To be credible, that new proposition needs to be rooted in the retailer’s core identity. But to unlock new opportunities to create value within the retail sector, leaders need to build beyond what worked in the past. By tailoring their offer so it creates value that is right for both the customer and the retailer, they can build relevance and trust.
The three opportunities to become more integrated into the customer’s life (invisibility, indispensability and intimacy) map to three value propositions: save me time, solve my problems and give me an experience I value. A compelling and differentiated proposition will give the customer the ideal mix of all three:
1. The time saver
This proposition is about becoming an essential part of the customer’s life by making what you do almost invisible. The focus is on giving the customer what they want, quickly, conveniently and efficiently. Leading “time savers” are adept at using automation and digital capabilities through a variety of channels and models. They deliver high volumes at a low margin, with a product assortment, property portfolio, digital infrastructure and logistics that are designed to minimize friction. They use fulfilment models such as subscription and auto-replenishment to pre-emptively curate the customer’s needs and tastes. For example, a grocer connected to IoT in your fridge knows when you’re running low and what to restock.
2. The problem solver
This second proposition is about becoming an essential part of the customer’s life by making what you do indispensable. The focus is on creating bundles of goods and services that meet the customer’s needs in a holistic way. The best “problem solvers” are brilliant at delivering outcomes. They curate, combine and orchestrate goods and services from a broad ecosystem of partners. They often provide goods and services at zero margin, but as part of higher margin service offerings. For example, a company that links the nutritional profile of the groceries they sell to you to the health insurance premium they provide.
3. The experience creator
The third and final proposition is about becoming an essential part of the customer’s life by creating an experience rooted in intimacy. The focus is on providing enriching experiences that delight the customer to such an extent that shopping becomes a meaningful and satisfying leisure activity. For companies that are great “experience creators”, the product is secondary to the service and experience that surrounds it. They win when they create digital and physical spaces that their customers want to spend time in, and when there’s a sense of shared values between the retailer and the customer. They create a sense of intimacy by optimizing every interaction and service experience around the individual customer. This isn’t just about premium brands and luxury; a compelling shopping experience can be anything that the customer enjoys doing, including browsing for bargains. For example, a retailer that hosts social events and generates revenue from the merchandise it sells.