Trust is one of the themes of the speech I am giving today at the World Retail Congress. It is (surprise, surprise) a room full of retailers from around the world but what is true for our industry is also true for other sectors. The potted argument is that consumers, armed with technology, have greater control than ever. At the same time they are under huge financial pressure and are using that greater control to ask whether retailers are on their side or not. What retailers – and business in general – must do is to be loyal to their customers, to work as hard at keeping them as they worked at getting them.
The starting point is that, if the nineties and noughties were characterised by care-free spending, we’re seeing something different in this decade. Not just consumers tightly constrained by their finances but a pride in value-seeking. It’s a psychological and social phenomenon as well as an economic one. It is about the satisfaction of finding value.
Technology is playing a big part: the communal, social activity of sharing tips, free-cycling, word of mouth and collective buying is all powered by digital media. Smartphones have made revolutionary change faster still. They have given birth to the always-on, networked shopper empowered like never before to find and share value – or the reverse – whenever or wherever they are. That’s not just for big ticket purchases like a new TV. Over half the visits to our Tesco.com website are to check prices – and this is our food site, not our general merchandise site. Individuals using the technology are powerful; individuals using technology together are all powerful.
If it sounds alarming to my fellow retailers it shouldn’t. It’s good news if we have the right attitude. Those same networked shoppers are fair. If they find a business worth praising, they do. What’s worth praising? A business which works hard to understand them, to help them, to anticipate what they might need and deliver it, perhaps when they don’t even really know they want it yet. It is about seeing that every person’s needs and wants are different and finding a way to meet them.
At Tesco, we’re using Clubcard to develop what I call mass personalisation. Clubcard itself is not new of course. What is new is being able to work the sales data harder than we ever have before. In the past we rewarded you based on what people a bit like you bought. I wasn’t happy that we used Clubcard to reward people a bit like you. I want it to reward you, with offers and coupons on the things you buy, not offers for products that people a bit like you might buy. That’s the attention to detail which we value as shoppers, the kind which makes us feel well understood and well served. So that’s the personalisation bit. Then we replicate it for millions of customers, which is the mass bit.
To achieve it, we need to make the data work harder but we also need to work harder. But it’s not about working harder to find new customers. We’re working flat out to better serve the customers we have, to be fair and trustworthy, to know our customers so well we know what they want next, to earn their lifetime loyalty by giving them ours.
It’s why six months ago I called a halt to what’s been called the space race – the rush to open ever more stores. New stores are about new customers, not loving the customers we’ve got. We needed to invest more in our customers, in the stores they are using today with better quality products and more staff. And if we’re investing in tomorrow’s customers, our money is better spent online because that’s where the future growth is. In the world of the social consumer, taking care of the customers you have is the best way to attract the customers you don’t.
I’m a retailer and that’s the way I think, but I don’t think it’s something just for retailers to think about.