January 30, 2009
The Value of Time
By Tom Ryan
All this
rampant bargain hunting may be saving consumers money, but it also takes
up a lot of time, according to a research report from NCR Corp., the self-service
solutions provider. The extra time involves looking on the internet and
in circulars for deals as well as traveling to a greater number of stores
to find them.
A survey
of 500 U.S. consumers by BuzzBack Market Research
in December 2008 found that the markdowns are resonating as 80 percent
said that they are buying discount or sale items. But the survey found
that saving time and easing the buying process were also important to consumers:
- Fifty-three
percent are using the internet more frequently to research products and
prices; - Forty-six
percent want to receive price comparisons, product reviews, coupons,
promotions and store sales information online or via e-mail; - Forty-nine
percent are switching between retailers, ‘shop hopping’, to get better
value;. - Twenty-six
percent are making more frequent shopping trips to take advantage of
promotions; - Twenty-one
percent are shopping at stores with more flexible hours and 17 percent
are increasing trips in line with pay day.
Not surprisingly, NCR found that many consumers were looking for self-service
technologies as one way to speed up the shopping
process. Of those surveyed:.
- Seventy-two
percent were more likely to shop with a retailer that gives consumers
the flexibility to interact easily via online, mobile and kiosk self-service
channels versus a retailer that does not; - Forty-nine
percent believed kiosks that show them where to find products in stores
would be convenient; - Forty-three
percent believe receiving discount offerings and product information
on large screens in-store would be convenient; - Thirty-nine
percent want self-return solutions for processing returns quickly.
“People assume
that in an economic downturn the consumer is only motivated by price, but
this research shows that retailers also need to deliver on changing service
expectations that consumers say they value as well,” said Mike Webster,
chief strategy and communications officer for NCR, in a statement.
Discussion question:
Do you think saving consumers’ time has become more or less important
in the recessionary climate? Does this environment increase or decrease
the demand for self-service solutions at retail?
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Time isn’t the only variable. In these constrained economic times driving around (even using relatively lower cost fuel) may offset the appeal of those “sales.” Also, sales fatigue may soon set in–making these 60 and 70 percent discounts the new street price.
As to time itself it stands to reason that, like any resource, there’s less of it than there used to be.
Retailers need to pay attention to findings like this. The current “value = price” mindset that exists among consumers and merchants needs to be revised to “value = price + incentive.” In this case, the incentive to keep patronizing a store is convenience.
Even now, when merchants are closing stores, downsizing staff and trimming expansion plans, investing in tech remains important. Especially the customer-facing gadgets and apps that consumers want that help create a more pleasing and convenient shopping experience. And let’s not forget that tech-enabled customer service is just half the story. Good old-fashioned hand-holding and pleasant one-to-one interactions are just as valuable.
Customer service and the shopping experience should always be front and center. But we all know that both areas took some lumps on the head during the pre-2008, aspirational-spending heyday. Now that the recession has greatly leveled the playing field and reset customer expectations, this is the perfect time to refocus on retailing fundamentals. Get them right and they become key differentiators, both during the recession and when consumers start spending again.
Let’s be very careful about defining self-service. Any retailer that moves dramatically to self-service without enhancing customer service will ultimately lose its reason for being.
This discussion is very closely related to today’s Amazon discussion. When one looks at the ultimate that online retailing can offer, it leaves very little reason for their brick and mortar cousins to exist. The future in brick and mortar is face-to-face customer service. Ultimately, that is their only competitive advantage.
Sure–convenience is still an important factor for the shopper.
The rise of “presentee-ism” will make convenience even more imperative. What is presentee-ism? It’s the phenomenon where workers show up at their places of business, regardless of illness, forfeiting vacation and time off, because they are afraid of losing their jobs. They know that America is losing jobs at a rate of about 600,000 a month (NYT). This means more stress, less time.
The winning retailers provide quick and easy ways for their shoppers to find good deals fast, on the items they most frequently buy. And–at their store. This is a recipe for loyalty, which will outlast the recession.
Although the importance of time is not well articulated by shoppers, the reality is time is probably at least as important as money in terms of driving sales. Money is just money, but time is personal. Obviously there is an interconnection but we have become increasingly confident of Sorensen’s First Principle of Retail Sales: The faster you sell, the more you will sell.
Anyone involved in personal selling surely knows this. The longer it takes to close the sale, the more likely the customer is to not buy. This fundamental principle that dominates ALL sales transactions is flagrantly and willfully violated by many retailers as a matter of determined policy. I’ve heard this sales-destroying policy clearly articulated repeatedly: hold them in the store as long as possible.
