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Competitive pricing analysis

Winning in the German Consumer Market: Top Retail Industry Trends to Track

retail industry trendsRetailing in Germany is going through major transformations as consumers are increasingly becoming accustomed to the new retail trends in the market. Although the German retailers are widely known in the international markets, especially in the US in the context if their entrance into the North American market, the domestic German retail sector is also as sophisticated and competitive as other international markets with their own unique set of challenges and opportunities. In this blog, experts at Infiniti provide comprehensive insights on the current German retail industry trends.

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Top retail industry trends in Germany

Discounters emphasizing on customer experience (CX)

In some key German retail outlets also known as ‘no-frill discount stores’, pallets of products go straight from the backroom to the sales floor. However, with the changing retail industry trends in Germany, these retailers are beginning to emphasize more on improving customer experience in retail. Furthermore, supermarkets in this region have been investing heavily into private brands in order to steal the market share from discounters. As a result, the boundaries between traditional supermarkets and discounters are becoming less clear in the German retail sector.

Increasing value of omnichannel retail

Increasing mobility and a greater number of informed customers are making digitization one of the popular retail industry trends in Germany. As a result, German retail companies have increasingly identified the need to possess the agility that comes with an effective omnichannel strategy. However, most of these retailers lack a sense of direction that is required to make their omnichannel strategy successful. The industry is now waiting to see if these retailers will develop clear strategies and begin investing more into their omnichannel strategies or refrain from selling online.

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Introduction of Amazon fresh

There is some indication Amazon Fresh may be scaling its operations in the United States, but it is a relatively new concept to German consumers and is now being piloted in a few large cities like Berlin and Hamburg. Amazon Fresh delivers groceries directly to consumer homes in temperature-controlled bags. This year online sales in Germany saw a rise compared to the previous year, but it remains to be seen how consumers will respond to specifically ordering groceries online.

The aging German shoppers

The German population is growing older and this is making a significant impact on the retail industry trends in the market, affecting how retailers sell. To cope up with the changing retail industry trends, German retailers are rethinking store layouts, making product packaging easier to read, and putting benches in stores, all in an effort to better serve older customers and enhance their customer experience.

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Market segmentation

4 Common Retail Market Segmentation Mistakes that You Might be Making

Even the most successful retail companies agree that the ‘one size fits all’ approach is no longer a viable option to survive in today’s exceedingly competitive marketplace. As such, they are using techniques such as retail market segmentation to stay ahead of the game. However, often the lack of preparation or faults in implementation of a retail market segmentation strategy is where companies fail, and this is just the beginning for any retailer looking to segment their audience and better target the most valuable consumers. With over 15 years of experience in engaging retailers in successful retail market segmentation analysis and implementations, experts at Infiniti Research have identified four retail market segmentation mistakes that companies often make and also suggests how to avoid them.

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Why do retail market segmentation strategies fail?

 

Retail market segmentation

Defining segments too broadly

Segmenting the customer segments too broadly is one of the most common retail market segmentation mistakes that most companies make. This will consequently make them fall short to a competitor who targets more narrowly. Retailers can successfully create narrow segments by analyzing their customer accounts, website visits, and transaction history. By doing so, companies can better target customers. For instance, a customer who may be frequently purchasing a particular product and may be interested in a new and improved version of the product that the company is planning to launch. Although this might be challenging to achieve at the moment, but it would be more feasible when over time more and more data is gathered.

Not aligning business by market segments

Successful retailers tend to create market focused teams or segments which later gets organized into a market-focused business model. This allows the customer communications and transactions to be more targeted, consequently, making the business more streamlined. Businesses who refrain from doing so are more likely to find their retail market segmentation strategy fail.

By segmenting your customers into different, narrow subcategories, you’ll create more targeted experiences for them that result in better marketing and a better ROI from your marketing efforts. Get in touch with our experts to know how we help our clients achieve this.

Managing segments locally

Some businesses that operate in a smaller market currently tend to set up their retail market segmentation strategy to only apply to their local or regional organization. Although this may work well at present, in the long run when the business grows there are chances that the retailer will get blind sided by a more dynamic global economy.

