Major bankruptcies in non-food retail on the way, wrote RetailNews beginning of June. The reason is an analysis by a credit insurer, Euler Hermes. E-commerce is the culprit, along with stagnant consumer confidence and continued margin pressure. Classic players are stuck in traditional models; online retailers are in any case working on innovation, according to Hermes. Does that also apply to price fighters in the retail sector?

But according to Tadek Solarz online retailers shouldn't celebrate too soon. Because it is no longer possible to compete on price, this must be done on service and experience, and a major stumbling block is the 'free logistics': no ​​shipping costs, no return costs. Coolblue, bol.com and Wehkamp are all working on a new distribution center to reduce costs at the back. Solarz doubts that is enough. Online retailers all over the world are working on new or additional revenue models such as platform services – think of bol.com Plaza or Amazon, says Solarz.

Who is the discounter's customer?

It is and remains tight control in e-commerce land. All the more so because these companies have a relatively high overhead: offices, sometimes even shops, many staff, including for heavy IT for CRM and (online) marketing. On the other hand, they have a lot of knowledge about the customer and a loyal fan base (with corresponding NPS). They also benefit from sufficient scale for the time being – until Amazon – or another – really strikes in the Netherlands.

Scale and efficiency are two important conditions for survival in retail. That is something in which low-cost fighters in particular excel. I will name four: Zeeman, Action, Primark and Wibra. They are not in A1 locations and have invested relatively little in shops, IT, marketing or customer service. The advantage of the low-cost fighters is also their weakness. They do not know exactly who their customer is, because Wibra, Primark and Action do have a website where you can find the product range, but no webshop.

Prize fighters also want interaction

Nevertheless, Primark and Action find it interesting to interact on the website. For example, Primark focuses on engagement by, for example, encouraging customers to send selfies; Action offers the possibility to create a shopping list online (you can print it out and take it with you to the store). Zeeman does have a web shop, which is on a separate website. Don't expect too much from omnichannel customer service: "It makes no sense to contact or call Zeeman TextielSupers directly, because the customer service there does not have the data that is available at service@zeemanshop.com." The response time to an e-mail is a maximum of 14 days. Zeeman does not interact on Twitter, but does interact on Facebook.

Are there opportunities for price fighters to establish a relationship with their customers? And is it useful for them to retain customers? The question is of course whether the business model of a low-cost airline offers the scope to invest in customers (CRM, customer contact) and to reward them for loyalty. Let's zoom in on this.

The business model

Only Zeeman has a web shop, the rest of the formats rely on physical retail for the time being. If they don't work with a customer card, they don't know who their customer is. For the time being, that doesn't seem to be a problem, because the customer base of the low-cost fighters grows. Of course, that growth is not permanent; from that perspective it seems interesting to me to build a relationship with your customer.

In addition: what will you miss if your competitor already has a web shop? In that respect, Zeeman's choice is a wise one: not to be left behind. The fact that Zeeman values ​​web visits is evident from the smart marketing campaign in which a wedding dress for less than three decades was deployed (available online only). In the online model you can manage volume and margin even better than in physical retail: there is more to earn when orders become larger, you can use algorithms to present alternatives and choices for up- and cross-selling (there are no staff in the stores) available to advise).

Price fighters cannot escape customer experience

There is more to automate – a cashier and a shelf filler are no longer necessary. And online interaction, including questions and complaints, can be regarded as a cost-effective marketing tool: you help the customer via Facebook, but that is immediately visible to everyone. If Zeeman starts doing more marketing and focuses on e-commerce, something will also have to be done on the service side. Price fighters will also have to take into account the development of the customer base. Something similar to McGregor can also happen to them: excellent brand and excellent (online) shop with a slightly aging target group that has unfortunately forgotten to interest new (younger) groups of customers.
In this respect, I think Zeeman's current choice is a smart one. This store seems more or less ready for an omnichannel future. But what is seen as the future today may be obsolete in two to three years. Are Zeeman and the other price fighters ready for eBay, Alibaba, Google Shopping and Amazon? Or do they have eternal life anyway?

Niels van den Broek –Business Development Director, Teleperformance Benelux

Customer Experience, Technology Teleperformance