From the pages of Images Retail (July 2009)

It’s all about Trust
By Ramesh Narasimhan

As the world continues to become smaller, flatter, riskier, and smarter, future leaders will continue to capitalise on the focus on value, exploit new opportunities, and act with speed. Retail industry is no exception. Retailers face the most challenging environment in decades.

Consumers are faced with reduced wallet size, job insecurity and falling real estate values, yet they are increasingly savvy and informed. Competitive and regulatory changes abound. Historical underinvestment in IT, pervasive connectivity and mobile devices, and security and compliance are key technology trends.

What do the consumers want?
Understanding the changes in consumer behaviour related to the new economy is imperative for all retailers. But what resides deep in the minds of the retail customers? What the customers are craving for? Trust. Yes, it’s all about trust - a word we typically associate with a family member. Close friend, good neighbour. However, significantly, more and more customers are using the word to describe their relationship with a favourite retailer. In uncertain times, customers are turning to the retailer they know and believe they can count on for a quality product, dependable service and an experience.

A recent study conducted by the IBM Institute for Business Value came out with interesting findings. The survey involved 30,000 consumers focused on understanding drivers of consumer spending across several product categories: grocery, apparel, home merchandise, pharmacy, and health & beauty care. The survey revealed that consumers anxious due to economic conditions rely on retailers they trust – leading to two valuable segments: ‘advocates’ of existing retailers and ‘shifters’ seeking new relationships. Retailers that execute on the requisite strategies to attract and retain these attractive shoppers will be positioned to emerge as winners.

In fact, 38 per cent of respondents in the survey can be described as advocates, almost double the 21 per cent of the previous year. And by 2020, more than 80 per cent of marketers say they will be focused primarily on earning trust. Trust means delivering on your promises: getting the product you’ve promoted to your customers onto your shelf and into their hands. Yet retailers continue to disappoint: The out-of-stock rate for promoted products is around 17 per cent. And the retail industry loses a staggering $93 billion in sales annually due to not having the right merchandise in stock.


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