What it Takes to Capture and Keep Loyal Consumers: Part I

This is Part I of a three part blog. In this issue, I’ll address loyalty of shopping for women’s clothing. Part II will address loyalty of shopping for men’s clothing. Part III will address tactics for capturing the loyal market.

In the retail biz, summer is known for big promotions to push merchandise. Consumers stock up on school and office supplies and clothing for the family. Despite the weak progress in unemployment, June has been a good month for retailers. Coupons, promotions, and heavy marketing efforts brought consumers into the stores. According to the International Council of Shopping Centers, major retail revenues increased 6.9% during June 2011. This increase is very good, particularly considering the bleak existence of the rest of the economy.

So the $64,000 questions are: (a) what types of retailers are gaining strength and (b) what potential exists to gain leverage? BIGresearch© Consumer Intentions and Actions® Study of 8,379 respondents surveyed in April 2011. We asked consumers to indicate where they shopped most often for women’s clothing.

32.7% of consumers shopped most often for women’s clothing in department stores. This finding might not come as a surprise to many readers. Department stores have long been the supreme ruler for women’s clothing sales. But will this retailer continue to dominate in the future? 

Based on the survey results, discount stores and specialty stores are also popular. Discounters like Target attracted 21.6% of shoppers for women’s clothing. Specialty stores such as The Limited, Ann Taylor, Jil Sander and Talbots attracted an additional 14.8%. You get the idea. Consumers like variety; they have choices.  

The really interesting statistic is the “no preference” answer. 23.2% of consumers weren’t loyal to any category of retailer. This group – a rather significant size – is floundering and ready to be wooed by retailers. If a retailer could capture even a small percentage of the market, this group, the sales (and hopefully profits) would increase. The “no preference” consumer is not a loyal customer. It is the job of the retailer to make him or her loyal. Before you say it - - yes it is easier and less expensive to keep a consumer than to attract a consumer. However – in this changing economic climate, all retailers should concentrate at least some of their efforts on attracting new customers to their store. It is not enough to keep their existing customer base. I firmly believe that all retailers should have the following goals:

1. Maximize the customer satisfaction of the existing target market
2. Increase merchandise sold to the existing target market
3. Expand the market share captured without sacrificing products or services offered

The “no preference” demonstrates that there is market share to be captured. In order to capture this group, it is important to understand why consumers select a store.

Consumers spoke loud and clear in this April 2011 survey. Seven items were identified as reasons for choosing a type of store for women’s clothing. 67.7% stated that price was the driving factor in selecting a type of retailer. Location was the second most popular reason with 37.9% of the sample.  19.5% of the customers shop as a result of coupons and sales.

The era of shopping in stores that offer superb service, beautiful store layouts, fashion assistance and knowledgeable sales assistance may be over. These store attributes are reserved for the retailers on Rodeo Drive and couture stores with the names of Chanel, Dior and Givenchy. The majority of consumers are looking for the best deals on price and location. The economy has hit them hard. They want to feel as if they are getting the best deal for their value.

Here is the big twist for retailers. June 2011 was a good month for retailers. Sales were good, because consumers were offered deep discounts and promotions. These deep markdowns can’t be offered indefinitely; profits will dwindle away.

Retailers need to identify creative ways to keep consumers loyal. Increasing the market share of the category is also essential. On July 25^th I’ll look at where consumers shop for men’s clothing. Is there room for retailers to grab “no preference” consumers and make them loyal? Which retailer is the most patronized when purchasing men’s clothing? Are there significant differences in shopping patterns between the income brackets? Log on next week to find out.