Task: You are to answer the following questions – Total 1800 words
- In the classic article by Leonard L. Berry, The Old Pillars of New Retailing [Harvard Business Review, April 2001, pp.131-7.] there are 5 specific ‘Pillars’ discussed. He suggests all of them are relevant “Whether you’re running physical stores, a catalog business, an e-commerce site, or a combination of the three”. Adding “Everyone who glance at a newspaper knows that the retailing world is brutally competitive.” Critically examine these five pillars of new retailing and evaluate how an internet [email protected] might apply the mantra to his or her operation. (600 words) (Refer to the case study below- The Old Pillars of New Retailing)
- Critically evaluate what social, economic and population trends should be monitored and what are their impacts on retailing. (600 words)
- There has been an explosion in e-tailing, shopping in virtual space over the Internet. Evaluate the main advantages and disadvantages of Internet [email protected] compared with traditional ‘bricks&mortar’ retailing. Critically examine the advantages of adopting a ‘hybrid’ strategy (combination of a physical location and an Internet presence) indicating how a ‘hybrid’ retailer could utilise the differences in a complementary way to achieve real competitive advantage. Use real life examples to illustrate the key points in your answer. (600 words)
- In the classic article by Leonard L. Berry, The Old Pillars of New Retailing [Harvard Business Review, April 2001, pp.131-7.] there are 5 specific ‘Pillars’ He suggests all of them are relevant “Whether you’re running physical stores, a catalog business, an e-commerce site, or a combination of the three”. Adding “Everyone who glance at a newspaper knows that the retailing world is brutally competitive.” Critically examine these five pillars of new retailing and evaluate how an internet retailer might apply the mantra to his or her operation.
The current retail market is a competitive one requiring that businesses remain on the watch out for new moves by competitors while still devising their own competitive points. Failure to remain focused and competitive is likely to hurt the business direly. Author identifies five key categories that retail businesses need to focus on in order to remain competitive within the market which include solving customer problems, treating customers with respect, connecting with customers’ emotions, setting the fairest prices, and saving customers’ time (Berry, 2001: 131). Retailers should not focus on one or a few of the pillars, instead, they need to focus on addressing these business needs in entirety. This implies that all the five pillars are relevant and applies to all forms of businesses. This paper proceeds to critically analyse how an internet retailer business can adopt these pillars in its operations.
Solving Customers’ Problems
Online businesses just like other businesses should focus their marketing efforts into providing their customers with solutions not just products and services. This idea is based on the argument that customers are seeking services or products to meet a need or a problem. By just offering a product, businesses fail to appeal in the best way to their customers. For online businesses, it is imperative that they conduct market analysis to identify the most pressing needs of their customers and the best way to addresses them (Schwerdt, 2015: n.p). Solutions for online businesses have to do with meeting the needs of customers in a way that is unique. There are always products on offer on several online sites. However, an online business can offer differentiated products and services that offer superior customer experience compared with those of competitors. To achieve this, the business must first identify and understand what their customer needs and what is already on offer in the market. This will offer a strong basis for differentiating their products and services.
Treating Customers with Respect
Online business has many aspects where they need to treat customers with respect. Treating customers with respect is critical for any business and determines the number of repeat and referral customers they have or those who walk away never to come back (O’Brien & Harris, 2013: n.p). In online business, responding to customers requests, concerns, and enquiries and doing it on time is the most outstanding way to demonstrate respect to customers. It is also imperative to ensure that products on display are available in the store and in status described on the business page.
Connecting With Customers’ Emotions
Keeping promises made to customers is an important stride towards achieving emotional connection with customers by online businesses (Dunne, Lusch, & Carver, 2014: n.p). Some online businesses have a tendency of promising services they cannot deliver just to appeal to customers. It is imperative that online business focus on products and services they can deliver and do it within the expected time. Internet retails have the opportunity to connect emotionally clients by delivering products to their destinations on time and in the expected condition.
Setting the Fairest Prices
Fairest prices do not imply lowest prices for retailers, instead it implies that the price represents for what it purports to represent (Berry, 2001: 131). Prices for internet retailers need not be too low or high in order to appeal to customers. Instead, internet retailers need to present genuine claims about their prices and what they represent.
Saving Customers’ Time
Clients prefer to shop online in order to save time spent in travelling to the business premises and having to beat traffic or long lines at the mall (Dunne, Lusch, & Carver, 2014: n.p). As such, internet retailers can only succeed if they can save customers time by adhering to strict timelines and convenient service. (625 words)
- Critically evaluate what social, economic and population trends should be monitored and what are their impacts on retailing. (600 words)
The retailing industry is influenced by a number of external factors in addition to the market forces. These factors have a great impact on business and determine the direction a business should focus in order to maintain its revenue. This part focuses on the social, economic, and political trends that a retail business needs to monitor and their impacts on business.
Five social trends are crucial for retailers. These trends include changing state of marriage (expansion of the never married population), increasing levels of education of consumers, change in nature and significance of an individual’s work, changing makeup of the households, and the effect of the higher divorce rates (Dunne, Lusch, & Carver, 2014: n.p).
Education: There is an increasingly high level of education across the American population with over 87 percent of people above 24 years having a high school degree. The women population is equally rising in its levels of education (Dunne, Lusch, & Carver, 2014: n.p. The high levels of education are closely linked with income potentials, spending habits, and attitudes. The more educated the consumers the more sensitive they are likely to be on quality, price, and other critical aspects of retailing.
State of Marriage: The median age for marriage for both males and females has increased in the last four decades to about 28 and 26 years respectively (Dunne, Lusch, & Carver, 2014: n.p. These trends indicate that many people are postponing marriage and another proportion deciding not to marry at all. These trends raise the number of small households in the country and as such creating more demand for retailers. Retailers need to adjust their stores in line with the emerging large market presented by the young adult population.
