2. Guidance for 2014
2
A new year – a new approach. In Guidance for 2014,
BMC offers retailers a short “to-do” list that’s long on
opportunity.
1. Prepare for shoppers to assign a monetary value
to time.
2. Look for the point of diminishing returns in
personalization.
3. Test new approaches to fee for services.
4. Increase your vigilance re competitive prices.
5. Watch for new vulnerabilities in very large
competitors. MORE »»»
3. Guidance for 2014
3
1. Prepare for shoppers to assign monetary
value to time.
Implications/opportunities
o Retailers will have an opportunity to differentiate themselves on the basis of the time they
can save shoppers.
o Capturing this benefit will require the retailer to:
• Communicate to shoppers how they can think about these benefits and “do the
math” for them.
• Promote the store’s time-saving features as a way to make that store a more
attractive choice for convenience-oriented purchases than other options.
More shoppers will consider the time they spend shopping
to be a cost. This will lead to more online buying for at least
some shopping occasions.
Shoppers who calculate their “savings” by combining travel
time with in-store shopping time will be the most impacted.
Interest in time-cost and time savings will extend to greater
interest in quicker service and checkout inside the store.
4. 2. Look for the point of diminishing returns in
personalization.
Implications/opportunities
o Retailers who can understand what it costs to execute the key elements of
personalization can create competitive advantage.
o Among the challenges they must overcome:
• Collecting and validating shopper information without “creeping people out.”
• Translating that information into a form that’s appreciated by and useful to
shoppers.
Guidance for 2014
4
The costs and challenges of personalization will become more
evident as markets are sliced into ever-smaller segments.
Retailers will need to weigh these costs against the expected
incremental sales. Reaching “segments of one” may not
always be cost effective.
5. 3. Test new approaches to fee for services.
Implications/opportunities
This form of “service pricing” resonates with shoppers and grows the sales of retailers
that implement it.
To keep pace, all players will need to find ways to apply this concept without eroding
customer profitability.
The challenge will come when shoppers have to make choices between several
competing services since it feels a bit like joining a “club” or committing to one
retailer. Will it be reasonable for a household to subscribe to multiple grocery
services, for instance?
Guidance for 2014
5
Look for greater use of subscription fees for execution and delivery of
online shopping orders. More businesses will realize that moving
away from “one-off” transaction fees not only promotes more orders
per household, but actually increases household spending.
6. 4. Increase your vigilance re competitor prices.
Implications/opportunities
Since more and more shoppers will come to the purchase decision armed with a real-time
understanding of marketplace prices:
o No retailer can afford to charge “insult” prices just because they’ve been able to do so
in the past. Prices today don’t have to match, but they do have to be closer.
o Retail margins will compress because it will be harder to sell higher-than-market-priced
products in order to balance out lower prices on other items.
o Increasing the velocity of product sales will become an even more important way to
improve performance.
Guidance for 2014
6
Shoppers’ growing access to and use of competitive pricing
information is undermining many traditional pricing practices.
Price will continue to be important, as even more shoppers tap
into the reservoir of available information. Retailers will need
to adjust pricing strategies accordingly.
7. Guidance for 2014
7
5. Watch for new vulnerabilities in very large
competitors.
Implications/opportunities
This will make some business opportunities more attractive by making it easier for
smaller and more specialized sellers to win a loyal following.
Among shoppers, there’s concern that very large businesses
could grow so big that they stamp out smaller competition,
disadvantaging shoppers in the process. (Think Amazon and
Google.)
As more people realize these companies can already do things
customers don’t like – and that there’s little customers can do
about it – concern will likely increase.
8. Guidance for 2014
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that retailers, suppliers and technology providers
need to drive growth by meeting shopper needs in
an omnichannel environment.
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future of shopping at our website.
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