Comment: Creating a relevant customer proposition in retail

In this new series of four articles from Boxwood, we are going to tackle the issue of how to impress customers and deliver results – "Execution Excellence" for short.

Creating an effective strategy isn’t easy, but it is relatively logical and straightforward. Getting your organisation to consistently execute the fantastic customer proposition that your strategy contains is, however, another story.

Indeed, a survey by the Economist Intelligence Unit revealed that over 60% of the senior managers they surveyed felt that their organisations struggled to bridge the gap between formulation and execution of strategy. Our own experience of working with organisations to deliver execution excellence echoes these statistics. In fact, we would suggest that 60% is a conservative figure.

To a large extent, this has always been true. However, the world is undergoing constant change and execution excellence has become a whole lot more difficult to achieve.

During our research a quote from Andrew Jennings, Hema chairman, global retail advisor and formerly CEO of Karstadt, Woolworths RSA, Holt Renfrew and House of Fraser seemed to sum up the problem nicely:

"There's nothing wrong with 90% of strategy papers – it's the execution that fails."

So why has achieving execution excellence become so hard in the last few years? There are a number of macro trends working against us:

Our research covered four areas we believe are pivotal to achieve "Execution Excellence" – customer value proposition, leadership style, operating model and change capability.

We segmented the above four areas into old truths (aspects that used to be important and remain to be so today), even more true (have substantially increased in importance) and new truths.

Now we have set the scene, let's take a much closer look at the customer value proposition. This is why consumers buy from you.;

What attracts people to your brand or offer? Why is it relevant, different and compelling? Is it just price or range, or is there something extra that customers connect with and gives you the edge?

The ability to evolve your core customer value proposition to stay relevant and attractive to your current and future customers lies at the heart of any consumer-facing business. 

Old truths – product centric

Product will always be the core of a customer value proposition. If the range, quality, design and value is not compelling, any retailer will struggle to be successful.

However, having a great product is no longer enough. It’s become a given, rather than a USP.  

Even more true – consumer centric

In the last few years, consumer expectations have changed. Consumers want a great product, and they want to purchase it anytime, anywhere and on any device. In addition to that, they want to customise their products and they want to make informed decisions about what they buy. All this drives the need for convenience, personalisation and transparency.

Convenience tomorrow will be driven by different technology and expectations – Apple, for example, is heading the trend towards digital payments through Apple Pay. Within this decade, the need to carry money around could become obsolete.

Another implication of being consumer centric is the importance of building trust with your customers . We live in a world where what you say and do can ‘go viral’ within minutes. With instant access to information about not just pricing, but about how ethically sourced your products are and how you treated Joe Bloggs in store, you need to know what your customers expect of you and make sure you meet, if not exceed, those expectations. With greater access to information, customers are able to make informed decisions about which retailers they can trust.

New truths – community centric

The issue of trust leads us on to communities. Where before consumers placed their trust in the brand message, they are now more likely to place their trust in communities of like-minded consumers. For some brands, especially fashion, the ability to tap into this emphasis on communities will have a huge impact on how effectively organisations execute their customer proposition.

Asos has built an online community, which embraces a fashion lifestyle; tweeting, blogging, living and breathing fashion. It draws its target 20 something years+ consumers into its community, offers them a blend of content and products and encourages them to participate, making money from their involvement. Through a skilful use of social media, the boundaries between consumer and employee are blurred as Asos incorporates its consumer community into its operating model.

Whether you follow the Asos route and create a community of consumers within your operating model, or whether you choose to build a community as an extension of your brand marketing like Heinz, or simply find ways to tap into existing communities, the choice is yours, but it’s a choice you need to make. It is no longer an option to treat your consumers as unconnected individuals. The majority of them will be part of an online community somewhere, where they can become powerful advocates of your brand or equally powerful detractors.

Paul Martin is managing director of Boxwood Insights at management consulting firm Boxwood. His series of articles on "Execution Excellence" will be serialised on Essential Retail over the coming months.

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