There is further comment on Shopper Efficiency and Total Store Sales at http://www.tns-sorensen.com/
“It is all about relative utilities…”
There–I said it yet again. (I could hear the collective groan all the way to Chicago.)
Seriously, convenience and value are just two of many sides of the shopping experience evaluation criteria. Sometimes one supersedes the other in importance–but the BEST combination is always the one that optimizes the balance. A toothbrush for $1.99 versus $3.99 that requires a dedicated trip to the drug store may not be worth it. While a grocery basket of similar items that can be had for $51 in one 10 minute stop versus $50 and a thirty minute stop is a no brainer for consumers.
Sometimes we make this too hard.
I firmly believe that convenience has become an increasingly important factor. Otherwise, online sales wouldn’t exist.
Bottom line–we are catering to multi-channel shoppers that demand strong store and online experiences. No reason the two can’t be melded together. I think we are going to see more in the way of multi-function in-store kiosks that will not only locate product but enable people to order and purchase it. Per a conversation earlier this week, I believe the use of next-generation mobile phones as a payment system is coming. Small pilots are underway in Europe and Asia and it will be coming here.
Having said all this about the technology=convenience=sales equation, it would be a mistake to ignore price–no matter what the economic environment. Perhaps we should talk more about using the online channel to drive people to the stores with additional discounts, special offers, etc….
The self-service demands and needs of consumers has been alive and well since Sam Walton recognized this in the late 50s and then founded Wal-Mart based upon this concept. Save money, save time, increase customer service and reduce costs. This all spells out to a more satisfied customer. Increased customer service (in the store) and the consumer, who is spending more time trying to find bargains, will feel welcome by the store, rather than just an aggravation. Consumers are schizophrenic when it comes to saving money, and it still shows during a recession.
Ryan is right; time is not the only variable. However, if we consider just time, think about who is most concerned about low prices–those who have been laid off, downsized, or outsourced. Those people have time. However, they may not have the gasoline resources to drive around. IF they have Internet access, they can search online because they do have time.
The value equation is made up of several variables, among them price, quality, customer service, assortments, and convenience. There is no question that convenience has become an increasingly important component of that equation as price/quality has become commoditized, assortments rationalized and customer service minimized.
Convenience (which includes the ease of getting to the store, the ease of getting in and out, and the reliability of knowing the store will have what you want) has become a key differentiator for successful retailers, and accounts for the success of e-tailing and Amazon in particular.
As Ben noted above, the right balance of all the variables, and consistency, is likely to be the winning model. Amazon is a good example as they provide an optimum blend of price, convenience and transparency. To wit: for most items, Amazon has at or near the lowest price you’ll find anywhere, there are usually multiple sources for an item so you can price compare within the Amazon interface, there are detailed descriptions and consumer reviews so you can learn more about an unfamiliar product, there are multiple shipping options, and a “Prime” club so you can pay one flat fee and eliminate shipping considerations for most items. The list goes on.
What Amazon does well is create a track record of being the first place to check and the best place to buy, which ultimately saves the consumer a lot of time as well as money.
Shopping time covers multiple factors, covering hours of operation, travel time, search time, time to check out, delivery time, and time to return. So time-saving convenience is highly conditional:
– A mother will drive across town to a 24-hour drug store at midnight when she has a sick child, but she may leave a convenience store when faced with a long checkout line during the morning coffee rush.
– An electronics shopper may spend hours researching flat screen TV prices online but grow impatient when forced to wait 10 minutes for sales help at the local electronics superstore.
– A discount store shopper may watch TV at home four hours a day, but will attend to an in-store digital screen for exactly eight seconds before moving on to the next purchase task.
– An online shopper will gladly wait three days for free delivery of a purchase from a multi-channel retailer, but grow agitated waiting five minutes to return the same item at a local branch store.
These behaviors, I think, are relatively independent of current economic conditions. At the same time, we may observe that some shoppers will devote more time and effort to planned shopping trips by clipping coupons, preparing lists, and advance online price comparisons.
But the general rule (and its inverse) still applies in retailing: Time is more valuable than money for shoppers who have more money than time.
“Sometimes we make this too hard.” – Ben Ball
AMEN !!!
If we are indeed headed into a prolonged recession, retailers should rethink the issue of convenience/time. It has been a major driver for so long, that it is an assumption that retailers must provide a fast, convenient shopping experience.
In a long, deep recession, consumers may very well revert back to the days when shopping was a substitute for other forms of recreation, since they have little choice but to conserve their scare funds.
Spending hours finding a great bargain has two benefits; one is the ability to stretch the dollar further and the other is the savings from not going to dinner, a movie or whatever. Maybe we should rethink this paradigm.
