Wednesday, April 22, 2009

Why Shoppers May Come, But May Not Return, to Your Commercial District

Take a moment to view this short video presentation by Jon Skinner of the Verde Group for the International Council of Shopping Centers on "Retaining Customer Center Shoppers". In it, Jon discusses a shopper survey done in conjunction with the Wharton School of Business of over 1,000 shoppers. While the target audience is shopping center managers, there is quite a bit that commercial district managers can learn by applying similar principles to our work.

So, why do I keep talking about shopping centers when this blog is about commercial districts? Well, because frankly I believe that there is not much of a difference. Our commercial districts are basically open-air (mixed-use) shopping centers - but instead of being owned by a single owner with the power to control and improve the environment, they are owned by many owners who are often working with different objectives and goals. This only making our work more difficult, but essentially, the same.

I really appreciate this video because it identifies some key issues that as to why shoppers don't return to a retail store...this is need to know information during difficult economic times!

Here is what they found:
  • The most significant problem that drives shoppers away are 'sales associate problems', i.e. customer service problems that a shopper may encounter with someone working at the store. Amazingly, 70% of customers who don't return to a store do so because of customer service problems they encounter in a store. And interestingly enough, WOMEN are more bothered by these customer service problems than are men. To make matters worse, over 50% of shoppers will not shop at a store they have never even been to because of a negative comment about the experience that a friend or colleague had at the store. Wow.
Just today I was walking a commercial district with a local BID manager and we passed what looked like a cute hardware store. Just the kind of place folks need and want in the district. The problem is that the owner was basically a nasty person (who happened to own the building - likely with no underlying mortgage). The manager said that in her experience, this was costing the store significant lost sales. Not a surprise given the research. So the next time you walk into a store in your district and customer service is lacking - consider ways in which you can address this most basic of retail problems. And remember to communicate to your retailers that customer service is one of the most significant reasons why shoppers will not return to their store. As a commercial district manager, you should also be thinking about finding ways to encourage or even provide training to employees in customer service. For example, can you bring city or public resources to help support training for a few business owners at once?

  • Another very critical point (and perhaps most important for commercial district revitalization efforts) made by this research is that the shopping center itself plays a significant role in shopper satisfaction. In the case of commercial districts the corollary is what happens on the street. I call this the 'outside-the-store' or 'on-street' experience. This is super critical for commercial districts because at the end of the day, it is the 'outside-the-store' experience that commercial district management entities can control most effectively. Everything from street scape, safety/security, services, events, etc. make a big difference to shopper satisfaction. These outside-the-store experiences are what ultimately set the stage for the in-store sale. The research presented here makes it clear, retailers DO suffer significantly when the district itself is shoddy, unkempt or unsafe. Yet another reason to make sure you always keep on eye on those basic housekeeping details.
I'm excited to hear more about this research as they delve deeper. The next step will look at which specific interventions in the outside-the-store experience, like improvements in safety, aesthetics, etc. pay the most dividends in terms of improving the overall shopping experience, and ultimately driving retail sales. We wait with baited breath - so stay tuned!

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