Divorce: Professor Gary Becker’s theory offers a robust explanation concerning the reasons for the high divorce rates over the last five decades. The main reason is cited as the less dependency levels for couples. Many purchases are needed when a divorce is done meaning more demand for retailers (Dunne, Lusch, & Carver, 2014: n.p).
Income Growth: There has been a 70 percent income growth in median income over the past two decades. This implies a higher demand for products with increased purchasing power of consumers (Burnett, Cutler, & Davies, 2012: 451).
Personal Savings: Despitelow tendency of saving among the American population, there has been a noted increase in the levels of savings since the 1990s. In 2009, Americans saved 5.9 percent down from 1.4 percent in 2005 (Kotkin&Ozuna, 2012: 14). Retailers on the other hand, continue to enjoy significant increases in sales due to increases in household incomes over the same period. However, retailers should be prepared for a shift in these trends in the next decade as baby boomers and generation x reduce their spending and increase their saving as they prepare for retirement.
Women in the Workforce: Women are increasing becoming dominant within the labour force and currently account for about 59 percent up from 43 percent in the 1970s for women over 16 years. The trend is true for all age groups of women with 75 percent of women between 25 and 34 currently being in the workforce (Lazer& Smallwood, 2007: 14). For retailers this trend implies a rise in the number of dual wage-earner families. These kinds of families have less time for shopping and tend to seek convenience shopping.
Widespread Credit Use: In the US more than 70 percent of the households have a general purpose credit card. Retailers can benefit immensely from the use of credit cards than when cash is used (Herhausen, Binder, Schoegel, & Herrmann, 2015: 309). Customers spend more when using credit cards than when they use cash.
Population Growth: The population growth rate has been on decline in the past three decades. Population growth is largely in terms of immigration. Increase in domestic population growth implies increased demand (Lewis, Whysall, & Foster, 2014: 43). To counter decline in population growth, retailers can focus on international expansion.
Age Distribution: There is a change in the age distribution of the US population. The bulge of early baby boomers that are moving into their sixties is one such significant change. Aging population implies a change in taste and preference for retailers (Cho, 2015: 213).
- There has been an explosion in e-tailing, shopping in virtual space over the Internet. Evaluate the main advantages and disadvantages of Internet [email protected] compared with traditional ‘bricks&mortar’ retailing. Critically examine the advantages of adopting a ‘hybrid’ strategy (combination of a physical location and an Internet presence) indicating how a ‘hybrid’ retailer could utilise the differences in a complementary way to achieve real competitive advantage. Use real life examples to illustrate the key points in your answer.
Internet retailing offer the convenience of shopping without the hassles associated with town shopping. With the busy lives of the modern professionals, online shopping offers solution to many challenges in shopping. Internet retailers offer customers with seemingly endless selection available on online options. Internet retailers do not require costly storefronts but just cost-effective warehouses to hold inventory and they can offer the best prices for products (Schultz, & Block, 2015: 101).
The brick and mortar stores major strength is the ability for the customers to receive the product on the spot as opposed to internet shopping that offers the same day or one-day delivery options. Another major strength for the traditional stores their ability to entice customers into buying more than they had planned. For instance, customers in in-stores spend an average 40 percent more than they had anticipated spending as compared with internet shoppers at 25 percent (Pauwels&Neslin, 2015: 182). It is much easier for in-stores to create emotional connection with their clients as opposed to internet shopping. For instance, women tend to enjoy the personal connection with the store employees especially in stores that have a well-executed atmosphere as well as the ability to touch and hold the products before they can purchase.
The brick and mortar stores remain a strong voice in shopping. Brick and Mortar stores can easily be integrated with online retailing offering even better services to its customers. They can build on their already established brand name to introduce online services for their customers. This would increase revenues by capturing a pool of customers who prefer convenience shopping. Online is equally gaining hold especially with more businesses and service providers going online. However, online shopping does not offer certain in-store customer experiences that they can get on the traditional brick and mortar stores (Joonkyum&Bumsoo, 2014: 27). For instance, one cannot try out a new clothing to see if it fits them when they shop online. It is also impossible to examine a product for durability when you shop online.
Advantages of a Hybrid Strategy
The use of a combination of both the bricks and mortar stores and online retailing, commonly referred to as brick and clicks strategy is rapidly gaining hold among retailers. One approach of this strategy is when a chain store encourages clients to order products online in their stores and get it delivered to their home (Bhatnagar&Syam, 2014: 1293). One of the major advantages is that it is easier for an established brick and mortar store to start an online presence for their products than for a start-up company to come up with an entirely online business (Li, Lu &Talebian, 2015: 3823). For consumers, it is convenient for established customers of brick and mortar stores to have the option of shopping inline but still remaining loyal to their brands (Rafiq, Fulford, & Lu, 2013: 494).
A good example of a company that has adopted a hybrid strategy successfully is the Sports Direct. The company initially a brick and mortar store is now offering online options to shoppers. Other examples include Safeway supermarkets, Tesco, and John Lewis (Verhoef, Kannan, & Inman, 2015: 174).
With the increasing population of people using the internet, internet retailing is expected to become even more profound and rewarding for businesses. The brick and mortar stores can increase their sales and revenues significantly by integrating the online shopping into their traditional strategy of in-store shopping. This offers the customers who like shopping online the opportunity of experiencing their customer service and continuing being loyal to the company. As such, integrating the online retailing into the traditional brick and mortar retailing offers a combination of benefits from both approaches for retailers and consumers.Sewdas et al.’s (2017) study employed, there are very little room for generalizing the study’s findings.
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