Unclear retail market segmentation results

An effective retail market segmentation analysis should provide the company with strategic direction to move forward. Furthermore, it should also provide a clear idea of which markets are the most viable to target. If a retail market segmentation research does not meet these requirements, then it is an indicator of a failed approach. So, before beginning, get your research team together and clearly define their goals and the information you’re aiming to get.

Learn more about Infiniti’s solutions for retail businesses.

Market research analysis

How Market Research analysis helped a Big-box Retailer Fine-Tune Their Processes to Adapt to the Changing Retail Dynamics in the US

As e-commerce and specialty stores grow in appeal, big-box retail stores are gradually losing relevance. The numerous store and company closures across several categories over the last decade is a key indicator of the shrinking demand for big-box retail. One of the prime reasons for this is that customers are no longer keen on being anonymous shoppers in large retail stores. Consequently, big-box retail companies must shift their strategy from competing on access and selection to providing better discounts and staging greater consumer experiences. Moreover, the proliferation of ecommerce stores in the US that are able to offer a wider option when compared to brick and mortar stores, consumers are becoming more inclined to use these platforms for making a purchase. All these factors are making it highly challenging for big-box retailers to grow and retain their customers. This is where the benefits of leveraging a market research analysis comes into play.

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Market research analysis

Business challenge

The client: A big-box retailer with stores across North America

Industry: Retail & CPG

A major big-box retail chain observed a steady decline in their store traffic over two consequent quarters. They were facing predicaments in identifying the exact reasons for the sudden reduction in the footfall. In an effort to increase their store traffic, the client even invested aggressively into promotional campaigns. However, they failed to achieve the desired viewership and conversions. This also had a great impact on their overall sales and profitability, with the net profits plunging by at least 15% each quarter. The client approached Infiniti Research to identify the critical reasons for their reduced footfall and traffic and also identify strategies to get back on track with the help of our market research analysis.

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Furthermore, by leveraging our market research analysis solution, the client also wanted to tackle other key challenges including:

Build brand loyalty

As consumers today have a wide range of options to choose from, they tend to switch between different online and offline platforms to make a purchase. With Infiniti’s market research analysis, the client wanted to identify the factors affecting consumer purchase and brand loyalty and build appropriate strategies to retain their customers and turn them into repeat shoppers.

Identify the right marketing channels

The client’s previous promotional strategies failed as they failed to identify where their target customers are before investing in marketing campaigns. Using Infiniti’s market research analysis solutions, the client was keen on grouping different customers based on their purchasing behavior and create targeted marketing campaigns to attract these segments.

Create promotional strategies

With the help of our market research analysis, the big-box retailer also wanted to understand their competitors’ promotional activities and strategize their own promotions and discounts accordingly. They also wanted to learn how their big-box retail counterparts are withstanding competition from new players such as ecommerce and specialty retailers.

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Solutions offered

To help the client tackle the above-mentioned challenges, the experts at Infiniti Research conducted a comprehensive retail market research analysis. The market research analysis involved qualitative and quantitative market research for augmenting sales and targeting the right audience for the big-box retailer. The experts at Infiniti also carried out a market trend analysis in order to understand the change in market trends that are affecting the sales and profitability of the business. The industry best practice assessment undertaken as a part of the market research analysis also provided the client details about the strategies adopted by their peers in the market to withstand competition from ecommerce and specialty retailers and retain their customers. The market research analysis also included a customer satisfaction and loyalty assessment through which the client was able to gain a better understanding of what their customer expectations were and their gaps in fulfilling them.

Results obtained

By leveraging Infiniti’s market research analysis, the client identified that one of the key reasons for the declining footfall was the lack of personalized in-store experience and offers. The market research analysis study helped the big-box retailer understand the promotional tactics adopted by their counterparts and formulate similar offers that were most viable for their business and at the same time attract more customers. They were also able to identify the right promotional channels where their target customers were most active and undertake targeted marketing campaigns to drive more sales. As a result of these targeted campaigns, the big-box retailer also observed a rise in the number of repeat shoppers.

By leveraging our market research analysis, the client consequently saw an increase in their profit margin by 25% within 6 months.

Learn more about how Infiniti’s solutions can help overcome challenges in retail.

