin America will gradually make the solutions more affordable for small and medium sized enterprises. Further, to overcome competitive pressures from regional vendors, global vendors need to increasingly focus on after-sales services, such as maintenance and consulting, and customized solutions,” said Prakash.

Poundland targets 2009 expansion

Poundland, the discount retailer, will open at least 35 new stores in 2009, creating 1,200 jobs, as it looks to profit from the economic downturn.

Once the stores open the company’s portfolio will be extended to around 240 shops, after it opened 40 new sites this year.

Chief executive Jim McCarthy said: “Times are tough and customers know Poundland offers quality brands at the incredible £1 price point on all products every day.

“We are convinced that Poundland will continue to help shoppers through the tough times in even more locations next year.”

This year the discount firm revealed annual profits until the end of March were up by 122%.

McCarthy said at the time: “Poundland’s unique single price strategy is providing even greater value. We are perfectly positioned to take advantage of customers’ flight to value.”

By contrast, Woolworths will shed 27,000 jobs after its administrators Deloitte failed to find a buyer for the company.

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