Tag Archive for: retail industry

[Intern Insights] Imagining the Future: Retail and Consumerism, How they affect the World

What is the consumerism?

Consumerism in one of its interpretations is a doctrine which states that the increasing consumption of goods and services is the basis for a healthy economy (Business Dictionary, 2017). In other words, for a society to function properly, it must produce and sell goods and services (Shah, 2005). Capitalism 101. The more that is produced, purchased, and consumed, the more successful and prosperous the economy becomes. This culminates in the yearly gross national product (GNP), the measure of success every nation uses to rank its economic power (ibid).

What does that have to do with the Retail Industry?

Retailers are defined as the final link between manufacturers and consumers. Basically retailers are where demand and supply meet (The Balance, 2017). Philosophically, we could say that the retail industry is the wheel that turns the global economy. Round and round it goes. Yet, when mentioning consumerism, we often get a very negative impression. As if the world has gone bad. How can the world go bad, when the economy goes well? Does the wheel spin both ways?

I have touched on this subject on my previous entries. The moment when we, as consumers, ask for more goods, more performant, better quality, state-of the-art versions, we really confuse that poor wheel. Why? Even though we drive the economic forces that may result in a better purchasing power and life quality for us, we run the risk of stealing the same benefits from other people in other parts of the world. Or worse, we may be robbing future generations.

I am talking about the gap between the amount of resources we have and the speed through which we are using and misusing them.

Let’s take a classic example. Fast food restaurants such as KFC and Pizza Hut are designed to cater to the masses by providing food at a lower price (Global Issues, 2016). This way they are taking advantage of the economy of scale, having more beneficial prices from suppliers because of the sheer quantity that they demand.

At the same time, they create a competitive landscape putting in motion economic forces, such as the purchasing decision. Everybody’s got to eat. But what happens on the other side? Intensive breeding of livestock and poultry meant just for these restaurants. More animals means more space to house them, things to feed them, all of which can lead to deforestation, land degradation, contamination of water resources, etc.

If we were to transform this into an equation, it would look something like this:

 …for every pound of red meat or poultry or egg or milk produced equals the loss of five pounds of irreplaceable top soil from farm fields.

Another equation:

…for meat breeding one animal per day requires 190 gallons of water which equals ten times the amount of water that a normal Indian family requires per day. The sad truth is that animal farms use nearly 40 percent of the world’s total grain production (ibid.).

But this is food you might say!

We buy food, folks! It’s still on the retail side!

What does that have to do with the Future?

If we imagine the future we tend to always have these shiny, sleek qualities in mind. Everything is high-tech and functional and ordered and efficient. But this future will happen only for some people. For others, it will be messy, with masses of lands sliding away due to deforestation, limited resources of water, leading to relocation, poverty and famine. And suddenly you find yourself in Elysium with Matt Damon fighting societal inequality.

In an ideal future, all people would have access to the same resources, have the same possibilities, the same potential. Now we are digging at the roots of Marxist communism. Every way we turn a turn the wheel there seems to be a danger waiting for us.

Let’s stop the wheel. Let’s think about what we are doing and most importantly WHY we are doing! The retail industry is a powerhouse. Let it be a force for good.

If retails would think WHY they are supplying or enticing demand when it would not be necessary, their answers would be connected to the financial aspect. But future retailers…what would they say? Would they even exist? There is a precarious balance between the economical rise and downfall, sustainable development and environmental collapse. They’re all specks on a wheel and they’re turning our world.

Consumerism pushes this wheel but it can also break it. Would it be difficult to temper our needs and wants? We want so much more than any human wanted in the history of this planet and we are surpassing nature’s rhythms to supply us. What happens when demand exceeds supply? Scarcity. Economy 101. Unfortunately, this scarcity involves our home at a planetary level. And for now, it’s our only possible home.

What happens when the curtain falls?

Nobody knows what will happen, but we know for sure that the curtain must not fall. The rising awareness of consumer’s action over the environment shapes the new economic dynamics. Personally, I will pay attention to what I am buying and why. If I do need it or if 50% of the time I am just indulging myself. Because if it is the latter than I must change. Mother nature deserves more consideration. And if I can change just one person’s mind about it and that individual would change another person’s mind…well…with the risk of sounding cliché…we would change the world. So, let’s spin the wheel of fate!

