The main point of retail (and probably most other businesses)

There’s a whole army of consultants, who will give you many answers: efficient lean processes, digitalization, margin optimization, big data analytics, targeted marketing, customer loyalty programs and much more. They show you statistics and models how things may probably develop – and that your company is doomed to fail if you do not give your attention to those topics. And of course to prevent all that you may hire them for help…

For six years I worked in the headquarters of a big retail company in Germany. During this time I was wondering quite often why so much effort was put into such projects. I was especially startled about young people coming from university and starting to work there. They seemed to be genuinely convinced that it is valuable to optimize how customers are tricked into signing terms and conditions so that marketing material can be sent to them. Many invested most of their time and energy into similar endeavors.

A few years ago I changed my main job to a different area and employer that has nothing to do with retail anymore. But besides I frequently help at a small local coffee roaster, especially with selling their products in the store and on weekly markets. This direct experience confirmed my previous suspicion.

Retail is about relationships.

First and foremost: between customers and retailer or sales person. I assume we all had the experience of someone trying desperately to sell us something. In clothing stores I often find this so annoying that I try to avoid staff members at all costs. But also what was mentioned above, what’s going on in headquarters, shows the nature of the predominant relationship. The underlying structure: the customer is viewed as a means to an end, to sell him something and overall to get his money.

In some cases there may be a positive short term effect on sales, but in the long run? Trust gets eroded until customers change to a different retailer when there is only a slightly better offer available. More and more effort and huge marketing budgets are necessary to ‘convince’ or better manipulate customers to come to the stores and buy something.

A completely different relationship emerges if a customer is really listened to, is helped and honestly cared for. I experienced and practiced this while selling products myself. In many cases a strong bond is formed and customers from all walks of life, including myself, return over and over again.

This understanding of the importance of relating may not seem much at first. But as a result of authentic relations customers come intrinsically motivated, do not compare prices as much and start to honestly share with the staff what they like and what they miss. That means there is almost no need for customer research, analytics and marketing any more. If you consider that today these are usually the biggest departments or budgets in most retail companies you get my point. I wonder how things would develop when time and money are allocated differently, for example mostly on developing and producing higher quality products…

Such strong and pleasant relationships are built over time through direct personal interaction. They cannot be managed or manufactured top down with training programs. And it is actually much easier than you may think. The key element is the underlying intention with which we interact with each other. That also explains why sending out personalized marketing messages pretending to help or inform have the opposite effect and do not lead to real customer loyalty.

Other relationships may be considered, too.
How are for example your suppliers doing? As with customers there is a difference between the best short term deal to increase margins and establishing a decent and strong relationship. Especially when times get rough this can be the crucial point. Can you honestly talk to each other and work on finding co-creative solutions? Or is every man just desperately trying to save his own fortune?
The last relationships I want to mention are the ones within a company. This may seem to be a highly complicated topic but in the end it comes down to the same principles already mentioned. Is the intention behind interactions to use each other to fulfill everyone’s different KPIs or to really work together?

My intention with this article is not to persuade anyone to do additional training programs or further restructuring exercises. I’ve never seen that forcing people, even with good intentions, lead to something fruitful. In fact, what is really the underlying relationship if you ‘convince’ somebody that a course is a necessary step?

You may simply from time to time consider the quality of relationships. Or you try out discussing within the company how new projects or processes may affect relationships besides other KPIs. From my own experience I can say I learned one more time that it is not as complicated as it is often depicted and that days are much more joyful when I interact with customers, colleagues and business partners in a friendly human way.
Just in case, that does not mean that everything is or should always be harmonious…