Our Retail Practice

The Homogenization of Retail

Can you tell a Home Depot from a Lowe’s? A Nissan showroom from Toyota’s. A customer who shops at Pearle Vision instead of Lenscrafter? If you can’t, you are not alone. Retailers today are increasingly finding it harder to make their brand, their products, their services and even their stores/web sites stand out—and they themselves are to blame in very large part.

Me-too strategies proliferate and retailers continually follow each other’s lead to capture sales from the same customers. How many women aged 24 to 49 can there possibly be? From the way retailers and consumer packaged goods companies talk, you’d think they make up 99% of the country’s wealth and everyone is designing products and brands to meet their needs.

The net result is that we have a “homogenization of retail,” a blending of the brand identity in the minds of consumers.

And not only are products and stores looking alike, but the brand promises are all blurring as well. Can everyone really be the best in customer service? And for that matter, can a service offering alone really create loyalty among shoppers? (Our research says no.)

With such little apparent differentiation, retailers have turned to private label as the solution to their margin and brand differentiation woes. But are they delivering the right message to consumers to clearly communicate their brand difference and promise? Are they making the right choices about which products make the most sense for their customers’ needs? Are they identifying the different private label branding platforms that will deliver the highest return by gaining the interest of their most profitable customers? Again, our research shows that the answer is no.

The net result: Retailers are failing at the basic level: They don’t understand their customers’ needs.

Sure, basic market research tools are used to dissect demographics and POS tools are used for CRM and couponing and loyalty programs, but the underlying assumption is wrong. You can’t target consumers based solely on demographics or past spending habits. And if you look like everyone else, your customers are never going to know how you are different.

Markitecture believes that success at retail comes only from a) dedicating the time and effort to developing a sophisticated process for understanding your most profitable customers and having done that, b) targeting those customers precisely with new and/or repositioned offerings.