This post is brought to you by one of AQ’s Undergraduates, Laura Susnea. As part of our internship programs, undergraduates and classic interns are encouraged to take part in company culture. Laura’s primary project focusses on training programs and eLearning and how best to adapt this to industries under pressure.

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What happens after the Mystery Shopping Report?

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After many intense hours of fieldwork, quality analysis, intrinsic research, and valuable insights market research companies proudly deliver the Mystery Shopping Report to your company doorstep. This valuable data is there to help you develop strategies to increase your service and sales performances. It eventually finds its way downstream to one of the many shops that has been visited by one of the many mystery shoppers! And of course, both the sales team and the Shop manager are awaiting this moment with excitement!

So why are we so curious to see this Report?

One of the reasons for this is because many have been working hard, because of less successful previous Reports or because they want to match or even surpass them! Whatever reason the company employees have for being so exciting about all of this, it all comes to the conclusion that Retail is detail!

It will always be a challenge, how to become more detailed and what details need the main focus. And every detail counts obviously! Detail about what shoppers experienced or not experienced in your specific shops or details about what the shopper thought about that big Christmas tree in the middle of the main entrance? All questions that can be answered by that extensive report lying on the coffee table in the canteen.

What to do?

To get to all of this, the shop manager needs to decide what the next step will be and how to address the employees with the new findings of the report. After a short briefing of the shop manager with the exciting news that “it” has arrived, everyone strives for a glimpse of the report. You, the shop manager…Are you going to take the Mystery Shopping Report as a starting point for a training session, are you going to evaluate it step by step, or is it just a reminder of what to do right the next time?

No matter what way you choose as a shop manager, always be reminded of the fact that mystery shopping is a measurement tool for your service delivery and the report is a summary of how your company is doing on delivering service to your customers. And most important question what is your company aiming at? You need a basis that will lead you towards your main service objectives.

Here are five components needed for a better understanding of your Mystery Shopping Report:

  • Intrinsic motivation
  • Participation
  • Commitment
  • Awareness
  • Rewarding

To succeed, you need full participation and interaction of your employees and thus do not make your employees see this whole process as spying or as a performance evaluation! With this mixture your sales department will use the Mystery Shopper report in the most efficient way and you will be able to realize change!

Also read this article: Retail Customer Service: Reality of Retail Industry

On this journey we will take you further into many other steps that will lead us to the best practices for the best service delivery!

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[Intern Insights] Imagining the Future: Value Perception vs. Environmental Impact in the Fashion Retail Industry

Why did humans become the leading species of Earth?

We did two things:

  • We ranked the importance of things surrounding us, giving them value
  • We changed the environment according to these value perceptions

If we look back at the proto-humans, thousands of years ago, and judged them based on the current principles of survival, our assured conclusion would be that they would not survive. Nature did not equip them with sharp claws, poisonous teeth, or hard-shelled exoskeletons. How could they possibly go up against apex predators when countless species of mammals have done so and disappeared?

The one advantage that humans have had is the fact that they wanted more. More food, more heat, more comfort. Although nature did not equip them with features that enabled them to easily achieve it, humans took it for themselves by changing their environment. That still holds true for today!

Value Perception

Nowadays, people expect speed, transparency, and immediate gratification in/with any service or product they purchase. Taking technological advancements into consideration this may seem an easy process. However, to get what we want, we transform our environment, and not always in the best of ways.

Take a look at the fashion industry, we notice that this sector has one of the most drastic impacts on the global surroundings. This makes sense, considering that it is a $3 trillion global industry. Making abstraction of the social issues it supposes and the community sustainability principles it must uphold, the fashion industry starts its environment impact with one word – ‘fiber’.

