Article by Frank Marafiote
For the past few years I have been trying to unravel the mystery of why so many local retailers are reluctant to embrace new marketing technologies such as email marketing and e-commerce web sites. The explanations I get from various small business consultants and web gurus usually fall along the line of “they are resistant to change,” “they are stuck in the past,” “they’re just old-fashioned.”Barely hidden behind these comments is a raw contempt that suggests that local retailers deserve to fail because they are so “slow to change”None of these comments have made sense to me. The independent retailers that I know are smart businessmen and women. They are as aware of the challenges as anyone and eagerly looking for solutions. They are not resistant to change. More often it’s a case of not being sure about which change to embrace and which ones will be worth their investment in time and money.A few weeks ago I came upon another explanation — one that makes sense to me — about the local retailer’s reluctance to embrace new marketing techniques and technology. Last April the Journal of Retailing published a paper, When Do Relationships Pay Off for Small Retailers? Exploring Targets and Contexts to Understand the Value of Relationship Marketing. The authors are Mavis T. Adjei, David A. Griffith, and Stephanie M. Noble.Their study of 172 local retailers showed that there was a significant difference in the value of customer relationships depending of the audience (customers and suppliers) and local market conditions (highly competitive and dynamic, high levels of customer change). Retailers in their study had an average of eight employees, 4,000 in annual sales revenue, two locations and 18 years in operation.As you might expect, in most cases the better the retailer’s relationship with customers, the better the store’s performance. In one situation, however, a strong customer relationship actually had a negative effect on performance.I know that sounds illogical and counter-intuitive, but the study suggests that retailers can become over-reliant on customer feedback. Having that personal, face-to-face contact gives them a false sense of security that they are “in touch” with the marketplace. With that confidence in their customer relationships, they tend to discount what is taking place outside the store.As the authors of the study explain it –”Market dynamism resulted in a negative relationship between relationship quality with customers and market responsiveness. This negative moderation suggests a small retailer’s over-reliance on relationship quality creates an inertia effect, thus when practices are changing relying on quality relationships with customers hinders a retailer’s market responsiveness because they fail to adapt to changing marketing practices in the industry.”Independent retailers have been exhorted to embrace new marketing practices and technologies for years with mixed success. As the study shows, the reluctance to do so is not because retailers are stuck or resistant to change. It is primarily because they believe they are already doing what logic tells them they must do: create excellent customer relationships.Clearly, that is not enough. Now we see that the next step is to maintain those relationships and to monitor and respond to today’s dynamic retail marketplace.
About the Author
Frank Marafiote is a business writer and consultant with over 25 years experience in advertising, marketing, and public relations. His specialty is helping small and medium-sized businesses communicate more effectively with customers and employees. He is the president of Emerge Communications ( http://www.emergecommunications.com ).
