3 lessons for winning over the customer in today's retail environment
Last Friday my wife and I visited our local shopping centre to see Jack the Giant Slayer. It's a high octane re-telling of Jack and the Beanstalk for big kids and grown-ups who should know better. The lasting memory of the evening was not the film however but that two national retailers (in similar sectors and in the same location) could have such contrasting fortunes; one clearly understanding and satisfying the needs of today's value hungry customers - the other apparently not. I wanted to understand why.
The West 12 Shopping Centre in Shepherds Bush has perhaps seen better days. Originally opened in 1967 and re-developed in the 1990s it is just 200 yards yet a million miles away from its upmarket neighbour Westfield London. With 30 stores, low ceilings and a lack of natural light, West 12 has to fight hard to drive footfall.
Nevertheless, one retailer inside this shopping centre - Wetherspoon's Central Bar - is not just surviving but seems to be thriving despite the challenges. I wondered why? As we squeezed ourselves into the bar I noticed groups of office workers unwinding at the end of a hard week over ice cold bottles of premium Italian beer (2 for £5) and steaming platters of spicy king prawns. I spied romantic couples cosying up over rump steak and an earthy bottle of Spanish Rioja. Recession - what recession? This is what I wondered as digital screens enticed me with seductive shots of champagne on offer (£36.95).
"Ahhh"… I hear you say, "… that's easy – they're just piling it high and selling it cheap" - but if you believe that you are seriously underestimating the quality of the customer experience on offer. After a thoroughly pleasant half an hour we set off to our second retailer of the evening, the local cinema. Here the picture was somewhat different. With tickets in hand, we sauntered over to the counter for some salty snacks. The selection consisted of a lonely tortilla chip 'Grab Bag' (£3.65). We left empty handed.
The cinema foyer was almost empty as we queued to go in. "Is it always this quiet?" I asked the usher. "Oh yes", she replied, "but it does get busy on Saturdays". We were one of only ten people in a theatre that could accommodate 200. The accountant in me gulped as I imagined the fixed costs of running this place. Somehow we still managed to sit behind the group that talked through the whole film.
Based on these two extreme examples I realised 'Spoons' had learned and applied 3 valuable lessons for winning in today's retail environment:
1. Offer great customer value, not the lowest price
A helpful definition of customer value = Perceived benefit ÷ Perceived costs (relative to competitor offers).
Wetherspoon's seem to be delivering on both sides of the equation. Pricing is competitive but not at the expense of the quality of the brands on offer – a powerful combination.
2. Know the long term value of a customer
Customers may be tempted by the lure of a great deal. But so will their mates. And guess what, they may stay for the night and buy other higher margin offerings like food as well. Plus after a good night out they will be more likely to tell their friends and family as well.
3. Remember you're in the 'Retailtainment' business
Wide screen TVs, Netflix, Dine in for £10… customers have never had entertaining at home so good, or cheap. Tempting customers off the sofa means offering experiences that cannot be easily replicated at home. Here again, Wetherspoon's have kept their proposition fresh and distinctive through such things as free WiFi, International Ale Festival and Steak Club.
If you are still in any doubt as to the wisdom of Wetherspoon's founder Tim Martin's recipe to create great customer value, consider the interim results he just posted. While 2 traditional pubs close per day in the UK, Wetherspoon's delivered like for like sales +6.9%, total sales +10% and a share price that has risen from 231p at the start of the recession in 2008 to 542p today. And that's a menu to satisfy even the most hungry shareholders!
For more information about how Brand Learning can help you lift your organisation’s marketing capabilities, please get in touch or contact me directly on LinkedIn. You may also like these films, perspectives and resources on Marketing Capability.