Here are some dramatic facts about fiber processing:

  • ‘Approx. 70 million barrels of oil are used yearly to create polyester fiber, the most commonly used fire in clothes today.’
  • ‘It takes 200 years for polyester fiber to decompose.’
  • ‘More than 70 million trees are logged yearly and turned into fabrics like rayon, viscose, modal and lyocell.’
  • ‘Plastic microfibers shed from our synthetic clothing into the water supply account for 85% of the human-made material found along ocean shores, threatening marine wildlife and ending up in our food supply.’
  • ‘The apparel industry is the second biggest polluter of freshwater resources on the planet.’
  • ‘A quarter of the chemicals produced in the world are used in textiles.’

(Conca, 2015)

The question is why do we need to invest so may resources into the creation of fiber. True, we number 7.2 billion people now, but it is not our numbers that pushed this change (Conca, 2015). It is our value perception. We want more, we want newer, flashier, more complex, and instant products and services. And if it lasts one or two years, that’s ok, because a better version is right on its heels and we are going to buy that one. Durability, consistency, stability, preservation, these features are no longer sought after.

You might ask yourself why that is so important. Not so long ago, all the products available on the market were handmade. Hours were put into their development and so, because they were not instantly available, they were cherished and their durability appreciated. Now, the speed of consumerism drives a hard-competitive edge and nature by itself cannot keep up without artificial support. What does that mean?

Environmental Impact

Considering the current energy expenditure, we realize that the highest amount is for the least eco-friendly fibers.

For instance, linen is woven from the fibers of the flax plant and it is one of the world’s oldest textiles, as old as 7000 BC.  It is white, lightweight and durable, gentle on the environment, consumes the least of energy, water and pesticides. However, it takes more to weave it and is more expensive. On the upside, it is more durable and more gentle in the contact with the body (Conca, 2015).

Fashion Value Perceptions - Comparative Chart

Cotton, however, is advertised as one of the most natural, high quality fiber. It is used in 40% of clothing and requires large amount of water, 2.6 % of the global water use and is chemically dependent, using 24% of all insecticides and 11% of all pesticides globally (EcoWatch, 2015; Hermes, 2017).

Polyester and nylon are made from petrochemicals and by nature they are not biodegradable. They need the highest amount of energy in their manufacturing, but they also emit large amounts of nitrous oxide, a greenhouse gas. Its impact on global warming is almost 300 times that of carbon dioxide, the most ubiquitous greenhouse gas (EcoWatch, 2015).

The next step from the fiber is to give it the desired color. Dyes processing is becoming a concerning issue in Indonesia, where the Citarum River is considered one of the most polluted rivers in the world. All along its banks there are hundreds of textile factories (EcoWatch, 2015).

The end of the life cycle in fashion is when clothes are not needed anymore. With the rising of fast-fashion chains like Zara and H&M, weekly fashion has become the norm (Hermes, 2017). Trends are changing too fast for nature to keep up with the expected demand on its own, and as we buy more, we throw away more. Clothing waste reached new peaks in U.S. in 2014, where the average person discarded 32kg of clothing annually. Approximately 85% of them reach landfills or incinerators. In China millions of tons of unused fabric go to waste each year when dyed the wrong color. Taking into account that 41.3 million tons of fiber are processed there and account for 53% of the world’s total production, this paints a grim color on the textile industry. Although clothing recycling is rising, currently it cannot face the environmental challenges that fast-fashion creates (ibid).

Conclusion

Change is good, it’s what made us who we are today. But I believe we are sufficiently advanced nowadays to understand the consequences of our action on an environment that expands throughout the whole planet. We want more, we want to fit in, we want self-achievement, we want to promote a certain image, because today’s battle of wits comes through value perception. And we want to be valuable in the eyes of our peers. The easiest way to achieve this is through fashion statements. What we wear, what we show other people, with what we are associated, this decides our status in society, our worth. The problem is that we are changing these values so fast that there is no time for the environment to absorb the impact.

It’s simple, today’s value perception is reduced at the power we have over others. Powers is the easiest obtain through accumulated wealth. Wealth comes through the development of businesses. Business need the required services and products to exist. But power over nature we have not. And what we should strive for is a co-existence in harmony. That can only be achievable through the shift of our value perception. Durability over speed. A well-made blouse will still be a blouse in 5 years. It should last 5 years! It will fulfill the same function in 5 years! And by changing the fashion trends we are making it useless in 2 weeks.

