Old-Time Retailing Concepts Still Ring True

While channel surfing, I came across a rerun of "Little House on the Prairie" and was struck by how little the fundamentals of retailing have changed. In this episode, Mr. Olson, the owner of Olson's Mercantile, asked "Pa" Ingalls if he had enough livestock feed and at the same time gave "Half-Pint" a piece of her favorite candy. While this portrayal is fictional, "Little House on the Prairie" actually shows the type of customer service that occurred more than a century ago. No one can deny that retailing has become a complex endeavor with more product variety, multiple channels, highly efficient multipipe supply chains, and fickle customers. But the fundamentals are still the same as at Olson's Mercantile.

When Mr. Olson's customers walk through the front door, he already knows a lot about them - what they do for a living, how many children they have, and what they bought last week (or even last year). Every customer interaction is a focus group that helps him fine-tune his retailing strategy. Knowing and understanding customers isn't as easy today, but don't let data complexity be an excuse for not trying. Customer relationships are still based on information - just more of it. Retailers that understand the power of information are using technology to turn data into a strategic decision-making tool at the store level. Your retail organization can become a better suggestive seller and more precise merchandiser by using technology to mimic Olson's Mercantile.

Managing Inventory - The "Virtual" Back Room
As a small retailer, Mr. Olsen always knew what he had on hand, what was on order, and when it would arrive. If a customer couldn't find something, he knew almost immediately whether or not he had more in the back room. In other words, he had the ultimate in supply chain visibility. As retail complexity has increased, we've gotten away from the concept of quality service within the supply chain. We need to get it back - not just through relationships, but through data. Retailers have to do a better job of managing supplier relationships and improving their ability to visualize every single point in the supply chain. When we do that, we'll be in a better position to create a "virtual" back room that improves our retail operations.

Establishing A True Customer Relationship
Now that we have all of these incredible tools for gathering a customer's personal information, a debate rages about how and when that information should be used and by whom. Mr. Olson dealt with this issue pretty easily, and I guarantee he had more personal information on his customers than we ever will on ours. He wouldn't dream of providing personal information on his customers to a third party - no matter how much he was paid. Nor would he use that information in a way that would damage his long-term customer relationships. When you consider the cost of acquiring a new customer vs. retaining an existing one, the privacy question answers itself - keep the information to yourself.

Most people in Walnut Creek had a good relationship with Olson's Mercantile because Mr. Olson was a nice guy. How can a modern retailer, with the incredible turnover in workforce, begin to replicate that type of relationship? What we forget is that Mr. Olson didn't have it that easy. After all, he had the unpleasant Mrs. Olson for a wife and partner. Still, he kept good relationships with his customers because he got them to see the value of having a relationship with the store itself. Retailers need to do the same by training the clerk to draw the customer into a relationship with the store and by making sure that all employees share a common attitude toward customer service. Make no mistake, retailing today is a far cry from Olson's Mercantile on "Little House on the Prairie," but the core principles remain the same. I guess channel-surfing has its benefits after all.