Deep-discount retailers have experienced double digit growth but face similar growing challenges. Sales have been strong in this sector compared to other retail segments for economic reasons, but sales growth per store has not increased at the same rate. Their growth comes from opening new stores, not necessarily from deeper customer engagement at a store level.
These ultra-value retailers have just begun to stick their toes in the e-commerce water with simple shopping carts selling a handful of products, but they struggle to find the right fit. Most of their customers live within walking distance of their stores in an apartment complex, make less than $40,000 in annual household income, almost always pay with cash and stretch $120 per week to feed a family of four. Since customer loyalty is measured in steps from their front door, these customers rarely show enough resilience to be willing to drive past one deep-discount retailer just to go to another. Proximity is king for this retail segment.
So, with so little customer data, how could deep-discount retailers engage more with their target audience? Should they balance protecting their current customer base while expanding up market to draw higher income families to give up their superstores? Should they expand into broader categories to earn more wallet share, like furniture, pharmacy, fresh and health food choices, financial activities, check cashing, banking and money transfer? Should they host social and community events like bingo or a music concert to get customers to drive past a competitor to come to their store?
Well, one interesting note I neglected to mention above is that almost every customer has a smartphone. If these stores could find creative ways to engage using mobility (aside from generic email coupon blasts), then they may win more loyalty.
Some ideas include the following:
- Proximity-based SMS offers broadcast in the customer’s preferred language
- Special food discounts for registering the media access control (MAC) address of phone
- Social media sharing of recipes for moms on a budget
- Click-n-collect m-commerce site for working parents to pick up prepared dinners from coolers in the front of the store
- Store-based offer system showing discounts and special offers as customers walk through the store
- Targeted apps for pharmacy, medication instructions, check cashing, money transfers and other pseudo-banking solutions
- Apps to notify of new product arrivals to local shoppers at a specific store since customers live so close
- Self-checkout with mobile payment to help with long till lines and those in a hurry
What impact could these mobile solutions have on the bottom line? Existing customers would spend more, and new customers would be attracted by the expanded offerings. Even a modest 1 percent increase in same-store sales growth would mean $50 to $100 million in additional revenue without increasing capital expenditure on new store expansions.
What other ideas could deep-discount retailers do to attract more customers through their mobile phones? Please share your thoughts below.Tweet