Is the customer really the most important thing in retail?
Photo: Groceryshop

Is the customer really the most important thing in retail?

Pardon my cynicism, but if I had a dollar every time I heard some variant of the phrase “the customer must be at the center of every retail decision” at Groceryshop last week, I’d be able to buy a nice meal at one of the many overpriced restaurants in Las Vegas.

Nearly every facet of retail discussed at the event featured some type of customer-first notion, from retail media to supply chain. Even the CEOs keynoting the event were focused on the use of tech and process to enhance customer engagement. The new CEO of Whole Foods, Jason Buechel, said “customer” no less than 20 times in about 20 minutes. (I counted.) John Furner, CEO of Walmart US, used that term or a related one several times in his session, as did Kroger CIO Yael Cosset, who focused on the digital angle in his discussion of the customer.

It wasn’t as if other key retailing factors were ignored during the conference. There were excellent tracks on ecommerce, supply chain, marketing, technology (of course) and even physical retail and merchandising.

Still, and with full acknowledgement that the statement may be entirely accurate, the proliferation of the customer-first approach at Groceryshop was borderline cliché to the extent that one of the presentations featured a slide with this Sam Walton quote: “There is only one boss — the customer. The goal as a company is to have customer service that is not just the best but legendary.”

There has to be more than just a customer focus in retail. Merchants need to sell something and need to sell it in a certain way. There has to be a staff that supports the marketing and selling of that product. There needs to be a process to get the product from the point of the production to the point of consumption. And there need to be guardrails to ensure the product and the process is as risk-free as possible.

By constantly repeating “customer-first” at conferences and in internal and external communications, companies run the risk of it becoming noise that is ignored more than followed. If the most recent Groceryshop is any indication, we are rapidly approaching that line.

BrainTrust

"We have doubled down on shareholders for years, and where are we today? It’s imperative to find out what customers want and give it to them. It’s as simple as that."

Ken Morris

Managing Partner Cambridge Retail Advisors


"If customers come second, then who comes first? Employees!"

Kevin Graff

President, Graff Retail


"Getting closer to the customer drives delightful product and engaging experiences. It’s a no-brainer."

Liza Amlani

Principal and Founder, Retail Strategy Group


Discussion Questions

DISCUSSION QUESTIONS: Does the customer really need to be the primary focus of every retail decision? What other factors, if any, are as critical for retail decision-making?

Poll

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Paula Rosenblum
Noble Member
1 year ago

Funny question. There’s no doubt the term “CX” is beyond over-used at this point — but — retail today is about what the customer wants to buy, not what you want to sell. So, I guess, yes.

If I were going to prioritize, I’d say the keys to the customer experience are:

  • Product;
  • People;
  • Processes;
  • Technology.

If I were going to make a list of what we’re missing at the moment it’s innovative product, employees that actually care, updated, efficient processes and, of course, the technology to support them.

The big danger these days is the perception that some technology or another will be the magic bullet that solves all problems. Like those horrific voice response systems (or whatever you call them) that allow companies like Xfinity to presume their God-awful telephone system is actually helpful.

Georganne Bender
Noble Member
Reply to  Paula Rosenblum
1 year ago

Xfinity’s phone system is a good example. So are retailers who get you into the store only to tell you that what you want is available online, or piles of merchandise tossed on fixtures or the floor as if customers are expected to shop that mess, or our favorite, Paula, retail buyers who think women over 50 only want to wear leopard print and sequins. You can’t preach service until you have experienced it firsthand in your own stores.

David Slavick
Member
Reply to  Georganne Bender
1 year ago

Agree, it used to be that clientelling was the buzzword before personal service or personalization became the “thing.” Just having a women’s apparel chain that has fashion sense and is on trend would be appreciated by all women over 50 — remember Coldwater Creek or Casual Corner or hey, how about Kohl’s having apparel for women that they would actually love which isn’t athletic or casual wear? Might help their current situation.

