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It's all about the customer
Last Updated June 5, 2007
By Peter Hadzipetros, CBC News
As a shopper, you pride yourself on being your own person. You're discriminating, you buy only what you and your family need. You are an individual.
Guess again. You fall into a category. You're actually a type.
If you shop at Canada's largest retail grocery chain — any of the stores owned by Loblaw Cos. Ltd — you're one of six different categories of shoppers. The company has given each of them names. Five are female because each of those categories is dominated by women.
The sixth — called Bernard — is the only one with a male name. If you are a Bernard, you tend to want your groceries at a good price, but don't want to spend a lot of time hunting down bargains.
"Bernard is very conscious of his time," Mark Foote, president and chief merchandising officer of Loblaws, told a Toronto retail conference. Bernard is more likely to shop at one of the Loblaws discount stores — like the No Frills brand in Ontario. He represents about 14 per cent of the company's sales.
In the first quarter of 2007, Loblaws reported sales of $6.35 billion. That's up $200 million from the same period a year earlier.
Inspired by Canadian Tire's growth
Foote says the company began developing the consumer profiles in the summer of 2006 as part of its effort to turn around a sagging performance. Foote had spent 30 years at Canadian Tire and oversaw that company's growth to one of Canada's most successful retail chains.
Loblaws is especially keen to appeal to the shopper-type it has identified as Lynne. She's young and stylish but is on a bit of a budget. She wants quality food at a good price. She's critical to the success of the Real Canadian SuperStores that the company hopes to take across the country. The stores are much larger than the traditional Loblaws supermarket and carry a wide variety of non-food merchandise.
So far, the format has fallen short of expectations and expansion plans are on hold. In the meantime, the company is planning to spend $50 million promoting its President's Choice and No Name labels. It is also actively soliciting feedback from its customers.
Dalton Philips, chief operating officer of Loblaws, says the company is offering a small incentive for customers to go online and give their opinions of what's working or what's not.
"The response blows me away," Philips said. "We are getting great information about what the consumer feels about our stores."
Philips said it's clear that a lot of people are very loyal to the Loblaws brands.
Seeking the 'emotionally connected'
And that may be key to the company's fortunes.
"Simply satisfying customers is not enough," John Fleming of The Gallup Organization told the same conference. "It's the starting point and not the end point."
Fleming says Gallup's research suggests there are two types of customers who surveys reveal to be "extremely satisfied:"
People whose satisfaction is based on a rational decision — the service was good, the product is good. People whose satisfaction is based on emotion — love the product, love shopping there.
Fleming says people whose satisfaction is based on emotion are key. Keeping the most emotionally connected customers happy could mean a profit premium of 23 per cent.
Since much of that loyalty is built with face-to-face contact — how the customer and a store's staff interact — more retail chains are paying attention to how they can best foster that environment.
Best Buy — the largest electronics retailer in the United States — moved into Canada in 2001 when it bought the Future Shop chain. Its sales jumped from $2 billion that first year to almost $5 billion last year.
Robert Willett, Best Buy International's chief executive officer, says the chain's success is due to the front-line employee — the people who deal with customers.
"We make them part of a movie," Willett said. "They all play critical roles. They are the lens of the consumer."
Making employees' ideas count
The company actively solicits ideas from its employees.
"Good ideas don't come from the boardroom," Willett said. "They come from the people on the floor, the people who know what's working and what's not working."
It's key to attract and keep employees who are passionate about the field. If they feel they are listened to and have a stake in the company, he said, they will be motivated and that will create a positive experience for the consumer.
It's a philosophy that has worked well at The Running Room, North America's largest chain of specialty running stores. It was founded in Edmonton in 1981 by John Stanton, who took up the sport of running but had difficulty finding decent running shoes and running apparel.
The chain has centralized the business of running the stores at head office and has left front-line staff — who are all either active runners or walkers and passionate about fitness — to focus on serving the needs of customers.
"If you empower people with their passion," Stanton said, "it's amazing what they can accomplish.
The chain has grown to 90 stores across Canada and parts of the United States.
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