Retail Insight: The cost of choice

From the consumer perspective, we are used to, and therefore expecting, ever-more choice. Along with this increase in choice has come an increased demand for value; not just the best price but the right package of product quality, brand reputation, retailer service levels and price.

From the retailer perspective the task is further complicated by the increasing acceptance and usage of multiple channels. Maintaining both bricks and clicks increases the cost base and yet this diversifying puts more pressure on price and therefore margin.

In categories where on-line has been a major part of the channel mix for the longest, such as banking, we see the maturing of behaviour with individual customers using a variety of channels to suit their specific requirements at a given point.

So for retailers it is about not just offering the exact same service and range in-store as on-line, but tailoring the offer to the reason for the consumers ‘visit’. As shopping on foot becomes an increasingly social activity; shoppers are wishing to engage more with staff in stores, seeking them out for help and advice. The on-line offer needs to emphasise convenience, ease of transaction and minimisation of the perceived risks of buying ‘unseen’. But again all this costs money, but get it right and it should increase sales.

For many retailers there is a perceived need to offer telephone or postal services too, but at what cost? It is easy to slip into thinking that to be successful retailers must offer every channel to their customers, but, does the cost of each channel really get repaid through the revenue of those using it? Only by clearly understanding shopper behaviour and motivations can retailers make informed decisions on which channels to operate through.

And what of the future? There used to be a school of thought that said we would soon be doing all our shopping on-line and other channels would fade away. But why would consumers turn their back on choice? Now it’s here, it’s here to stay. The challenge will be to make sure that the experience offered by each channel optimises its sales potential.