David Slavick
Member
Reply to  Paula Rosenblum
1 year ago

You mean you don’t like the stupid tapping sound while you are on hold that somehow makes you be patient, as if someone is routing your call? I have to assume a social psychologist or behavioral scientist recommended this hold experience.

Jbrandonpowell
Reply to  Paula Rosenblum
1 year ago

I would agree with this list except I swap people and products places. If you don’t care about and take care of your people, they won’t care about taking care of your product or customers.

I would argue that one of the problems in retail right now is that companies have put the customer so far into the first priority slot they are inadvertently beating down their people.

Neil Saunders
Famed Member
1 year ago

The customer is critical and should be considered in all decisions. Unfortunately, for some retailers “customer first” is a meaningless platitude that is rarely acted upon. Of course, the customer is not the only consideration as there are many other stakeholders – investors, staff, communities, etc. – that need to be considered and have their needs balanced into decision making. I’d also say that properly understanding the customer is vital. How good a grip do retailers really have on who their customers are and what they actually want?

Dr. Stephen Needel
Active Member
1 year ago

Great points, Ron – as usual. Yes, the customer is critical but no, they do not need to be the focus of every decision. Let’s be honest, most of the decisions a retailer makes are invisible or irrelevant to the customer. Don’t make life more difficult for your customers and if there’s a problem, see if you can fix it. Otherwise, worry about your bottom line, optimize your ongoing processes as much as possible, and have nice front-facing people.

Katie Thomas
1 year ago

At the end of the day, the consumer should be at the center of every retail decision. Even if you can find success through other avenues at first, over time knowing the consumer will win out. The bigger challenge is what you call out – that everyone *says* the consumer is at the center, but in reality they are not. They are not willing to listen to the consumer, making long-term investments at the expense of short-term ones, and that is where the breakdown occurs.

Bob Phibbs
Trusted Member
1 year ago

I couldn’t agree more. Who could argue with “the customer has to be at the center of all decisions”? It’s like saying, “the target is that big red bullseye.” Much like, “The customer wants to buy what they want, when they want, and how they want,” these cliches mask the very real problem – the details. Many don’t understand, it seems, that creating interest, buzzwords, and Powerpoints do not fulfill any of that. It takes people building people to build customer conversions.

DeAnn Campbell
Active Member
1 year ago

The customer is the only mechanism for the continued existence of a brand or retailer, so they do need to be the focus of every system, process, decision and resource. Yes, it’s necessary to invest in staff, technology and real estate, but without the customer those investments are lost. Regardless of how much attention and love has been placed into product selection, staff training and marketing, If no one buys the products or services then that business is out of business.

Ken Morris
Trusted Member
1 year ago

Yes, the customer should be the center of every retailer’s universe. Just outside that center should be the in-store people who interact with the customers. Everything else in the retailer’s business should support delivering goods and experiences that make customers love them and their brand. And, yes, that requires a lot of technology and expertise behind the scenes.

Now, is the “customer first” mantra overused? Of course it is, and for good reason. We need to double down on the customer. We have doubled down on shareholders for years, and where are we today? It’s imperative to find out what customers want and give it to them. It’s as simple as that.

Nikki Baird
Active Member
1 year ago

LOL, Ron, I love it! I agree with your point on product – you can have the best customers in the world but if you have nothing to sell them, what’s the point? But I would add one more wrinkle to this. Everyone talks about “the customer” but they’re all mostly talking about what they want to do TO the customer. It’s not about understanding the customer, or enabling the customer, or solving the customer’s problems or delighting them. It’s about getting the customer to do what retailers want them to do: getting them to spend more or devote more attention. Those are outcomes – if you can delight a customer or save them time or money, they will freely give you more of their attention and more of their spend. But you can’t just demand those things!

I agree – “the customer at the center” has become a mantra almost without meaning.

Ken Wyker
Member
Reply to  Nikki Baird
1 year ago

You nailed it, Nikki! The problem isn’t the focus, it’s the objective.

