Manufacturers shift toward retail strategies

By GEORGINA BOND

New Zealand manufacturers and suppliers are adopting retail strategies to increase market share, reflecting international trends, says Deloitte consumer business partner Lisa Cruickshank.

"Today, if a business has a customer - it's a retailer," said Cruickshank, and as a result retailing skills were becoming important for businesses right across the board, not just those with retail roots.

Research by Deloitte showed this was occurring all around the world.

Cruickshank points to the strength of supermarket house brands such as Signature Range and Pams as an example of how branding has shifted from suppliers to retailers, and driven suppliers such as cheese and icecream manufacturer Kapiti to establish their own retail presence.

Bendon and Sony are also examples of manufacturers that have opened their own specialty stores in Auckland.

Cruickshank says consumers themselves have also become retailers, with the existence of trading websites such as www.trademe.co.nz

Differentiation is therefore very important for a much broader range of businesses, she said.

Manufacturer and retailer Kathmandu has done this by creating a customer community through lifestyle-type catalogues and connecting with customers through its Summit Club.

Health insurance provider Southern Cross, law firm Simpson Grierson, and the Automobile Association use newsletters to foster closer relationships with members and clients.

Cruickshank said businesses were now using strategies to combat customer boredom and a desire for instant gratification.

In-store cafes and those located in supermarket foyers are an example of an entertainment strategy to improve the customer experience, as are the in-store manicure kits offered at Servilles hair salons.

Pumpkin Patch, which publishes parenting advice in its clothing catalogues, is an example of how businesses are looking to help solve their customers' problems.

The creation of loyalty locks is making it difficult for customers to shift their business elsewhere. Airline frequent-flyer programmes are a classic example, encouraging flyers to remain loyal to an airline through frequent-flyer clubs and opportunities for class upgrades.

Banks also take advantage of this, electronically locking customers into their accounts with a range of automatic transaction services such as automatic bill payments, which make it difficult for the account holder to change banks.

Cruickshank points out the shift from a product-centric to a customer-centric approach to business, with the deluge of loyalty schemes allow businesses to collect and analyse the shopping and spending habits of their customers.

"My wallet is exploding with loyalty cards, some of which track my purchases and tailor their communications with me accordingly," she said.

Although it was predicted the internet would pose fierce competition for book and appliance stores in particular, and that store location would become less important, Cruickshank argues retailers such as Noel Leeming have reacted by establishing their own internet presence, and many bookstores have made the in-store experience more enticing with comfortable reading areas and story-time sessions.