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With inflation rocketing in markets across the globe, retailers are seeking innovative ways to protect consumers from rising prices and build trust.
They have good reason to, as shoppers are flocking to stores which offer better perceived value. Defining a strong value proposition is a classic retail play at times of rising prices.
Aldi UK chief executive Giles Hurley recently told the BBC that an unprecedented change in consumer behavior had seen the discounter pick up 1.5 million new customers in just 12 weeks as rising inflation reduced their spending power.
“We put people before profits,” Hurley proudly told the BBC, reinforcing the retailer’s growing reputation as a consumer champion.
The scale of the inflation challenge should not be underestimated. Some analysts are already predicting that consumers will cut their typical Christmas spending by more than a fifth this year.
As consumer confidence falters, retailers see a long-term future in building trust now to drive customer loyalty when conditions improve, as well as to maintain market share while times are tough.
As management consultancy McKinsey highlights, simply raising prices during periods of inflation risks damaging relationships with customers. However, while reluctant to increase prices, retailers also need to protect their margins as much as they can.
There is no one-size-fits-all solution to coping with rising prices, but a portfolio of measures can help retailers to provide some help to consumers and a level of protection to their own bottom lines. Here we explore some of those measures.
Improve customer experience with relevant rewards and promotions
Retailers with the most accurate and relevant data on their customers have an advantage in the targeting of effective promotions. Being able to surface a promotion at the right time and for the right product improves in-store experience and customer satisfaction.
Scandit Smart Data Capture is already being used by many retailers in this way. Integrated with loyalty apps, shoppers can view personalized offers and other information by scanning barcodes on products or shelf labels with their smartphones. Offering a hybrid store experience by bringing the benefits normally only found online to physical retail.
Brands are also coming up with other innovative ways to drive loyalty using their customer apps.
In areas such as quick service restaurants (QSR), brands are showing new expertise in using the wealth of data from their loyalty schemes to encourage repeat spending.
For example the new KFC Rewards Arcade is aiming to surprise and delight loyal and occasional KFC customers with targeted rewards.
Customers play an arcade-style game on their phone whenever they use the loyalty app. Prizes are menu items which can be redeemed at any time. The app uses customer data to avoid giving customers items they don’t like or – if the customer is a more adventurous diner – it might reward them with something they haven’t tried before.
Gamification is also being used by some retailers. Take Asda, the large UK grocery firm for example. Their loyalty scheme provides extra points for shoppers who complete in-store ‘missions’, such as spending a certain amount on ‘back to school’ ranges.
As these examples show, discounts and free items are not the only way to engage customers to drive loyalty. Exclusive treatment or a sense of fun can work too.
Make sure the price is right
By helping consumers to navigate economic headwinds with accurate pricing and targeted promotions, retailers can help to build long-term trust.
But accuracy is essential.
With shoppers keeping a careful eye on household budgets, they expect advertised prices to be accurate. Due to their frequency of visits, loyal customers are the ones most likely to spot incorrect pricing. Placing more emphasis on getting them right.
Only 18% of customers would accept an overcharge and shop again at the same store with confidence.
Source: Planet retail
But with the costs of raw materials, fuel and associated factors, such as packaging, all heading upwards, more frequent price changes can be expected.
Changing prices may be a simple process, but human beings are involved at many stages. A grocer, for example, needs to ensure that shelf edge labels, promotional notices, temporary signage and – naturally – the price charged when an item is scanned at checkout, all match up.
With tens of thousands of SKUs in a typical grocery store, this leaves ample scope for human error that can be compounded across a chain of stores.
Technology can be an important ally for retailers here. Automating repetitive tasks can improve accuracy and free up staff for more valuable work, such as helping customers directly, that improves their job satisfaction and effectiveness.
Shifting tedious tasks to technology is a win-win.