Too many retailers focus on targeting the customer to get them to do what the retailer wants. It is far more effective to view the situation from the customer’s point of view and work toward creating an environment that nurtures the customer relationship and makes it easy and rewarding for customers to get what they want from you.

Georganne Bender
Noble Member
1 year ago

The answer to this question is yes, the customer really is the most important thing in retail. And everything else including buying, merchandise presentation, marketing, policies, etc. must be customer-focused, too.

The reality is that the customer is no longer first in retail. You can say it in every way possible, but all you have to do is walk a sales floor to see how far stores have drifted from what customers really want and can’t easily find. You can’t just give lip service to customer service and think you’re good, you have to practice it every day.

Jeff Sward
Noble Member
1 year ago

Yes, of course retail is all about “customer-first.” But the quick qualifying filter to add is “how?” Differentiated product that establishes a moat? Commodity product but with emphasis on price and value? Speed of delivery? A differentiating value-adding service? The next filter might be “when?” Meaning, what are the priorities to best serve the customer today and tomorrow? How does that change a year out? Three years out? I think the customer is always at the center of the decision making process, but it’s about managing the Rubik’s Cube of variables involved in staying ahead in the highly competitive and evolving world we live in today.

Richard Hernandez
Active Member
1 year ago

As we all know, retailing has changed over the past 20 years. For so many years it was the customer that was most important because we really didn’t have any other data to use to make decisions, but innovation, people and other factors have caused us to look at retail in different ways. I believe this will continue to evolve as changes in habits will drive our definition of retail.

Nicola Kinsella
Active Member
1 year ago

Amazon prides themselves on being “customer obsessed.” It works. You make different decisions when you are “customer led” and not just “customer aware.” Anyone who thinks they can make decisions without factoring in customer data and insights without a negative impact to the business is fooling themselves. To be clear, that doesn’t mean doing everything a customer says. It means truly interrogating customer data, generating smart insights, and iteratively tweaking your offering to meet their needs.

Brad Halverson
Active Member
Reply to  Nicola Kinsella
1 year ago

Nice, Nicola. The distinctions you make show the difference between stating platitudes versus putting them into action to grow a customer centric business.

David Spear
Active Member
1 year ago

The retail customer journey is as important now as it ever was, albeit a bit more complex today with multiple shopping touch points and digital modalities that are used. Whoever buys product, whoever visits stores, whoever shops online is and should be at the center of decision making. Understanding consumer behavior and the motivations and idiosyncrasies of why decisions are made during the moment of truth are critical to research, new product innovation, programmatic media, promotions, pricing, merchandising. Retailers who lose sight of this are going to see their businesses struggle.

Shep Hyken
Active Member
1 year ago

Let’s consider this: Without customers to buy what we sell, we have no business. So the customer is a very important part of the retail business. That said, there is more and more emphasis being placed on what’s happening inside the business with employees. Who would’ve ever thought there would be such a shortage that it would wreak havoc on the retail world? So, without employees to sell, customers won’t be taken care of, and therefore won’t buy the products. It opens the door even wider for online retailers to win more business. I’ll go back to my statement at the beginning of this answer. Without customers to buy what we sell, we have no business.

Gene Detroyer
Noble Member
1 year ago

No customer, no business.

Ryan Mathews
Trusted Member
Reply to  Gene Detroyer
1 year ago

Gene, true — but equally true: failed business, no customers.

Liza Amlani
Active Member
1 year ago

Of course brands and retailers should have a customer-first mindset. The reality is they don’t. It’s very apparent when the customer is not at the center when you look at disconnected product assortments, the abundance of excess inventory, decreased revenue and eroded gross margins. It’s not that difficult to spot a brand/retailer who doesn’t know who their customer is.

If predictive analytics, leveraging insights, closing the customer feedback loop, walking the shop floor and engaging with customers are not part of the product creation or assortment planning process, brands will fail.