Consumers are more thoughtful today about time, money and value. They are reconsidering convenience in much broader terms–from the products they choose to the stores they shop. They will not reward anyone who wastes their valuable time, and will balance cost savings against the difficulty to purchase and use.
Although not all shoppers are time-starved parents and professionals, no one wants to spend it hunting for things in the aisles, standing in checkout lines or figuring out how to use a product. Shoppers will return to stores and buy the products that simplify things, giving them time to spend in other ways they value more highly.
The real story here is the change in customer behavior.
Americans are so worried about the economy and its effects on their short- and long-term finances that they’re trying to avoid stores, and frequenting less-expensive ones when they do. There’s no reason to believe that they’ll stop doing this any time soon. This has the potential to marginalize aspirational retailing.
Shoppers don’t like to waste time waiting on line. Shoppers don’t like to waste time hunting for what they want, if the location (online or in a physical store) isn’t obvious. Shoppers don’t like to waste money. For these 3 facts, why pay for surveys?
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Time isn’t the only variable. In these constrained economic times driving around (even using relatively lower cost fuel) may offset the appeal of those “sales.” Also, sales fatigue may soon set in–making these 60 and 70 percent discounts the new street price.
As to time itself it stands to reason that, like any resource, there’s less of it than there used to be.
Retailers need to pay attention to findings like this. The current “value = price” mindset that exists among consumers and merchants needs to be revised to “value = price + incentive.” In this case, the incentive to keep patronizing a store is convenience.
Even now, when merchants are closing stores, downsizing staff and trimming expansion plans, investing in tech remains important. Especially the customer-facing gadgets and apps that consumers want that help create a more pleasing and convenient shopping experience. And let’s not forget that tech-enabled customer service is just half the story. Good old-fashioned hand-holding and pleasant one-to-one interactions are just as valuable.
Customer service and the shopping experience should always be front and center. But we all know that both areas took some lumps on the head during the pre-2008, aspirational-spending heyday. Now that the recession has greatly leveled the playing field and reset customer expectations, this is the perfect time to refocus on retailing fundamentals. Get them right and they become key differentiators, both during the recession and when consumers start spending again.
Let’s be very careful about defining self-service. Any retailer that moves dramatically to self-service without enhancing customer service will ultimately lose its reason for being.
This discussion is very closely related to today’s Amazon discussion. When one looks at the ultimate that online retailing can offer, it leaves very little reason for their brick and mortar cousins to exist. The future in brick and mortar is face-to-face customer service. Ultimately, that is their only competitive advantage.
Sure–convenience is still an important factor for the shopper.
The rise of “presentee-ism” will make convenience even more imperative. What is presentee-ism? It’s the phenomenon where workers show up at their places of business, regardless of illness, forfeiting vacation and time off, because they are afraid of losing their jobs. They know that America is losing jobs at a rate of about 600,000 a month (NYT). This means more stress, less time.
The winning retailers provide quick and easy ways for their shoppers to find good deals fast, on the items they most frequently buy. And–at their store. This is a recipe for loyalty, which will outlast the recession.
Although the importance of time is not well articulated by shoppers, the reality is time is probably at least as important as money in terms of driving sales. Money is just money, but time is personal. Obviously there is an interconnection but we have become increasingly confident of Sorensen’s First Principle of Retail Sales: The faster you sell, the more you will sell.
Anyone involved in personal selling surely knows this. The longer it takes to close the sale, the more likely the customer is to not buy. This fundamental principle that dominates ALL sales transactions is flagrantly and willfully violated by many retailers as a matter of determined policy. I’ve heard this sales-destroying policy clearly articulated repeatedly: hold them in the store as long as possible.
There is further comment on Shopper Efficiency and Total Store Sales at http://www.tns-sorensen.com/
“It is all about relative utilities…”
There–I said it yet again. (I could hear the collective groan all the way to Chicago.)
Seriously, convenience and value are just two of many sides of the shopping experience evaluation criteria. Sometimes one supersedes the other in importance–but the BEST combination is always the one that optimizes the balance. A toothbrush for $1.99 versus $3.99 that requires a dedicated trip to the drug store may not be worth it. While a grocery basket of similar items that can be had for $51 in one 10 minute stop versus $50 and a thirty minute stop is a no brainer for consumers.
Sometimes we make this too hard.
I firmly believe that convenience has become an increasingly important factor. Otherwise, online sales wouldn’t exist.
Bottom line–we are catering to multi-channel shoppers that demand strong store and online experiences. No reason the two can’t be melded together. I think we are going to see more in the way of multi-function in-store kiosks that will not only locate product but enable people to order and purchase it. Per a conversation earlier this week, I believe the use of next-generation mobile phones as a payment system is coming. Small pilots are underway in Europe and Asia and it will be coming here.
