The ability to access a company’s goods or services conveniently and at low cost is a value-added brand benefit for its current and potential customers. A core value-added benefit of many retail brands such as Home Depot, Walmart, Gap, Lululemon, Target, McDonald’s, Best Buy is their wide network of locations that are easily accessible to current and potential customers. For example, customers of Walmart can shop at more than 10,000 stores worldwide while McDonald’s serves it customers at more than 40,000 restaurants worldwide.1
Beyond providing access, retail locations contribute to customer value in many ways as summarized in Figure 1.
FIGURE 1
How Retail Locations Can Build Customer Value
Brand Equity. Retail locations provide unique experiences to customers to experience the brands emotional benefits that go beyond the product itself. The experience of shopping for and purchasing the right Rolex watch or Tiffany ring at the store provides for a unique experience for every customer. At the opposite end of the spectrum, Walmart stores provide value through the large assortment of brands that are available under the same roof. While Tiffany customers reinforce a sense of luxury, Walmart customers reinforce a sense of being efficient and frugal. As shown in Figure 2, Tiffany’s remodeled store in New York City reinforces its luxury brand status among customers.
FIGURE 2
The Brand Equity of Tiffany Is Reinforced by Its Retail Location
Developing and Maintaining Customer Relationships: Retail locations enable brands to strengthen their relationship with customers through a variety of mechanisms. Customers interact with sales members and service employees to learn about, shop for, and buy the products and services offered. In many cases customers develop relationships with employees. At other times, customers can experience a sense of “being home” at a retail store, evidence of a strong relationship. At Home Depot, creating and maintaining strong customer relationships by helping them is critical for success.
FIGURE 3
Helping Customers Builds Relationships at Home Depot
Service Quality: Retail locations are a physical manifestation of the brand where customers can experience intangible benefits like service. These can include browsing and shopping for offering, trying out different sizes a brand, returning and exchanging products, and more. Some brands let customers shop online and pick u goods and services at their retail location. In other cases, customers can shop at a retail outlet and get goods delivered to their home.
Product Offerings: Despite the growth of online shopping, the vast majority (over 70%) of most brands’ sales come from physical locations. For experiential categories such as perfumes, clothes, jewelry, and daily consumables such as milk and eggs—physical stores remain the distribution channel of choice for most customers. Brands such as Walmart provide value to customers by offering a large selection of products and brands at everyday low price.
FIGURE 4
Walmart’s Large Variety of Product Offerings Provides Customer Value
CONCLUSION: Despite the growth of online shopping, retail stores continue to provide many different types of customer value. Customers can shop and buy products, avail themselves of many different services, build relationships, and experience the hedonic and emotional aspects of the brand at retail locations. Therefore, rather than discounting retail locations as obsolete, smart companies optimize the mix of retail and online interaction with their customers.
Learn more: Learn more in Chapter 10 of Market-Based Management (7th edition). Chapter 1 can be reviewed online at www.mbm-book.com.
References:
- Sources: Walmart stores: https://www.worldatlas.com/articles/walmart-locations-by-country.html ; McDonald’s restaurants: https://www.globaldata.com/data-insights/foodservice/mcdonalds-number-of-restaurants-globally/#:~:text=McDonald%E2%80%99s%3A%20Number%20of%20Restaurants%20Globally%20%282005%20%E2%80%93%202021%29,billion%20in%20revenues%20in%20the%20fiscal%20year%202021