The customer should be at the center of the retailing, from store planning to merchandising strategy to brand ambassadors. Getting closer to the customer drives delightful product and engaging experiences. It’s a no-brainer.

Raj B. Shroff
Member
1 year ago

One reason you might hear it so much is because human-centered design, shopper-based design, consumer-centricity, etc. are what consulting firms have been using as the foundation for their shopper-facing work for the past 15+ years (actual time might be longer but that’s not the point). And they were brought in when the “stack them high, let them fly” mentality wasn’t enough anymore.

Soon you’ll see that human-centricity model even more with systems thinking and service design, which look to improve and drive that type of thinking and behavior across the entire value chain.

There is no doubt that the whole value chain has to be well thought-out and executed well for any business, not just retail. And while the customer-centricity point is true, I am sure Ron is right that it’s just an all-too-often used buzzword with, in some cases, no clear understanding of what it means or could mean.

Dick Seesel
Trusted Member
1 year ago

To quote Ron: “Merchants need to sell something and need to sell it in a certain way. There has to be a staff that supports the marketing and selling of that product. There needs to be a process to get the product from the point of the production to the point of consumption. And there need to be guardrails to ensure the product and the process is as risk-free as possible.”

He’s 100 percent right about all of these steps, but for what other purpose than interacting with the customer? The trick is to move that transactional relationship with the shopper to higher levels of engagement and commitment.

Mel Kleiman
Member
1 year ago

I will try and make this simple. YES, customers first — as long as management looks at employees as their number one customer.

Kathleen Fischer
Member
1 year ago

Yes, the customer needs to be a primary focus as they are the reason retailers can exist. Decisions on products, processes, technology, etc. should be made with the customer PLUS employees and profitability in mind.

Kevin Graff
Member
1 year ago

My most popular keynote these days is “The Customer Comes 2nd!” It’s not just intended to be a title that makes people pay attention. It is, in my view, where retail is going, and needs to go. If customers come second, then who comes first? Employees! I’m not saying customers aren’t important, but good luck satisfying them on any front when employees aren’t happy. These days retailers can’t find or even keep enough staff it seems. Look around at so many of the retailers (and the wider business world) and you’ll find that the majority of the most successful retailers not only put staff first with words, they invest in them in every way possible.

Rich Kizer
Member
1 year ago

I think that when the customer becomes a non-primary target that no one feels the necessity to speak with the retail world will truly suffer. The loss of customers’ input would destroy inspiration, creation and margins Not too bright of an idea in my opinion.

Martin Amadio
Martin Amadio
1 year ago

Watch what they do, NOT what they say. As Gene Detroyer said, “No customers, no business.” BUT because so much of retail is focused on operations and the bottom line, decisions are made which negatively impact customers and the top line.

Kenneth Leung
Active Member
1 year ago

The customer is first, but profit is always paramount. You can’t lose money on every transaction to make your customers happy. Giving away products to make your customers happy is not sustainable. The key is to generate profit on almost every item that you sell to your customer, preferably immediately, since Lifetime value of the shopper is getting smaller and the timeframe shorter.

Ananda Chakravarty
Active Member
1 year ago

Yes. The customer is the most important. The customer is the source of revenue and profit. The customer defines assortment. The customer sets acceptable price and demand. The customer if not buying from you is buying from a competitor. All other functions follow the customer’s lead. There are temporary conditions where other factors can move to the top of the list, but over the life of any retailer, the customer remains most important. (Plug alert: behind a paywall) My recent Planscape report on Retail Customer Analytics and Insight outlines 20 top retail CEOs who advocate for the customer. Sam Walton says “There is only one boss. the Customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

David Slavick
Member
1 year ago

You can never have an argument with the statement “The Customer is King.” But there are areas of focus which indeed are essential to success at retail which may or may not require laser focus solely on the customer. In training employees on the floor of the store as well as cash n’ wrap saying “yes” and delighting the customer, showing appreciation is key. Having technology that supports seamless customer experience and captures data which informs retail decisioning should be the primary focus for any operator if they want to survive in tough competitive categories. Branding of the retail entity, store culture, merchant planning/analysis and so much more truly represent keys to success in retail decision-making.