We became the apex predator of this planet by transforming the environment to suit our needs and wants. We created our own claws, our own poison, our own shells. But there is no one else to challenge us anymore. And despite that we keep wanting more in the detriment of all other creatures that share our planet. The force of nature is the ultimate power and I am not sure we can become winners by tackling that. I may want to look good now, but I also want to live on this planet when I’m 80. Will nature allow me to do that in 50 years? Will nature even allow humanity to exist in 100 years? Food for thought!

This post is brought to you by one of AQ’s Undergraduates, Laura Susnea. As part of our internship programs, undergraduates and classic interns are encouraged to take part in company culture. Laura’s primary project focusses on training programs and eLearning and how best to adapt this to industries under pressure. 

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[Intern Insight] Imagining the Future: Evolution of Sustainability in the Retail Industry

The retail industry is an extraordinarily dynamic sector. Sometimes it becomes hard to identify the key players and key trends that shape its future. In the previous blog entries, I have discussed the technological and socio-cultural factors that would influence it. However, another key factor to take into consideration is how retail industry impacts the environment and all relevant stakeholders.
Perhaps all the buzz about sustainability is receding, as it becomes mainstream, but its effects are still quite noticeable. The retail industry represented approx. 6% of the global GDP in 2015 (BEA, 2016). Therefore, any sustainable practices adopted by this industry would rebound worldwide. So, who is actually affected?

Customers

Consumers are very aware of the negative changes happening in the worldwide environment. As a consequence, they have adopted a particular purchase behaviour. The top sustainability purchasing drivers worldwide are:

Products being made by trustworthy companies/brands (72%)
Product recognized for health and wellness benefits (59%)
Product made of fresh, natural and organic ingredients (57%)

(Nielsen Global Survey of Corporate Social Responsibility, 2015)

This means that consumers have to build a trust relationship with the brands before considering a purchase. Trust comes through transparency and providing information, which have become the public’s most sought after marketing and promotional tools. Consumers are asking themselves: ‘How was this product made?’, ‘Who made it?’, “In which part of the world was it made?’, ‘In what conditions was it made?’. Customers’ conscience is seeking answers in the issue of how consumerism is affecting the surrounding environment. After all, me and any other customer, we go to a store to purchase, but we leave wondering if we did the right thing? (Fashion Revolution, 2016).

This rise of conscience can come from simple things as – ‘I like the packaging, but how many trees were killed for this to look good?’ to seeing a commercial emphasizing the company’s/brand’s participation in social commitment (Nielsen Global Survey of Corporate Social Responsibility, 2015). Consumer education is done through multiple means but it’s important to find a specific uniformization in its sustainability principles.

Employees

The top promoters and advertisers of a company’s sustainable practices are the employees. Labour force needs both to be developed through a sustainable way and itself to adopt a sustainable approach towards the working lifestyle.
First of all, employees are not only the people that serve us in stores. They are also the people further down along the supply chain. The people who transport the products, the people who assemble the products, the people who create the products, the people who provide the raw materials. So, what does it say for a company if its product materials are of the best quality, but the products were assembled or obtained by workers in conditions akin to the definition of modern slavery. This social issue is especially noticeable in Asia, where Syrian refugees in Turkish factories supply to brands as Marks & Spencer and Asos, Burmese migrants in Thailand’s poultry farms, workers on tea plantations in South India as well as textile mills, and palm oil plantations in Indonesia and Malaysia (Eco-business, 2016). They face terrible working conditions, often with small wages and no social benefits, under the duress of being expatriated.

Slowly moving from the origin of the products towards the end of the line, the distributer’s labour force problem constitutes in small wages, high turnover and low training investment in training and development. People are more interested in doing the right thing when the right thing is done by them. Investing in employees’ development in order to improve the quality of human resources can result in lower turnover and higher sales due to customer satisfaction. Furthermore, providing fair remuneration is considered still a high-performance stimulant.

