Increasing the Value of the Retail Store Channel; • In an increasingly complex omni-channel retail environment, the retail store still plays an important role through offering an in-person brand experience. • Offering added-value retail services is one strategy that can emphasize the value of visiting a store. • These added-value services must be strategically tailored to specific customer needs in order to cause a significant impact on customer behaviour. • There are various factors that contribute to the branding strategy (new brand or co-branded) of added-value services, such as service type, project timeline, and overall objectives.

1. August | 2014
Research Paper
Added-Value
Retail Services
Increasing the Value of the Retail Store Channel

2. Think Blink
At Shikatani Lacroix, we design compelling at-purchase
moments that connect in the blink of an eye.
Our philosophy and strategic design approach,
Think Blink, is driven by a consumer’s motivation to make
a purchase decision. Everything we do is geared to owning
the “at-purchase” moment. Our firm has a well-earned
reputation for designing integrated brand experiences that
effectively connect brands with consumers to drive
measurable results for clients. !!
About the author
Sydney McMurter, Research & Strategy
Shikatani Lacroix
As a researcher and strategist at Shikatani Lacroix, Sydney
conducts research and analysis for brands such as TD Bank,
PepsiCo Canada, and Tim Hortons. !
Prior to joining SL in 2012, Sydney graduated from York
University with an Honours Bachelor of Science degree in
Psychology and a certificate in Urban Studies, where she
researched the connection between psychology and design. !
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3. • In an increasingly complex omni-channel retail environment,
the retail store still plays an important role through offering
an in-person brand experience. !•
Offering added-value retail services is one strategy that can
emphasize the value of visiting a store. !•
These added-value services must be strategically tailored to
specific customer needs in order to cause a significant
impact on customer behaviour. !•
There are various factors that contribute to the branding
strategy (new brand or co-branded) of added-value
services, such as service type, project timeline, and overall
objectives.
“The Blink Factor is the
ability to stand out and
effectively communicate a
meaningful and
differentiated offering,
and must be present
during the At-Purchase
Moment to ensure
maximum impact.”
Jean-Pierre Lacroix, President
Shikatani Lacroix
Summary
The Shikatani Lacroix Think Blink Process
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4. Value of the Retail Store
!
With the increasing complexity of shopper behaviour, channel
dynamics, and the competitor relations, the task of creating a
distinct competitive advantage at retail and preventing loss of
sales has become incrementally more difficult. Influences and
impacts cannot be completely isolated and business systems
are continuously evolving, with consolidation of major retailers
occurring as a means for growth. This report clarifies the
current role of retail stores and provides insights into creating
successful added-value strategies to grow margins through
physical retail stores. !
As online retailers become more dominant and can offer items
at lower costs, one may believe that physical retail stores are
becoming extinct. However, according to a 2013 A.T. Kearney
report, in 2012 60% of the total shopping time (including the
research phase) was spent in retail stores and 92% of sales
occurred in a physical store location. Furthermore, consumers
reported that retail stores still fulfill important needs, such as
obtaining a product or service immediately, providing an
opportunity to test or try products, or as a social event. Retail
stores are also the only channel that can offer a brand
experience to all five senses and allow for face-to face social
interactions. Therefore, this channel cannot be undervalued,
especially when some of the top 2014 consumer trends have
been reported to be instant gratification and in-person
interaction and experiences (Euromonitor International, 2014). !
When designed correctly, a retail store can be a place for
discovery, entertainment, social interaction and need
fulfillment. They also provide an opportunity for higher margin
transactions, since in-store visits are more likely to be
unplanned and customers are therefore inclined to spend more
compared to the frequent “mission” trips that occur in the
online channel (A.T.Kearney, 2013). Therefore, the retail store
still plays an important role in increasing a retailer’s ability to
avoid commoditization while increasing margin, a key factor in
the success of a retail operation.
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5. Added-Value Services in the Retail Store
!
To increase margins in retail stores, it is also important to make
a retail location worth repeated visits. Retailers need to
emphasize their unique value compared with purchasing online
or from competitors and build customer loyalty, especially
since customers can act as powerful brand ambassadors
through online reviews (Euromonitor International, 2014). One
way to accomplish this task is to provide added-value services
that allows the company to build stronger affinity with key
target segments, while helping increase overall store sales
margins. !
