I’ve mentioned before how tough a business retail is, because customers expect constant change, stimulation and ever-better value.
Something I’ve been learning in the food retail business is that even this isn’t enough. You might be forgiven for thinking that food shopping is habit-forming and most customers are difficult to prise away from their chosen supermarket. This is true but, a bit like in elections, major results can come from a relatively small proportion of people changing their allegiance. Food retail is a business of small percentages applied to very large numbers, so a relatively small change can make a big difference to the results.
So the erosion of a customer base, even just at the edges, is potentially a major threat to a supermarket retailer. Superquinn has an unusually loyal core customer base, which has been its saviour during recent difficulties. But now our task is to rebuild the sales by regaining those who did defect. I imagine this is what has had to be done at Sainsbury’s and now at Morrisons.
It’s one thing to get them back in – a tasty enough offer will normally do the trick – but retaining them is another matter. What I’ve been learning is that the uncommitted customer needs constant attention if they are to become regular visitors. Leave off for a couple of weeks and they’ve gone again.
This is not because they are fundamentally disloyal. It is because they are subject to continuous attention from competitors. So if I let my guard down, those competitors are in there, wooing them away with attractive offers of their own. Aggressive, sustained and effective lapsed-customer strategies are a hallmark of successful food retailers. They let nobody slip out of their net without a fight.
If Superquinn is to succeed in increasing its customer numbers, I have to be just as persistent in communicating with my customers, reminding them all the time of the advantages of shopping with us and giving them reasons to stay.
Never can I take them for granted. And this is not just for the potential defectors: if I am seen to heap offers on just those customers, the loyalists will quickly become resentful.
So, to build a secure and growing customer base, Superquinn has to direct constant and stimulating activity at all of its customers and never give up on the ones who have strayed.
This is made more feasible if, through loyalty cards, we know who these people are. But there is a lesson for all retailers here. Now that I’ve seen how well good food retailers guard their customer base, I think there is opportunity for all retail businesses to gain by focusing on this.
Most of us know how to get people through our doors at least once; if we can find better ways to hang on to them, the benefits must be immense.
SIMON BURKE, chairman, Superquinn and Majestic Wine