Having said all this about the technology=convenience=sales equation, it would be a mistake to ignore price–no matter what the economic environment. Perhaps we should talk more about using the online channel to drive people to the stores with additional discounts, special offers, etc….
The self-service demands and needs of consumers has been alive and well since Sam Walton recognized this in the late 50s and then founded Wal-Mart based upon this concept. Save money, save time, increase customer service and reduce costs. This all spells out to a more satisfied customer. Increased customer service (in the store) and the consumer, who is spending more time trying to find bargains, will feel welcome by the store, rather than just an aggravation. Consumers are schizophrenic when it comes to saving money, and it still shows during a recession.
Ryan is right; time is not the only variable. However, if we consider just time, think about who is most concerned about low prices–those who have been laid off, downsized, or outsourced. Those people have time. However, they may not have the gasoline resources to drive around. IF they have Internet access, they can search online because they do have time.
The value equation is made up of several variables, among them price, quality, customer service, assortments, and convenience. There is no question that convenience has become an increasingly important component of that equation as price/quality has become commoditized, assortments rationalized and customer service minimized.
Convenience (which includes the ease of getting to the store, the ease of getting in and out, and the reliability of knowing the store will have what you want) has become a key differentiator for successful retailers, and accounts for the success of e-tailing and Amazon in particular.
As Ben noted above, the right balance of all the variables, and consistency, is likely to be the winning model. Amazon is a good example as they provide an optimum blend of price, convenience and transparency. To wit: for most items, Amazon has at or near the lowest price you’ll find anywhere, there are usually multiple sources for an item so you can price compare within the Amazon interface, there are detailed descriptions and consumer reviews so you can learn more about an unfamiliar product, there are multiple shipping options, and a “Prime” club so you can pay one flat fee and eliminate shipping considerations for most items. The list goes on.
What Amazon does well is create a track record of being the first place to check and the best place to buy, which ultimately saves the consumer a lot of time as well as money.
Shopping time covers multiple factors, covering hours of operation, travel time, search time, time to check out, delivery time, and time to return. So time-saving convenience is highly conditional:
– A mother will drive across town to a 24-hour drug store at midnight when she has a sick child, but she may leave a convenience store when faced with a long checkout line during the morning coffee rush.
– An electronics shopper may spend hours researching flat screen TV prices online but grow impatient when forced to wait 10 minutes for sales help at the local electronics superstore.
– A discount store shopper may watch TV at home four hours a day, but will attend to an in-store digital screen for exactly eight seconds before moving on to the next purchase task.
– An online shopper will gladly wait three days for free delivery of a purchase from a multi-channel retailer, but grow agitated waiting five minutes to return the same item at a local branch store.
These behaviors, I think, are relatively independent of current economic conditions. At the same time, we may observe that some shoppers will devote more time and effort to planned shopping trips by clipping coupons, preparing lists, and advance online price comparisons.
But the general rule (and its inverse) still applies in retailing: Time is more valuable than money for shoppers who have more money than time.
“Sometimes we make this too hard.” – Ben Ball
AMEN !!!
If we are indeed headed into a prolonged recession, retailers should rethink the issue of convenience/time. It has been a major driver for so long, that it is an assumption that retailers must provide a fast, convenient shopping experience.
In a long, deep recession, consumers may very well revert back to the days when shopping was a substitute for other forms of recreation, since they have little choice but to conserve their scare funds.
Spending hours finding a great bargain has two benefits; one is the ability to stretch the dollar further and the other is the savings from not going to dinner, a movie or whatever. Maybe we should rethink this paradigm.
Consumers are more thoughtful today about time, money and value. They are reconsidering convenience in much broader terms–from the products they choose to the stores they shop. They will not reward anyone who wastes their valuable time, and will balance cost savings against the difficulty to purchase and use.
Although not all shoppers are time-starved parents and professionals, no one wants to spend it hunting for things in the aisles, standing in checkout lines or figuring out how to use a product. Shoppers will return to stores and buy the products that simplify things, giving them time to spend in other ways they value more highly.
The real story here is the change in customer behavior.
Americans are so worried about the economy and its effects on their short- and long-term finances that they’re trying to avoid stores, and frequenting less-expensive ones when they do. There’s no reason to believe that they’ll stop doing this any time soon. This has the potential to marginalize aspirational retailing.
Shoppers don’t like to waste time waiting on line. Shoppers don’t like to waste time hunting for what they want, if the location (online or in a physical store) isn’t obvious. Shoppers don’t like to waste money. For these 3 facts, why pay for surveys?