Kmart came to Australia from the US in 1960s, and in the past couple of years under the leadership of Guy Russo, has turned its fortunes around, moving from bargain basement to the nation’s number one department store.
Those who have read some of our previous columns, seen our LinkedIn posts or saw Guy Russo speak at our ‘Fit for Business’ Conferences in Sydney and Melbourne in March 2016, would know of the extensive period of listening Russo went through before making any big strategic decisions. “Kmart store managers were working with a business model that was broken. There were so many processes – and those processes were broken – but people in the stores knew where it was going wrong”.
Before long, Guy had a strategic plan in place from slashing product ranges to narrowing its price positioning, however how do you change the negative perceptions, customer scepticism and stigma that had grown over the past few years? While Guy was bringing in new product assortments, one of the biggest challenges was how could you change people’s perceptions if they wouldn’t even walk in the store?
While many retailers and brands don’t quite have the legacy and mileage Guy Russo was battling against, we regularly see changing customer perception can be an issue that faces many retailers across Australia. So what lessons can be learnt from this discount department store?
Firstly, understand who your influencers are. Look inside your stores, who are your customers and who’s opinion’s do they value. For Kmart it was mums influenced by other mums. These mums were not inspired by bloggers, or celebrities, they had their age-old network of recommendations and therefore would rely on each other as their biggest source of influence. They were price conscious, and wanted a cheaper, easier shopping experience, without the negative connotations.
Next, create advocates out of these influencers. Encourage them to share their positive experiences. Not sure where to start? Take inspiration from global best practice. Consider who has similar influencers and how they demonstrate their advocacy. Kmart showed the customer the way, using bloggers from America as examples of being proud of cut-price. As social media platforms started to evolve so did the customer community. Mum’s began to share their purchases and feel a sense of pride towards their items and the brand Kmart. They were shown the direction but left to their own devices – have faith in your influencers. If you’re truly listening to them and consequently catering to their needs, they will become your advocates.
Reward and engage your advocates to build trust. Reward your advocates by giving them face to face interaction with the brand. If they are rewarded for their opinions and therefore feel listened to and understood – a relationship based on trust will grow.
As you grow your customer relationships, ensure honesty and transparency to cement the relationship. When facing the challenge of changing customer perception and brand stigma, the ultimate test is making a large strategic shift in your retail model knowing it will directly impact your key market (and influencers). However you must consider the relationship you have been building with your advocates and what they value the most. Don’t shock them with this strategic change, invite them to be part of it. Be honest and transparent, give them the ‘why’ direct from the source, ideally in a human to human environment where they have the opportunity to ask questions. If they understand why and witness your transparency, they are more likely to support it.
Trust in your advocates to allow you to take risks. The great thing about investing in your influencers and advocates is that by building these relationships and trust, you will not only be invested in them, but they will be equally as invested in your business. Organically you have grown a strong ecosystem, or a community who not only rely on you, but that you can rely on to fight your battles with you.
Risk is important for business growth. If there are unknowns, let your customers guide you. This ecosystem will become your sounding board for new ideas. One of the biggest challenges for any business emerging in a new, grass roots space, is there is no history to measure against. Without those guidelines we tend to avoid risk, stick with what we know, and ultimately often miss out on innovation and growth.
This discount department store shows us how powerful it is to take risks, but with a strong understanding of your customers, let them guide you. They will tell you if something works, and if it does, don’t try to dilute or guide it.
Taking this back to the Kmart case study, as social media evolved and Kmart began to launch social media hash tags to assign to their three ‘worlds’ (clothing, home, kids), it was #kmartstyling that stuck and resonated with their audience. And so the brand has run with it, allowing the customer to lead the way. Consequently, Kmart’s UGC has organically erupted, which ultimately is the most powerful content they could have wished for. It’s real, it’s organic, and there is trust at the core of the relationship between brand and customer. If Kmart had tried to commercialise or constrict this UGC, there is no doubt it would have faded out. However, the people owned it, they were proud, and the brand was giving them exactly what they wanted.
Changing customer perception is always going to be a challenge for retailers big or small, however as these lessons from Kmart have shown, trust based relationships, empathy and understanding your customers will always be key.
Vikki Weston, author of this column, is part of Retail Doctor Group’s Retail Insights team and can be contacted via email at firstname.lastname@example.org.