Catalyst EU 2015: The three pillars of wisdom for retailers

Justin KingJustin King, CBE and ecommerce sceptic was CEO of Sainsbury’s for over a decade and delivered the final keynote at ChannelAdvisor Catalyst 2015. He told how he nearly cancelled Sainsbury’s entire ecommerce operation when he saw their P&L sheets, but fortunately found a way to make it work.

It turns out that buying groceries online doesn’t cannibalise instore purchases, ultimately after a few months those who buy online spend more than ever instore and the customers to target are those living closest to a Sainsbury’s who already shop there! You need to know where to spend your marketing dollars and Sainsbury’s discovered it’s not the people living miles from a Sainsbury’s store, even if it might appear they’d benefit most from a home delivery service.

Justin told how retailers (online and offline) make the very simple mistake of not putting the customer first. Making his point he suggests the biggest mistake you can make is special deals for new customers. Give the deals and new services to your most loyal existing customers first and only then roll them out to new customers, who are harder to win in the first place.

The three pillars of wisdom for retailers, according to Justin are: 1) Increase customer’s basket size; 2) Increase the frequency of purchase and; 3) Win new customers. Justin says #1 is the easiest so don’t spend all your marketing trying to win new customers, look after your existing clients and increase their loyalty to your business.

Whilst bricks and morter grocery selling has different challenges to online retailing, Justin drew many parallels. He cancelled the bait and switch tactic of giving competing manufacturers vouchers when a customer made a purchase. It’s not putting the customer first he insists, say a customer buyers Coca Cola, whilst Pepsi might be willing to pay a large fee to give that customer a Pepsi voucher that’s not what the customer wants. Sainsbury’s scrapped competitor vouchers which upset their suppliers who wanted to spend big bucks as well as the marketing team who were devastated to lose the revenue stream!

Likening this to online retailing Justin talked about choice for the consumer. Don’t assume that you know what they want and don’t assume that just because your best 10% of customers want a particular service that the same deal works for the other 90%. Delivery is one obvious way to add value, some will want to click and collect, some will want next day delivery, some will want free or low cost delivery. Give your customers the choice and they’ll pick what works for them.

The last keynote of a conference is always great if it’s just as much entertainment as it is educational and Justin didn’t disappoint. When you’re all that stands between 700 odd people and a cold beer in the post event drinks reception you’d better be good. Justin didn’t disappoint and it was a great way to round off yet another fantastic Catalyst.