The aftermath of mergers and acquisitions or other industry “disruptions” can be unsettling, to say the least. The dust is often kicked up, and the traditional foundation feels shaky at best.
A June 2014 article by McKinsey & Co., “How U.S. health care companies can thrive amid disruption,” states that the volume of M&A deal making rises during industry disruptions but often comes in waves as competitors attempt to keep up with one another. Such disruption often leads to massive reshaping of the affected industry and its key segments.
Rather than sitting on the sidelines waiting for the newlywed company to emerge, three primary areas should be considered for reinforcement during this turmoil: retail innovation, pricing strategies and service levels. This article focuses on in-store innovation to strengthen shopper relationships and attract new consumers.
Implementing innovative approaches to reinforce a retailer’s value proposition, while at the same time attracting attention away from disruptive merger turbulence, requires careful orchestration on the organizational, cultural and messaging fronts. Innovations are rapidly changing the face of traditional brick-and-mortar retail.
Here are three areas that retailers can strengthen during tumultuous times precipitated by industry consolidation:
• Leverage digital. Digital advances to push retail innovation ahead must extend beyond the four walls of the physical structure. Hybrid models that combine traditional retail and digital activities have quickly become a minimum ante to compete effectively in a crowded marketplace. Leveraging technology is one of the more logical steps that can be taken during an industry shake-up to enhance retail operations and the resulting consumer experience.
Individually geo-targeted promotional activities, in-store navigational tools, price checks and comparisons, customer service kiosks, click-and-collect services, as well as fast and safe payment methods are all potential innovative pathways to move a retailer ahead of the pack.
Another example aimed at enhancing the overall in-store experience was recently announced by Target Corp. Recognizing the possibility of increased competition from industry merger activity and/or new competition, the company is looking at a new way to monitor in-stock condition, deploying a robot at a test store to scan products and detect if they are in the wrong spot, mispriced, or if the stock is low, according to Forbes magazine. Imagine the data that will emerge from these tests which could ultimately drive assortment decisions and placement strategies.
• Engage customers. Giving existing customers a reason to remain loyal is paramount during industry consolidation. An example of this might be special offers pitched exclusively to a given brand’s Twitter followers or to membership and loyalty cardholders.
Recent merger activity and consolidation within the garden supply retail space in Milwaukee has begun to take hold during the past year. One locally owned, single-unit garden shop in the area has introduced an innovative approach to engage customers and offer something unique. Adding a “Blüm Coffee Garden” at the Bluemel’s Garden and Landscape Center may be just what they need to retain existing customers and attract new patrons. Here’s how it is positioned: “Bluemel’s and Colectivo Coffee are proud to introduce Blüm Coffee Garden, the latest addition to Bluemel’s award-winning garden center. Now you’ll be able to sip on delicious Colectivo coffee and espresso drinks, all while browsing plants and other high-quality gardening items and decor.”
This latest retail enhancement at Bluemel’s underscores that innovative approaches to engaging customers can take many shapes and forms.
• Build your brand. Ensuring that your brand proposition is delivered consistently to shoppers can be a stabilizer in an otherwise disrupted landscape. The values that a brand stands for and how they are communicated to the target market should be examined and reevaluated to reset focus and zero in on distinct advantages to segments such as families, singles, men and women. During times of industry disruption it can be ideal to test new approaches, reach new audiences and experiment with messaging methods.
An immediate brand-building measure that could be warranted amid merger activity is to reinforce social media presence and encourage recommendations from friends and peers. Positive word of mouth from customers is valued more highly than any messaging from a brand.
Realizing that consumers have become much less tolerant of unavailable products or poor service and that they immediately tweet about their experiences — particularly the negative ones — is good reason to laser focus on providing an outstanding omnichannel experience. M&A activity may affect competitors’ abilities to deliver on these promises, so the operation’s focus on excellence will resonate with shoppers.
Dave Wendland is vice president of strategic relations and a member of the owners group at Hamacher Resource Group.