Nielsen: Convenience, Continuous Innovation Key to Retail Success
NEW YORK -- Consumers' busy lives and fragmented time make it more likely that they won't be 100-percent focused on the task at hand when they shop. To keep up with them, retailers are increasingly finding they must innovate in ways that make it easier and more convenient for their customers to get what they need without missing a beat, according to Nielsen's Continuous Innovation: The Key To Retail Success report, which found that convenience itself may be the most creative and energetic example of retail innovation.
Channel and format are the stand-out areas of retail innovation. Major examples include Tesco plc's operation of four different store formats in the United Kingdom that provide quick and easy service from urban centers to the outskirts of town, and Walmart's testing of smaller Walmart Express stores in addition to its supercenters.
Additionally, while brick-and-mortar stores maintain strong footing with consumers, online shopping is changing how shoppers interact with stores, Nielsen found. Many stores with a significant physical presence have capitalized on the influence of online retailers by offering "click and collect" options that allow customers to order online and pick up their items at a nearby store, eliminating the need to wait at home during delivery windows.
The virtual supermarket, designed by Tesco and launched in South Korean subway stations in 2011, is another variant of online shopping intersecting with brick-and-mortar. Customers scan QR codes of the items they want, click the "send" button on a smartphone app and then receive the delivered items at home later.
Along with innovation, retailers also need to differentiate themselves from their competition -- as much now as ever, according to the report. Global consumer confidence during the third quarter of 2013 was flat compared to the previous quarter, but confidence was on the rise in more than half the individual countries Nielsen surveyed, including the United States. At the same time, many shoppers are still focused on getting value for their money, and electronic commerce has attracted a growing number of users. Trip frequency in the U.S. has fallen 15 percent over the last six years, while basket size has only grown by 9 percent. To compete, stores need to encourage consumers to increase their number of trips, the size of their basket or, ideally, both.
Retailers have several ways they can reach shoppers based on need – convenience, choice, shopability, price value and promoting the brand outside the store. Innovating in these categories makes the shopping experience easier, faster or better for customers, and promotes more frequent shopping with larger purchases.
Other Nielsen findings include:
- New ideas in convenience make shopping faster and easier for consumers, but can go further to leverage customer data to predict purchases and fill needs.
- Assortment innovations vary experiences by shoppers and their missions, creating the feeling of a justified trip.
- Shopability helps retailers sell by helping consumers buy. Creative brands are adding new reasons for visits, but are also making it easier to make purchases, such as through self-checkouts.
- Price value remains the key to many shopper buys, and while many tried-and-true ways to promote low prices exist, there are still new routes, such as through cross-category subsidization. Additionally, many global shoppers say they would purchase more private-label goods if given the chance.
- Many retailers have stretched their brand in innovative ways outside the store, such as including extra services like car washes and valets, and supporting volunteer efforts.
Finally, Nielsen noted that while innovation persuades shoppers to do something different, it only captures consumers' attention for a brief time as it brings in new customers or improves loyalty. Newness wears off, and retailers must continually develop new ways to capture interest in order to stay ahead.