The past 18 months have been among the toughest in living memory for the retail industry. Not only is there less money in consumer pockets, perceptions around worsening credit have meant what is there has stayed there, and significantly less has been reaching retailers’ registers. This is particularly evident at the premium end of the market, with same-store comparisons running at more than 20% year-over-year. An immediate reaction to such a harsh economic environment may be to encourage sales by pulling the ‘discount’ lever and slashing prices. Of course in some markets this can be a winning short-term strategy, but for most it won’t be a sustainable or desirable one – price cuts don’t support or grow brand value, don’t secure customer loyalty on their own, and they certainly don’t prepare a retailer for success when the economy rebounds.
The situation requires more than a blanket price cut; it needs a smart reassessment of how the retailer communicates with and serves its customer in order to maximize their value both in the short and long term.
In this article published on RetailingToday.com, Vertex’s Philip Michell explores the growth of lower cost channels to reach customers.