Adding the “S” into Value

Posted on 13. Jul, 2010 by Jon Bird in Westfield World Study Tour 2010, retail strategy

The shift to “value” has been the megatrend in retail for several years. As a retailer, if you’re not providing your own compelling version of value, you’re probably not in business. Gwen Morrison of international retail intelligence source “The Store”* told the Westfield World Retail Study Tour recently: “these days retailers are all competing for the same sweet spot – where high quality and low price converge”.

But there is evidence to suggest as the world emerges from the Global Financial Crisis, consumer perception of exactly what is value is starting to change. During the downturn, the value seesaw tipped sharply to “price”. Consumers became overtly frugal and thriftiness was trendy. Now we’re seeing a slightly more balanced view materialise.

Verdict Research in the UK reports a movement in drivers of UK shopper loyalty from 2009 to 2010. “Price” has decreased by 0.9% as a driver, while “Quality” has increased by 1.5% and “Service” by 0.7%. Small shifts perhaps, but nonetheless telling. It seems the post GFC consumer is becoming more of a smart shopper than purely frugal, and appreciating that true value is not defined by dollars alone. (As one international commentator quipped recently “frugality in itself is not aspirational”.)

Clever retailers are responding accordingly, and even the more progressive dollar stores are sharpening up their act. Recently in Japan, I saw a 100 yen store called Daiso (the equivalent of our $2 shops), which looked more like a contemporary discount department store in terms of fit-out.  

The next logical step in a sophisticated appreciation of value may be that consumers also expect a company’s values to be appropriate. Customers will intuitively question how retailers measure up on their levels of environmental, social and community responsibility. Three good examples of where retail is heading are Marks & Spencer in the UK with their Plan A environmental program (“because there is no Plan B”), US organic supermarket Whole Foods who donate 5% of their net profits to charitable causes, and Timberland globally with their emphasis on products that are durable, not disposable.

The richer definition of value will mean that consumers will not only want an offer that is “good for me”, but also “good for you and good for the planet.”

In an Australian market where even David Jones, our premium department store, constantly screams “price” and “clearance”, you may well question whether this trend will emerge. But if you lift your sights from the present, my bet is that an improving economy will encourage consumers to look for retailers who are not just doing deals, but doing the right thing.

Value and values. How do you measure up?

Jon Bird is CEO of specialist retail marketing agency IdeaWorks (www.ideaworks.com.au). Email jon.bird@ideaworks.com.au. “The Store” is owned by WPP, who is also the parent company of IdeaWorks.

• No Related Post