Companies

At this stage, companies themselves must change their attitudes, top-down approach. They must create the environment for dialogue and understanding, through transparency and development programs.
Sustainability issues such as waste, global warming, carbon emissions, water shortage, waste of energy, they are caused by human activity. Therefore, logic dictates that humans themselves must change in order for their actions to change. However, in the current social context, humans are more focused on their wellbeing through their working lifestyle, and cannot focus and their action’s impact.

Taking into consideration this point of view, companies must focus their sustainability initiatives both on nature-origin related issues as well as the social origin. And it does not only mean the modern slavery in India but as immediate as the employee in the corner store that is struggling to maintain a normal life.

A Silver Lining in Sustainability

A possible solution comes through technological advancements.

Now it is easier to track tiers of suppliers further down the supply chain. The carbon footprint can be measured and processes can be easily adjusted in order to meet sustainable strategic goals.
Fair trade and labour issues awareness are supported through heavy social media activity by worldwide interested parties.

Employee performance can be easily trackable and accurate training can be provided through e-learning platforms.
All is not lost! However, it is primordial that retail companies realize the advantageous role they play in educating society regarding the environment! It’s time to change the world and retail players can set off an unpreceded domino effect for the good of the human kind! We are waiting!

This post is brought to you by one of AQ’s Undergraduates, Laura Susnea. As part of our internship programs, undergraduates and classic interns are encouraged to take part in company culture. Laura’s primary project focusses on training programs and eLearning and how best to adapt this to industries under pressure. 

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[Intern Insight] Imagine the Future: Influencing Customer Behaviour: Lizard, Monkey, or Rookie

Understanding how people think, and why, can directly influence what they do and how they react to things. As a result of this, it’s important for businesses to learn to understand what influences customer behaviour, why, and how they can tap into it.

The Mechanics of Human Brain

An obsessive-compulsive lizard, an emotional monkey and a design-oriented rookie enter a clothing store during a winter storm.
The lizard says: ‘A warm coat.’
The monkey says ‘No. A fluffy coat.’
The rookie says: ‘A long sleeved, doubled layered coat, with a hoodie.’
The employee says: ‘We have all these features in this coat!’
The lizard, monkey, and rookie say: ‘BINGO!’

I bet you have no clue what I am talking about! It sounds like a really bad joke. Bear with me.

In previous articles, I discussed how I envisioned the retail industry to look like in the near and not so near future. In all these entries, the one challenge I always took into account was the fact that our environment was in constant motion, evolving.

Somehow, when we speak about the environment we always associate it with the external surroundings. However, we have another environment, a micro one, that changes at a very slow pace. But when it changes, humankind can only experience one thing… revolution.

I am talking about the human brain. It represents only 2% (Live Science, 2016) of our body mass, but consumes about 20% of our energy (Neuroscience Marketing, 2015). It is arguably the most complex system on Earth and the reason we are alive. So, how does it work? The brain is actually divided into three distinct parts:

  • The first part or the outer layer is called the neocortex (the new brain) or the ‘rookie’ in our case. It is in charge of designing our body according to the prototype code provided by our DNA. It starts from a common structure – after all, at conception all complex living creatures first look like a fish embryo (yes, even humans) – and then it adds specific functionalities (opposable thumbs, anyone?).
  • The second one is called the mammalian brain (the visceral brain) or the ‘monkey’. It is in charge of our basic functions such as thirst, hunger and regulates our emotional behaviour. It first developed in mammals around 150 million years ago, hence the name.
  • The third one and the core of our brain is the reptilian brain (R-complex in humans) or the ‘lizard’. It strongly resembles the brain structure of reptiles and it’s in charge of keeping us alive. It keeps us breathing, regulates our body temperature and controls our aggressive behaviour (flight or fight reflex) (Brain and Behaviour, 2017).

So, let’s try this again:

A customer enters a clothing store during a winter storm.
His survival brain says: ‘A warm coat.’
His emotional brain says ‘No. A fluffy coat.’
His higher-function brain says: ‘A long sleeved, doubled layered coat, with a hoodie.’
The employee says: ‘We have all these features in this coat!’
The customer says: ‘BINGO!’

