Business Gets Tougher for Retailers

Consumers are abandoning retailers that fail to stock the items they want to buy, and are less loyal to specific brands.
Published: December 6, 2011

Mark Roberti

Dec. 6, 2011—Perhaps it’s because they don’t have as much money in their pockets as they did before the 2008 financial crisis, but consumers are less loyal to specific brands these days, and are abandoning retailers that don’t have the items they want to buy in stock, according to some new research findings.

A nationwide survey commissioned by Galleria Retail Technology Solutions (RTS), a provider of retail and category-optimization solutions, reveals that nearly 70 percent of adults in the United States would avoid shopping at a retail store if they encountered empty shelves. Harris Interactive, on behalf of Galleria RTS, surveyed a random sample of 1,021 U.S. adults regarding retail store loyalty, from Nov. 3-6, 2011. The survey also found that women would be more likely than men to avoid shopping at a particular retail store upon encountering empty shelves during their visit (73 percent versus 62 percent, respectively).

In addition, the survey found that nearly two out of three U.S. adults would shun a retail store due to:

• Long checkout lines (64 percent)

• Desired items being out-of-stock (63 percent)

• Difficulty in finding desired products (62 percent)

According to Galleria RTS, “Statistics have shown that it costs five times more to obtain a new customer than to retain an existing customer” (see Consumers Get Cross When the Cupboard is Bare). “In the current U.S. economic climate, when consumers are more cost-conscious than ever, retailers should make every effort to ensure they have the right products, in the right place at the right time to keep their customers happy… and coming back.”

The study supports the notion that retailers can use Galleria RTS’ suite of retail-optimization software to determine the correct products, and the proper quantity of those items, to stock in store, based on actual consumer demand. But it also supports the idea that retailers could—and should—employ radio frequency identification to better manage inventory.

VideoMining, a startup company that utilizes software to analyze videos of consumers shopping, reports that its research indicates brand loyalty is on the decline, as a preference for favorite brands is replaced by a partiality for lower prices (see Brand Loyalty Is Declining Among Shoppers).

The data revealed several facts about our shopping habits: Consumers prefer wider aisles when they shop; women take a lot longer to shop than men do; and, aside from a few brands tested, brand loyalty is not always strong.

VideoMining uses software in tandem with cameras mounted on store ceilings to track shoppers moving around a store, and to accumulate data that can help retailers understand how customers choose from among the many products available within a single category. What’s more, the software anonymously tracks how shoppers move throughout a store, revealing which are most highly trafficked and where visitors linger the longest.

The fact that shoppers are less loyal to brands and more willing to avoid stores that disappoint them suggests that retailers and brand owners need to work harder these days to make sure they are delivering the correct products to the right place at the proper time. I know of at least one technology that can help them do just that: RFID.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark’s opinions, visit the RFID Journal Blog, the Editor’s Note archive or RFID Connect.