By Graeme McVie, LoyaltyOne
There is a significant migration underway in America. Big city dwellers are on the move — not necessarily to the suburbs, but rather to more affordable, up-and-coming metropolitan areas. According to census data released earlier this year, Americans are leaving cities like New York, Chicago and Detroit in favor of mid-size cities like Austin, Raleigh and San Antonio.
While there have been periodic, often cyclical shifts in population between cities of different size for younger people and from the Frost Belt to the Sun Belt for older ones, this latest trend includes all population groups and encompasses many different demographics. These current shifts require a new thinking on customer engagement across industries, but is and will continue to be felt strongest in the retailer sector. In short, retailers can’t operate under traditional assumptions of who their shoppers are going to be moving forward.
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The impact of this new round of urban flight on retailers is already dramatic. Some have already lost significant market share to existing competitors that have made adjustments in their merchandising strategies or to retail newcomers that have a more targeted value proposition.
To take advantage of the opportunities created by this population shift, here are five areas retailers should be mindful of:
- Importance Of Reassessing Their Shoppers: With a shifting consumer base, retailers will no longer have an accurate picture of who their potential shoppers are and which consumers and segments present the greatest opportunities. Retailers need to re-assess their shopper base and adjust their strategies to capitalize on where the greatest potential opportunities exist.
- Personalization: Retailers are pursuing increased personalization in their customer communications but due to budget realities are often forced to disproportionately focus these efforts on customers in their largest stores. They need to work out how to cost-effectively scale these personalized communication approaches to reach customers in all stores, many of whom may not have the largest current spend but represent the greatest opportunities to grow.
- Assortment Adaptation: With these midsize cities seeing thousands of new citizens (Austin’s population alone saw an influx of 92,812 between 2010-2013), retailers may need to gear their assortment to consumers who want a wider assortment, different pack sizes and more ready-to-eat and fresh options.
- Need To Bolster The Shopping Experience: Retailers in up-and-coming cities may need to re-think the layout of the store and the in-store experiences they offer consumers, with an expansion of fresh and foodservice offerings.
- Reconsider Store Operations: Retailers need to adjust the quantity of staff that are working at different time periods — they may need more staff available during lunch-time and just prior to dinner time — and alter store opening hours to cater to later evening shoppers.
By implementing some or all of these tactics, retailers can compete more effectively in the marketplace. Ignore the population trends and retailers run the distinct risk of not only losing market share but of becoming irrelevant, which may be much worse.
Graeme McVie is Vice President and General Manager of Business Development for LoyaltyOne, where he helps clients drive improved sales and profits through insight-driven, customer-centric strategies and solutions. He can be reached at [email protected].
