In a Retail’s BIG Show panel discussion moderated by Rod Sides, retail, wholesale and distribution leader for Deloitte LLP, Mike Mauler, EVP and president of GameStop International, and Colin Watts, CEO and chief health enthusiast for The Vitamin Shoppe, described ways in which insights about their customer base derived from consumer data have helped their companies change and evolve their business models.
In his introductory remarks, Sides noted that the United States economy is growing at about 2 percent per year. The retail industry, he said, is growing at about the same rate. “In a slow-growth pattern like this,” he said, “overall, retailers seek to grow by taking business away from each other.”
Meanwhile, he noted, the store journey is changing, as is the role of the store itself. No longer do consumers become introduced to products and explore them by going to a store; that part of the journey takes place at home, through online research. The actual trip to the store is increasingly part of the fulfillment stage of the buying process: Either the consumer is picking up an order placed online, or they have gone to the store to see and make the final purchase of a product long since decided upon.
For many customers, those trips to the store are only moderately satisfying. According to Deloitte, only 47 percent of surveyed customers report being satisfied with their store experiences on the logistical, taking-care-of-business level; 41 percent report being satisfied on the emotional level. “Expectations of the store experience are being set by the consumers’ digital experience,” Sides said, which leads to disappointment.
The rewards for solving this problem, Sides noted, are considerable; while the retail industry as a whole is averaging 2 percent growth, industry leaders — those differentiating themselves both on better products and a better experience — are reporting a 13 percent cumulative average annual growth rate for sales.
GameStop has some 50 million members in its loyalty program worldwide.
GameStop has apparently cracked the code as far as understanding its customers and cementing their loyalty. The retailer, which operates over 7,000 stores in 16 countries, has some 50 million members in its loyalty program worldwide. In Australia, its most recent annual EB Games Expo attracted 35,000 attendees; of the 21 million Australians, 19 percent of the population are GameStop loyalty members.
“In the nineties, it became a cliché to say business should think globally and act locally,” said Mauler. “We actually do that. We think globally, and we use loyalty program data to interact personally with our customers.” The program, he said, is “not about points or perks. Outside the U.S., points don’t even count. It’s about understanding customer data and using that knowledge to shape our business model.”
As an example, he cites what gamers refer to as “loot” — themed merchandise tied to the imagery of games or fantasy entertainment: “Game of Thrones” shot glasses, for example. GameStop’s customer base — 65 percent of whom are female and family shoppers — let the company know that the eight feet of shelf space devoted to loot in a normal GameStop store were not enough. In response, the company has launched a chain of stores called Zing that are devoted solely to loot. By the end of the year there will be 80 Zing stores, representing $500,000 in business.
More than nine in 10 first-time customers say they would recommend The Vitamin Shoppe to friends and family.
Transforming the customer base
Vitamin Shoppe, which has been in business for some 40 years, is in the process of transforming its customer base — or, to be more accurate, the customer base is transforming itself. From being a minority preoccupation, concern with proper nutrition and exercise is now “a national obsession,” said CEO and chief health enthusiast Colin Watts.
In response to changing times and the changing needs of its customers, The Vitamin Shoppe is transforming its appearance and business model. From a somewhat intimidating display of shelves of pills and powders, the stores now feature meeting places for one-on-one and group consultations, sampling stations and other features designed to help employees understand how they can help their customers.
“We’ve become a destination store,” said Watts. “We have three times the number of first-time customers, and 91 percent of them say they would recommend it to friends and family.”