Ricardo Belmar
Active Member
1 year ago

Love this point, Ron! I think the issue isn’t as much whether or not the customer should be at the center of every retail decision, but are they the only stakeholder impacted by each decision? If you look at it that way, then yes, you want them at the center to help justify what you are doing, BUT, there are likely many other groups sharing that spotlight, e.g. store associates, suppliers, and so on. Retail can be a very complicated business that involves many moving parts and many groups of people. You want to keep the customer at the center but not at the point of excluding everyone else and being blind to the needs of your store teams, your corporate HQ workers, your distribution center staff, and so on. Each one of these has an important role and needs to be considered depending on the decision at hand.

Brandon Rael
Active Member
1 year ago

If you are in the business of serving customers, then building and executing strategies to drive an outstanding customer experience should be at the core of your operating models. However, you have to consider the multi-dimensional aspects of running a retail business, and there, many variants of end consumers exist. The consumer of a product or service is also the employees and other stakeholders impacted by the company’s product and service strategies.

The narrative of being “customer first” are commendable and spans retailers’ annual reports, shareholder updates, and other strategy updates. Yet, the pandemic’s digital acceleration has required companies to be customer-first, agile, flexible, and value-centric. Retailers have to objectively review if their short and long-term “customer first” transformation plans are:

  • Unlocking commercial value and new revenue streams
  • Enhancing the cross-channel customer experience
  • Improving the associate experience, capabilities, and tools to serve the customer better
  • Migrating from a project-centric way of working to a collaborative product-centric way
Brad Halverson
Active Member
1 year ago

Being customer-centric and successful in the other key areas of the business is not an either/or trade-off. Amazon, Nordstrom, Zappos among others are or have been customer led in how they go about executing on their retail strategy. The decisions on the kind of products, pricing, people, real estate, and operations are very much integrated in supporting how to be customer led. The key is integrating a customer focused mindset in all aspects of what you do.

Of course, businesses don’t have to be customer led. They can primarily focus on other things. They can make products and services, price them, and put them out there without really understanding the customer, knowing if they are meeting their target base. Sears was once a great customer led business. And then they didn’t listen to them. They got caught up in other things they thought were more important.

Oliver Guy
Member
1 year ago

Retailers have multiple stakeholders to consider other than customers — shareholder, employees, communities, suppliers all spring to mind. Balancing the needs of this is really tough and one might argue that the environment is a new one to consider. In reality there are angles around these to focus the attention of customers – for example customers make environmentally conscious buying decisions — and also get concerned when the retailer is involved with suppliers who perhaps do not live up to the same set of values.

Customers ultimately should be the focus — as they are in a position to judge (with sufficient time and knowledge) the appropriateness of the focuses on the other stakeholders — for example how the company treats its employees.

Mohamed Amer, PhD
Mohamed Amer, PhD
Active Member
1 year ago

Retailers move goods and deliver services to their customers in a financial exchange of value and money. In a push model of mass consumerism, the product is the most important element in retail, and the customer becomes the key to success in a pull world of niche markets. The sheer efficacy and amount of consumer marketing ought to convince doubters that the customer is at the heart of retail decisions.

We need to see retailers connecting their words with deeds that operationalize their statements on the importance of the consumer who pays the bill.

Anil Patel
Member
1 year ago

How can we ever be sure that our company is worthwhile if we don’t put our customers first? Retailers align their products according to the customers’ needs and requirements. It is a fact that customers come first and are the boss.

Everyone believes that the customer is the person making the in-store purchases, however this is untrue. A brand’s customers are not just the people who ultimately buy the finished product but also those who are involved in building a product. Therefore, being customer-centric is crucial, but knowing your customers and designing your product with them in mind is even more essential.