The American Retail Value Proposition: Crafting Unique Experiences at Compelling Prices
August 26, 2016
Professor Kyle Murray draws on decades of research, and uses the tools of experimental psychology and behavioral economics to help build a solid business foundation in today's ever-evolving retail marketplace.
The American economy is profoundly dependent on the success of its retailers and the strength of its consumer spending. Yet, how do leading retailers create value for their customers?
To a large extent this has been accomplished by streamlining operations and a decades-long focus on cost cutting and price competitiveness. Today, retailers realize that they need to discover new ways to differentiate themselves and attract consumer spending. The American Retail Value Proposition: Crafting Unique Experiences At Compelling Prices, by marketing and retailing expert Kyle B. Murray, provides a framework for building that differentiation and establishing a competitive advantage that goes beyond price discounting. This framework is based on more than a decade of research, including hundreds of hours of interviews with executives from the world’s leading retailers, including Starbucks, Walmart, Apple, Amazon, and Lowe’s.
“The world’s leading retailers create value for their customers by crafting unique experiences at compelling prices,” writes Murray, who is the Director of the School of Retailing at the Alberta School of Business. As he explains, this approach hinges on the strategic management of value as the customer perceives it. This includes:
- Environment – Environment is a combination of store location, format, layout, and design. But, at the core, decisions about shopping environment are not about any of these things, argues Murray. They are about the customer. A comfortable and convenient shopping experience for the customer will have a direct impact on a retailer’s revenue and profitability.
- Product Selection - For many retailers, making the right product selection decisions is the difference between success and failure. Ultimately, retailers must ensure that they have the right products for the customers they aim to serve, rather than try to sellthe products they have to whoever walks in the door. “Too many retail organizations are built around products and brands rather than customers – a strategy that inhibits growth and jeopardizes profits,” contends Murray.
- Customer Engagement – “To flourish in the most dynamic and challenging market conditions in history, retailers must put the customer at the center of the strategy,” the author writes. Until recently, it was not practical to get to know individual customers’ preferences. Advanced analytics, supported by technology, have helped to change what consumer marketers are able to accomplish. Murray warns, though, that the point of those analytics is not data – it is a better understanding of the customer.
The final piece to the puzzle lies in pricing. “Compelling prices are those that the customer believes are lower than the perceived value of the goods purchased,” explains Murray. Thus, he explores how pricing must be tackled after the mix of environment, product selection, and customer engagement has been determined. He includes cost-based methods, as well as value-based and dynamic prices, emphasizing the behavioral science behind how customers respond to retail prices.
For aspiring merchants and industry veterans alike, the strategic framework presented in The American Retail Value Proposition will make it possible to build a solid business foundation in today's ever-evolving retail marketplace.
ABOUT THE AUTHOR
Kyle B. Murray is a Professor of Marketing and the Director of the School of Retailing at the Alberta School of Business. He received a B.Sc. in psychology and a Ph.D. in marketing and psychology from the University of Alberta. His work uses the tools of experimental psychology and behavioral economics to better understand the choices that consumers make. As a consultant, Dr. Murray has worked with such organizations as the Consumers Council of Canada, General Motors, Industry Canada, Johnson and Johnson, Leger, The Research Intelligence Group, LoyaltyOne, and Microsoft.