Retailers need to customize stores

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Retailers need to customize stores

Today’s sluggish economy is creating swarms of so-called cherry-picker shoppers, who are less interested in specific brands than buying whatever is the most compelling choice of the moment. Amid an environment of fast inventory turnover to cater to rapidly changing consumption trends and product standardization, consumers have become much more judgmental about quality and costs and have little tolerance for unjustified mark-ups.

Against this backdrop, brand loyalty is waning. While image and status still strongly influence the decisions of Korean shoppers, retailers can no longer count on revenue driven by certain brand lines. They must depend less on product, price and promotion and more on the fourth P in marketing: place, or the store itself. By emphasizing the store, retailers can better attract consumers who had no plans to visit.

Many companies stress the importance of understanding customers, but they are actually weak at discerning shoppers’ thoughts and understanding them. Studies on brain science and cognitive psychology show that 95 percent of consumer behavior is dominated by unconscious thinking. Although the psychological aspects of impulse and imitative buying are well documented, many companies still base their strategies on rational customer behavior. They traditionally concentrate on satisfying rational decision making and neglect attention toward satisfying consumers’ emotional expectations.

Retailers focus on their product lineup and sales volume, but only 20 percent of customers’ typical shopping time is actually devoted to making choices and purchasing. The rest of the time obviously holds potential for more sales.

As customers become increasingly hard to please, retailers must track customers’ habits with a nearly obsessive attention to detail, while developing the ability to forecast changes in customer behavior. While it is important for businesses to look at the big picture of market trends, it is even more important that retailers thoroughly understand the mood and thoughts of individual customers. Predicting customer behavior only with sales data can lead to false conclusions.

Store-centric marketing has several components. It makes a strong first impression at their entrance and guides the shopping experience. Apple stores are a prime example. Since most people are right-handed, high-revenue stores also have a layout that keep customers moving counterclockwise longer, and seeing more product displays, which are eye-catching. Attractive displays generate high sales even if customer traffic is moderate. Complementary products also are in the same proximity. For example, in Korean retail outlets, sashimi, seafood soup and sushi are placed next to the fish section.

A successful store also has a highly professional sales force. Retailers stand to gain if they train employees to be more communicative and knowledgeable about products. Proactive salespeople, moreover, can suggest products that meet a customer’s priorities and also introduce complementary items instead of simply waiting for hesitant or confused shoppers to decide.

Finally, parking lots that are easy to enter and exit and restrooms that are conveniently located and clean can make lasting impressions that influence a customer’s decision to revisit a store.

A store strategy does not require huge investments into stores. Most customers will gladly tolerate minor inconveniences if a product or service provides emotional satisfaction that exceeds any small dissatisfaction on a rational level. One leader in this area is U.S. retail chain Costco. Its product selection at discount prices garners high customer loyalty and satisfaction despite the company’s conspicuous lack of customer conveniences such as express check-out lines. Inconveniences can even be used as an opportunity to increase customers’ emotional satisfaction. Products provided for a limited time, or in limited quantities, have greater appeal to customers.

Wherever a store lies on the retail spectrum, retailers need to understand that individual perspectives on shopping can vary greatly. For example, a man in his 50s who considers shopping to be a tiresome chore will have unique responses to product displays and sales staff.

by Lee Min-hoon

* The writer is a research fellow at the industry and strategy department at the Samsung Economic Research Institute. For more SERI reports, please visit

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