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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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Insight around the world

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ROBERT HOWIE, MANAGING DIRECTOR, C SPACE

Over the past four years, we’ve listened to over 95,000 shoppers in the US and they all told us one simple truth: the businesses that they love, that keep them coming back, are those that deliver against their emotional needs as much as their functional ones. Further, we’ve identified five emotional cues that customers respond to (reflected in their buying behaviour): Empathy, Openness, Relevance, Ease, and Emotional Rewards. Companies that deliver on these needs have better financial results than their competitors.


Iconic brands like L.L.Bean, Nordstrom, Amazon and Disney top the list of best customer experiences in the USA in 2018, according to our 2018 ‘Customer, Experienced’ study.


Texas Roadhouse ranked 2nd for customer experience. It’s a restaurant chain that over-indexes on Empathy. Touches like allowing customers to choose their own cuts of steak or letting them look at it before it’s seasoned brings that magic you get when you’re watching Julia Child on TV, or when you’re trying to impress the friends that you have over for dinner.


Amazon (ranked 7th) stands out for Openness; a crucial part of any human relationship, and Amazon, like any good friend, is reliable and dependable. Customer service resolves issues immediately and it always delivers (literally and figuratively). The company has redefined retail in every sense and its hefty trillion dollar market cap speaks to that.


Nike (ranked 19th) knows how to provide Relevance by sharing its customers’ values, and Hilton (ranked 9th) is winning the Ease battle by providing a consistently seamless experience.


Luxury retailers like Nordstrom (ranked 5th) are tapping into their customers’ desires in different ways. The retailer is easy to do business with, and places great emphasis on delivering Emotional Rewards, like its recently introduced ‘Nordy Club’ loyalty program. If you’re a member, you’ve got early access to style and beauty workshops, free alterations and more. The more you spend, the more rewards you get – which panders to the emotional creature inside all of us that says, ‘I feel smart for shopping here.’ Once a company has that open dialogue with the emotional creature – they become hooked. Then you’ve got more than just a customer. You’ve got a promoter.

 

Noriyuki Matsuda, Founder and CEO, Sourcenext

Japanese IT literacy is lower than what people would expect. As a result of this, instead of consumers buying goods on Amazon, they like to visit large brick and mortar retail stores (i.e. Yodobashi Camera), and learn the technical aspects of products directly from in-store salespeople.


Therefore, having extremely well trained sales representatives who can provide consumers with excellent service is exceedingly beneficial for anyone looking to enter the Japanese retail market. The Japanese distribution channel is very complex and very domestic in the way that everyone must be able to speak Japanese to do business. Because of this, it is very important to have strong partners in Japan who can help with translation, as well as running day-to-day aspects of the business.


Since there is such a necessity for quality customer service in Japan, businesses will need to focus on that area, with support from a Japanese speaking service representative. Japan is known for its stellar customer service levels, which are consistently better than other countries.

 

This is largely due to the fact that over half the population takes their business elsewhere after having a poor customer experience. In order to retain customers in the Japanese market, you need to make sure your customer experience agents are always at their best.


Brands in Japan are still grown through television advertisements with television advertising and promotion having a much larger impact in Japan than in other markets, including the United States.

 

From a marketing perspective, television commercials are still a very useful way to create brand awareness so it is important to make sure that your brand is targeting the appropriate demographics through that channel.


Customer obsessions are key to brand success, and creating a superior in-store experience will keep bringing customers back into brick and mortar stores. Introducing “old school” retail culture to your employees, with a focus on ambience and a fully immersive retail experience, will help global brands stand out in Japan. No matter how quickly technology changes, there are certain aspects that stay the same, like being appreciated and having a sensory experience.

 

EMMA HERROD, EDITOR, INTERNET RETAILING

New Look is closing all of its physical stores in China following a review of the company’s international strategy. The fashion retailer, which has been gradually reducing the number of stores in China, is set to close the remaining 120 by the end of December 2018. Its head office in Shanghai will close shortly afterwards.


The exit follows substantial investments in recent years but New Look says that the sales and profitability of the Chinese business are not high enough to support “the significant future investment required to continue these operations”.


The company has been operating a store on Tmall and is currently reviewing options with regards to continuing its ecommerce trading operation in China “Having reviewed the trading performance of our business in China and the substantial investment required to continue operations in the market, we have made the difficult decision to exit our stores in China,” said Alistair McGeorge, Executive Chairman, New Look. He added: “As our turnaround plans continue, we remain focused on ensuring that New Look is well positioned to drive strong business performance and profitable growth.”


The strategic review of New Look’s other international markets is continuing.


Meanwhile, luxury retailer Hermès is continuing with its expansion in China with the launch of an ecommerce site in October. The company has also opened a store in Xi’an, Shaanxi Province, bringing its store estate in China to 25.


Fashion retailer Cos, is launching online in China too with a shop front on Tmall and a standalone site cosstores.cn. The company already operates more than twenty brick and mortar stores in 17 cities in China with further openings planned. Cos Managing Director Marie Honda said that she’s looking forward “to this new chapter ahead.”


Single’s Day, the biggest sales day of the year across Alibaba in China, reached a massive $30.8bn (£23.84bn), 27% higher than last year’s figure. 2018 marks the 10th anniversary of the 11.11 Global Shopping Festival which sees Chinese consumers buying from domestic and international brands. Over 40% of consumers bought from international brands with Apple, Dyson, Kindle, Estée Lauder, L’Oréal, Nestle, Gap, Nike and Adidas all doing particularly well reaching more than £11.12m in sales on the day. The leading countries selling to China were Japan, the US, South Korea, Australia and Germany.


Elsewhere, Inditex, owner of fashion brand Zara, has announced its ambitions to sell all of its brands online around the world by 2020. This includes in markets where it does not have any physical stores.

 

DERRICK HARDMAN, MANAGING DIRECTOR UK & IRELAND, GLOBAL BLUE

eagerly await Golden Week, a small window following London fashion week and pre-Christmas, which has long been established as the industry’s bumper season. Throughout the Golden Week period, wealthy Chinese shoppers traditionally flock to the UK and Europe to purchase new season, luxury products from leather designer accessories to the latest fashion collections.
While much of 2018 has been characterised by slow sales and a difficult retail environment, our latest insights reveal that October’s Golden Week holiday provided some welcome relief as an influx of affluent Chinese tourists made visits to luxury retailers and hotels across London and the wider UK.

 

Throughout October 2018 tax free spending from Chinese visitors in the UK increased compared to September 2018 and these visitors remained the UK’s largest group of tax-free spenders. Chinese visitors accounted for 32% of total tax free sales in the UK in October 2018, compared to 25% in September 2018.

 

Chinese tax free spend in October 2018 was also +4% higher than the second largest group of tax free spenders, which was Middle Eastern visitors who represented 28% of all UK tax-free spend.


Throughout Golden Week, many luxury retailers focused heavily on strategies to make their brand more appealing to Chinese visitors in order to promote spend in store. This included introducing more Mandarin in-store, highlighting products specific to the Chinese market and adding touches of China’s lucky colour red.


The growth and appetite for retail in the Chinese market, as seen during Golden Week and more recently Chinese Singles Day, where spend was up 27% on last year in China, proves how important it is for retailers to develop customised, welcoming experiences for international visitors as we move into the busy Christmas season.

 

Moving into the festive season, we anticipate that our new London Lounge in Mayfair will continue to welcome more visitors from key international markets such as China, The Middle East and America who will enjoy an early tax free refunding service.

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