Market Assessment

A Leading Fashion Retail Brand Curtailed Losses and Increased Revenues by 20% – A Customer Segmentation Case Study

Business challenge

Over the last decade, the retail industry has undergone incredible disruption, largely impacting how customers shop and what they expect and demand from retailers. Fashion retail is one of the most dynamic segments in retail, wherein companies have to keep a constant watch on the changing trends. A failure to do so would result in a considerable decline in their market share. Although fashion retail is a highly united industry, the owners of fashion brands may find it difficult to thrive in the fiercely competitive industry due to its ambiguous nature. As the pace of change in the fashion retail industry accelerates, the need to have an innovative and sustainable customer segmentation models have become imperative.

Recently, a fashion retailer based out of Central Europe faced a decline in their overall sales rate. They also noted a substantial reduction in the number of frequent and repeat buyers. The company, therefore, approached Infiniti Research to undertake a detailed analysis to better understand the European fashion retail industry. The client wanted to leverage our customer segmentation solution to examine customer behavior, identify segments with a high potential for losses, and devise a mechanism to better understand the changing customer needs.

Building a customer segmentation strategy is no easy task, but within the retail sector, it is quickly becoming a necessity. Request a FREE brochure to know how our solutions can help you build an ideal customer segmentation strategy.

Solutions offered and value delivered

Infiniti’s customer segmentation analysis included a study based on a combination of factors such as customer needs, purchase patterns, attitudes, and behaviors. The customer segmentation solution offered to the client helped them uncover lucrative, under-served customer segments. Furthermore, gleaning insights into the potential customer segments helped the fashion retailer to determine the profit potential of each segment by analyzing its revenue and cost impact. The unique customer segmentation strategy also empowered the client to differentiate their brand from the global competition. This, in turn, helped them break through the cluttered market space with a unique and convincing proposition.

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In a span of eight weeks, the client was able to transform their operating model into a more segmented, customer-relationship based structure. This helped them to improve their wallet share and increased their overall revenue by 20%.  Moreover, with the help of Infiniti’s customer segmentation solution and recommendations, the client was able to increase their customer retention rate by 2X.

Importance of customer segmentation

customer segmentation

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Market Intelligence

Retailers Taking the Path Less Trodden – Small is Set to be the New Big

Gone are the days when every company in the retail industry aimed at opening a chain of big-box stores with a space of 110,000 plus sq. ft. offering a wide range of products cheaper than other retail stores, aimed at providing a one-stop shopping experience to the consumers and encouraging them to purchase in bulk to save money. The big-wigs of retail and consumer packaged goods (CPG) industry such as Target, Wal-Mart and Best Buy are now taking the path less trodden, literally. These players have joined the latest trend that has taken the retail industry by storm, everyone’s going small – it’s the new big.

The “Smaller is Better” Philosophy

The idea of giant big-box retail industry foraying into the small format stores was something that no one predicted, but today, retailers have begun devising new strategies owing to the ever-changing preferences and shopping habits of consumers. “Why go Small?”, You ask. Here’s why,

  • Small format stores help retail industry venture in space-constrained and overly populated urban areas with little or no competition and
  • It helps retail industry tackle the online competition on various facets such as product assortment and variety, convenience and delivery time.
  • Smaller stores are also expected to yield higher sales per sq. ft. and increase in footfall.
  • These stores can be used to mirror the local needs of customers, with product range and assortment tailored specifically to the demographics of that area.

Small Stores – What’s in it For You?

For decades, the retail scenario in the Americas has been dominated by big-box store giants, but there has been a slow and gradual shift towards the so-called smaller footprint stores. For the consumers, this reeks of higher ‘convenience’ and ‘accessibility’. It means more locations closer to where the consumers are present, thereby translating into a much faster and convenient shopping experience for all. The small-store format is a promise of a quick and easy experience to cajole the consumers to actually make an effort to visit a physical store.

The Big and Small of Everything; Driven by Data

In nearly a decade from now, customers will outgrow the ‘one-size-fits-all’ approach of mass and big-box retail and gradually start seeking for smaller stores that will cater to their individual needs. Thereby making data and insights the secret ingredient for retail success. In order to know their customers and deliver unique and worthy shopping experience, retail industry need to make use of market and customer intelligence that will help them to tackle challenges and achieve growth, innovation and operational efficiency. Retail industry need to assess the competitive landscape and identify the most profitable customer segments and demographics in order to take the big plunge.

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