Q&A with Retail Marketing Expert Frances Yu on Retail Branding and Loyalty Marketing

Q1: As a retail expert, who are the top 3 retailers you admire most and why?

Locally, Rustan’s, SM, and Bench.  These homegrown brands all had humble beginnings and through the years have grown tremendously through constant evolution while remaining true to their brand essence, DNA, and heritage.

Rustan’s represents quality, service, and world-class products and experiences.  It has defined luxury retailing in the Philippines by bringing the best of the world to the Filipino consumer.  It set the standards for excellent customer service that remains unmatched to this day.  It continues to diversify into different businesses, all the while remaining true to its brand essence.

SM truly has it all–malls, department stores, supermarkets, specialty stores, and a whole lot more.  It offers unparalleled affordability, breadth and depth of merchandise, services, leisure, and entertainment for a broad base of customer segments.  SM is the market leader in most of the areas in which it operates.

Bench defined marketing for specialty stores in the Philippines.  It pioneered the use of celebrity endorsers, like Richard Gomez; the use of provocative advertising and events, and the use of giant billboards that captivate its audience.  The brand has grown tremendously from a small store selling men’s t-shirts to one of the most admired brands in the country.

Q2: Retail shopping is a therapy for many but there are tons of things needed to be done to make customers enjoy their shopping experience, what to you are these indispensable elements within the retailer’s organization that need extra attention?

Retail is very simple, but also very complex.  Retailers need to provide something of value in exchange for their customer’s time, money, and effort.  The key elements in defining value for customers are:  Product, Price, Experience, and Convenience.  Different retailers define value differently depending on their target customers.

Under product, you can have a range that offers depth or breadth, exclusivity, private label, speed, or ideology.  For pricing, you can have everyday low pricing, high value pricing, very premium pricing, or one price.  For experience, you can offer entertainment, expertise, bargain, pampering and a whole lot more.

The key is to define what and who you are, your market, and how you will reach that market.

Q3: What retail format is the most difficult to manage and why?

I think supermarkets are particularly challenging as they sell commodities that you will find in every other supermarket, have a high cost structure, and low margins.  To succeed in this format you will need a very strong value chain, which is comprised of logistics, process, data and supplier relations.

Q4: In your previous work with the Rustan’s group, what were your biggest successes and failures? Can you share with us the lessons you learned?

In my work in particular, I’ve been privileged to be part of the successful founding and growing of the Shopwise hypermarket that began in 1998.  From one store, it has grown to a multi-format retailer, with about 40 stores and counting.  It has also partnered with multi-national retailer Dairy Farm Group.  From zero sales, it is now a multi-billion peso operator that has carved a unique place for itself in the retail landscape.

The most important lesson I’ve learned in all the years I’ve worked in retail is that

the only lasting success comes from living one’s life and conducting business with integrity and truth. Success cannot be built on dishonest practices, injustice, and unscrupulousness. As we have seen from the examples in the world today, success built on lack of transparency is like a house of cards that can fail at any time. There are no shortcuts to success. In time, companies that do not have a solid foundation of values will fall apart. It is harder to be honest in business, but it is worth it because you can truly relish your success.

Q5: The bargaining power of manufacturers has shifted to the chain stores with many branches decades ago and channel margin has shifted as well.  What kind of suppliers would progressive retailers like to work with and why?

Progressive retailers want to work with partners who understand their business (who understand retail from a retailer’s point of view); have a sincere desire to grow their business (not just their brands but the retail store as a brand); and who are really looking for a win-win situation (not just sophisticated ways to advance one’s agenda).

This is more challlenging than it sounds because the retailer and manufacturer objectives will often clash.  For as long as both parties keep the shopper/customer at the center of all its programs and collaborations and there is mutual trust and respect then most obstacles and challenges can often be overcome.

Q6: How do you reconcile different goals of store loyalty of the retailers vs brand loyalty of the manufacturers?

The brand building process of retailer and manufacturer is directly opposed to each other.  A retailer builds loyalty in-store, while a manufacturer does it outside.  For a retailer, the in-store experience will drive loyalty to the retail brand.  So most retail advertising will be spent in-store on such elements as displays, signages, store design, in-store promotions, service, employees, etc.  When a manufacturer advertises, on the other hand, it has to make sure their brand awareness and preference are as strong as possible before the consumer enters the store.  In the store, the consumer is confronted with lots of brands.  At that moment, the manufacturer does not have as much influence.

To reconcile these two inherently conflicting process, both retailer and manufacturer need to identify mutual opportunities to build loyalty for both the brand and the retailer using both mass media advertising and in-store advertising.  Through mutual cooperation, a manufacturer can help retailers reach a wider audience and drive more traffic in-store through its mass media advertising, while a retailer can increase brand preference in-store for a manufacturer through in-store communications.  The key is cooperation informed by mutual trust and respect.

Q7: What makes customers keep returning to a retailer? Will a decline likely occur in the future since teenagers visiting stores (in the US) has declined from 38 times in 2007 to 29 times a year (source: Piper Jaffray survey).

Winning customer loyalty is one of the most important criteria for sucess for any retail business.  To generate in-store traffic, repeat visits, increase average spend and maximize customer lifetime value involves many interrelated factors that span the entire organization. Retailers can use these four guide questions in designing their value proposition and customer bonding tactics:

1) Which customer type gives you the best growth and profit opportunity?

2) What do you want them to remember about you and how do you make that stand out?

3) How do you make yourself continuously unique and relevant?

4) How are you developing your capabilities in social media, technology and database management, employee empowerment and customer engagement?

Q8: You graduated summa cum laude at Fordham University, not a small feat, what are lessons at school that you were able to apply in the retail setting?

With everything, there is no shortcut to excellence.  This is the same in the retail business. You need discipline, consistency, and a passion to serve, day in and day out.

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