One technology that can help retailers to automate the time-consuming task of ensuring well executed pricing and promotions is Scandit ShelfView. It uses smart data capture technology on existing smart devices to identify incorrect prices and misleading promotions. It spots mistakes that could easily slip past busy staff. It also saves staff time so they can focus on other value-adding tasks.
Avoiding those mistakes in pricing and promotions lets retailers sidestep a problem that could otherwise upset customers, dent trust and even result in compliance fines. It also ensures that promotions operate effectively.
Put simply, trust is a key element in building loyalty – and loyalty provides the reliable revenue that helps retailers to ride out stormy conditions and thrive beyond them.
Find cost savings to help protect consumers from price rises
As inflation bites, retailers face a dilemma. With their own costs going up, do they increase prices to protect themselves or hold them to protect consumers?
Being seen to hold your prices and absorb increases where possible builds consumer trust. It shows that retailers really are looking out for their customers and are willing to sacrifice profit in return for loyalty.
But to remain financially stable and keep an acceptable margin, costs must be reduced and efficiencies found.
One way to drive efficiencies is to reduce the total cost of ownership (TCO) of hardware.
One of the most practical and effective ways to do this is by using the same smart devices for multiple purposes, rather than employing dedicated devices.
For example, New Zealand-based retailer The Warehouse saw a substantial decrease in TCO when it replaced a host of dedicated devices with more flexible smart devices. The retailer found that, as well as reduced hardware costs, there was a reduced demand for staff training because staff were familiar with the same device across multiple tasks. It also became easier for staff to switch between tasks, as there was no need for them to change devices.
Not only is smart device scanning cost-effective compared to dedicated devices and sleds, it’s a future-ready solution helping us today with retail operations such as inventory management, clienteling, stock taking and order picking; but tomorrow it could serve additional industry use cases,
Trevor Jones, Chapter Lead DevOps, The Warehouse
Smarter shopping with mobile self-scanning
Self-scanning saw a boost during Covid-19, as customers and retail staff sought to observe social distancing advice. The wider benefits mean it is here to stay.
For retailers, this change in behavior offers a chance to redeploy staff to roles away from the checkout at a time when pay levels are rising, and to capitalize on other areas of efficiency.
As well as requiring fewer staff, mobile self-checkout lets customers take closer control of their spending and avoid surprises at the checkout. It allows them to prioritize the items they choose if finances are tight.
There are further opportunities for efficiency. Many of the retailers which offer self-scanning are still using dedicated scanners, which customers pick up when they enter the store. But companies with more advanced systems employ an app, which customers use on their own smart device. Here, savings from not deploying dedicated scanners can feed into any initiatives designed to protect consumers from price rises as mentioned above.
In-app incentives such as personalized rewards and coupons can be easily applied and give customers a real-time view of their spend and the feeling they are being looked after. Being app-based, it also gives retailers the chance to understand shopper behavior in greater detail using first party data.
Examples include:
- What are the shopper’s buying habits?
- What was the shopper’s journey to the final basket?
- What items were picked, scanned but then discarded?
All helping to refine store layouts and creating opportunities to present customers with closely-targeted promotions.
But scanning performance must be seamless. Failed scans can be a source of frustration that add friction to the shopping experience and may deter shoppers from entering the store in the future.
A crinkled bag, glare from harsh lighting, damaged codes, and condensation from cold items are some of the reasons for failed scans.
But retailers needn’t worry, user studies confirm that Scandit-powered mobile apps significantly outperform other scanning software solutions on any device under any condition with any barcode.
A holistic approach
Taking action now to build consumer trust can help retailers not only survive the current challenging conditions but also thrive in the long term.
But regardless of the measures chosen, the process of driving retail efficiencies and looking after customers can be more effective when a coordinated approach tackles several problems at once.
Combining processes that save staff time, cut the cost of owning specialist equipment, increase accuracy and make customers happier can see a dovetailing approach where each initiative works better when the other initiatives happen too. That’s where the flexibility of Scandit Smart Data Capture on smart devices is the difference.
The end result is an outcome that can be more than the sum of its parts.