Neuromarketing

Why did I go through the trouble of explaining that? It’s something to do with neuromarketing.

Neuromarketing is the point where human brain science meets marketing. If marketers tap into the secrets of human behaviour, which are regulated by the mechanics of the brain, new and wondrous things happen (Neuromarketing World Forum, 2016).

All this neuromarketing hype has brought to my attention that we are trying to find any kind of explanation of how customers behave. That includes the underlying pattern, and how to mimic the desired traits to trigger the purchasing action. So obviously, we have to look at who is in charge in our heads right now and who will take control in the future according to human evolution. Many specialists focus on the ‘lizard’. Why? Because the ‘lizard’ makes the vital decisions and we want our products and services to be vital for customers. And as the ‘lizard’ communicates the best through visual receptors, we bombard people with well-designed adds and splashes of colours to attract attention and create visual stimuli.

Of course, the ‘monkey’ and the ‘rookie’ also have their parts to play. Whatever we buy must serve a purpose (outside our own survival) and must encompass the necessary traits to fulfil this purpose – for business, for pleasure, for family, for work, etc.

Now, the ‘lizard’ is here to stay. Therefore, we must attract its attention first and foremost. That is the role of marketing. However, the purchasing decision is filtered through all three brains and I must say, the ‘rookie’ is in charge of this one. Let me make it visual for you.

When customers enter a store, and see the available selection of products – most of them would be a warm coat. So, if you have a warm coat for $50 and one for $500, the ‘lizard’ says: ‘Well, I am satisfied. What do you want monkey?’. Now, as we are such complex creatures we do seek the fulfilment of our emotional desires. If the coat is fluffy and offers comfort through its texture, the monkey will want it! But is this enough to buy it? What if both are warm and fluffy? Then the ‘rookie’ intervenes: ‘I have to pay bills, book a ticket for my holidays, buy a present for my mom, pay my school…”. (Honestly, at this point, my ‘monkey’ would say: ‘But it’s soooo fluffy!’ And it would have plausible chances of winning). It is quite simple.

The ‘lizard’ sees it.
The ‘monkey’ wants it.
The ‘rookie’ chooses it.

 

The Future of Customer Behaviour

The future retail industry must have a nice chit-chat with our ‘rookie’ brains and design their in-store processes to make this decision-making mechanism as easy as possible.

The hard part is already done. From all the multiple retailers offering the same range of products the customer entered in your store. So right now, all you need to do is to make the features, advantages and benefits of your products obvious enough in order for the consumer brain to have no doubts about the decision he is making.

Learning the secrets of customer behaviour gives an added advantage. It provides the path to one of the most desirable traits in customer service: personalization of the experience. And it’s so easy to do! Why? Because both your employees and customers are just people with brains. A company’s perspective is usually quite rigid when it comes to the human element, as people are more than people, they are resources.

Customers are divided into segments represented by personas Employees? Not really. They are almost faceless entities that must follow clear procedures. Ultimately, the real experience is that you have a ‘lizard’ brain talking to another ‘lizard’ brain. A ‘monkey’ brain feeling as intense as the other ‘monkey’ brain. A ‘rookie’ that analyses and provides logical information just like any other ‘rookie’. Brain to brain, customer and employees could have a wonderful interaction, provided they follow the same brainwave patterns.
Cognitive retailing is the future (Economic Times, 2016). It means that you are talking to the consumer on a higher level and not responding just to his basic needs. I think customers will appreciate that. To be able to do that you would need the insights that Big Data gathering can provide you but the funnel through which it has to go would still be human in origin for a long time to come. At the same time, this is what makes humans irreplaceable in the service context. Machines would not have the advantage of knowing how to engage the brain of customers. At the very least you would have a very distressed ‘monkey’ in that case.

This post is brought to you by one of AQ’s Undergraduates, Laura Susnea. As part of our internship programs, undergraduates and classic interns are encouraged to take part in company culture. Laura’s primary project focusses on training programs and eLearning and how best to adapt this to industries under pressure. 

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