Although initiatives such as improving customer service are
not new concepts, in today’s hyper-competitive marketplace it
is especially important to develop a strategic retail added-value
plan. This takes service to a new level, evolving from
facilitating a product to providing added-value knowledge that
fits a unique and specific customer need. This strategy must
originate from consumer needs to ensure customer satisfaction
and allows a brand to earn more. Yet, the added-value strategy
must be specific and differentiated since generalized efforts to
improve customer experience will be costly and inefficient
(Booz & Co., 2008). !
Identifying the appropriate services and strategy is an added
challenge. Booz & Co state in a 2008 report that retailers need
to identify and focus on the services that would make a real
impact on traffic, conversion and transaction size and that fit
with the existing offering and overall corporate strategy. The
service model must also be adaptable to evolving “competitive
dynamics and consumer preferences”. Furthermore, they note
that traditional survey methods may not yield ideal results for
determining consumer needs since customers often do not
know what they want, and a pilot service offering may be
necessary to determine impact.
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6. Retail Consumer Needs
!
Research into general customer trends and behaviours can
provide a starting point for developing added-value strategies.
Euromonitor International’s “Top Consumer Trends for 2014”
report states that consumers are currently looking for a
simplified life, convenience and are increasingly value-focused. !
Retailers should consider the following when considering
evolving their service offerings: !
1. What is the key customer target group to whom new
added-value service offerings would have the highest
appeal? !
2. What customer underserved offering is not being met by
the current channel? !
3. If the given business category is vulnerable to disruption,
how would the new entry overcome this? !
4. How will the organization create value and margin through
these new services? !
5. What impact do the new services have on the existing
product mix and offering? !
6. What are the current service gaps which will need to be
filled with a new added-value offering? !
7. Should the new services be branded, sub-branded or
identified through a descriptor? !
8. How sustainable is the new added-value services and how
quickly can competitors match the offering, driving
commoditization and price competition? !
Answering these key questions will assist in helping define the
ideal added-value services that are differentiated and
sustainable for the retailer.
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7. Branding Added-Value Services
!
Once the right service type has been identified through a
review of the various questions and current business model,
the next challenge is to develop the service branding strategy.
Branding is very important because it influences customer
perceptions, trust and awareness. Retailers may choose to use
their own “private label” brand service, bring in a reputable
outside brand through a co-branding partnership, or use a
combination of the two approaches. !
Determining the appropriate use of these branding strategies
depends on the type of service and how quickly it needs to
take effect and the role of the service on the overall branding
of the business. For example, offering a service with the retail
store name can help build brand equity. Creating a completely
new brand for a service will take more time to create
awareness and a positive image. Conversely, using a co-branding
store-within-a store partnership is a quicker way to
establish trust of a service. Using a new parent brand
combined with a new brand co-branding strategy is an
efficient way to develop the brand, since qualities of the
former will be absorbed by the latter. In this case, it is
important that both brands are mutually beneficial and are a
natural fit in terms of brand personalities (Leuthesser, Kohli, &
Suri, 2002). !
Consideration should also be given to understanding how
branding of the new services can build differentiation and
reinforce the organization’s position and direction. Often, the
introduction of a new brand or sub-brand leads to confusion in
the market place and may undermine the credibility of the
organization. Conversely, if the current organization lacks the
credibility or brand trust to deliver the new services, the launch
or acquisition of a brand may help pave the way for success.
Best Buy likely went through the same process when they
chose to retain the Geek Squad name for their added-value
electronics and upgrade service.
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8. Conclusion
!
Providing a new meaning and purpose for bricks and mortar
channels of distribution is a highly topical subject amongst
retailers and their boards. A key opportunity is to provide
added-value services not available as part of an online
interaction, thereby driving greater affinity to an in-store
experience. The challenge is understanding which of these
services bring true value to customers that warrant better
margin and a higher degree of store loyalty. For the retailer, the
second challenge is ensuring their service platform and brand
trust can effectively bridge their current offering with those of
a new added-value service platform.
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9. References
!
1. Leuthesser, Kohli, & Suri, HENRY STEWART PUBLICATIONS
1350-231X BRAND MANAGEMENT VOL. 11, NO. 1, 35–47
SEPTEMBER 2003. !
2. Euromonitor International, “Top Consumer Trends for 2014”. !
3. Booz & Co., 2008. “Winning in Retail with a Targeted Store
Service Model”. !
4. A.T.Kearney, 2013. “Recasting the Retail Store in Today’s
Omnichannel World”.
!!
9 | Added-Value Retail Services | Research Paper | August 20, 2014