Customer is King: Evolution of the Retail Food Industry Essay

It is commonalty understanding that you put up non pick up a ancestry if you do non cede nodes to bribe the harvest-tide you produce or go you de merryr hence client is an intrinsical part of every(prenominal) business. There was a time when guests was do by less diminutive and vocal by the businesses and securities industriousnesss was treated adept as dumping grounds for the products, tho this situation does not prevail any to a greater extent(prenominal)(prenominal) because of the tremendous transformation happening in the sell nutrition industry since go five decades. now nodes have much choices than ever before, through to a greater extent(prenominal) than divers(a) channels. hitherto the expectations of node atomic number 18 gritty than ever before. Companies who erupt to leave up to the expectation be finding saturated to get or retain the guests- legal age of the un agreeable node do not complain they just change the suppliers. indee d sellers have effected that the plainly modality to sustain in the hawkish trade place is by world guest central. (Barnes & Glynn, 1993) Today every businesses treat guest as king and aw ar that save exceeding level of node service can differentiate them from the competition in an increasingly saturated nutrimentstuffplace. guest is often treated as the asset of the fraternity and considered in the strategical level decision do. indeed I certainly agree with this oft used marketing cliche guest is king. To cave in explain my point I have presented my views householdd on two contexts. The first being how customer is king? This is explained by describing the customers position in the evolution of the sell f ar industry and its implications. The second being why customer is king? This is explained by detailing the significance of customers in the sell nutrient business.The evolution of the sell food industry and its implications Retail food industr y has underg nonp areil a tremendous transformation in the last five decades, these transformations can be classified into four different degrees- Predevelopment, Development, fecundation and Decline stage (Terbeek, 1999). During the predevelopment phase shop was a social event, births between the customer and grocer was weighty. Shopping experience was lucid, sell was more of a personalised business where the customer was treated as an individual and his or her pick outs were well known and mute by the businesses.Also there existed a long term personal relationship between the businesses and the customer (Steidtman, 2005). so during this phase more emphasis was given to the customer and customer service, nonetheless this situation did not prevail long. During the development phase, small(a) and region stores started to bloodline due to the raise of supermarket. Customers were no more confideing grocer rather they started to trust brands. No longer there existed a per sonal relationship between the businesses and the customer.Even management was interchangeised and employees were ignorant of the customer behaviour, old hold dears which existed during the predevelopment stage relating to employee and customer relationship c lapsely disappeared, the customer sounds a consumer. However due to logistics efficiency and nestle in new model of central buying and distribution of bar products to standard stores led in the decline of product prices. Even though retailer was the last-ditch connection to the customer but producer had more control everywhere the market demand and retailer was just playing as distributor.Manufacturer assumed that every market was standard and started using upgrade marketing model to sell his products, therefore emphasis on customer was ignored and customer service was taken a backseat (Terbeek, 1999) During the saturation phase the competition between the retailers escalate, there was a forward motion of legion(p redicate) stores even the products improverd from 8000 to 30000 items and above, which resulted in devising a decision making trying for the customers.However the offshoot of the industry deceleration and the real growth for supermarkets came from taking businesses past from each other. Marketing cost intensified because of the competition between supermarkets, even value created by supermarkets start out less on the loose(p) to issue because of the availability of the identical products in every store. accordingly Price engender the mien for many stores to differentiate them, which gave rise to the new mantra of super markets called more products and lower berth prices.Competition among the manufacturers excessively heated up which led retailers to get better incentives for the self-s thou. thusly retailers was busy cin one caserned on making deal money which was more profitable then customer service, Customer was al or so invisible and the relationship between the re tailer and the customer no longer existed(Terbeek, 1999). During the decline phase the might of the supermarkets reduced drastically by the entry of fast food chains and low cost department stores (Wal-Mart, Target etc. which started competing for the stomach parcel of land of the consumer. consequently retailers try to differentiate themselves by introducing new merchandising strategies such as home meal replacement and firmness selling, similarly another strategy for growth was geographic expansion through integration and globalisation. Retailers were more concerned on making profits and increasing market deal out, however even in this phase they neglected the fact that customer is one of the important asset and failed to be customer oriented.Therefore retailers still moved even win away from the customer. Following the decline phase of the retail food market is the actual (2000+) situation which can perhaps be termed as the frictionless phase (Terbeek, 1999). Its not s urprising that in this phase, the direction is once again on the customer. The one size fits all pattern of retail is no longer applicable and there is need to deliver personalized operate and products on an individual basis to distinguish them from others and to stay ahead in the market.Therefore customer has become the central direction in this era, even the retailers have pull in that customer service, customer devotion and customer property plays a major role in sales and favorableness of the concern. convey to Technological transformation, which has enabled retail to re shimmer to what it once a personalised business, at once businesses have get that customer is a strategic asset of the organisation and treating customer as a King is vital for the long term sustainability. Significance of customers in the retail food businessThe food and boozing market is often the largest industrial heavens in developed economies. In the US, expenditures on food in both retail store s and food service establishments account for more or less 30 percent of all retail spending. Food retailing all is among the largest of all retailing sectors in more or less countries(Gomez, McLaughlin, & Wittink, 2003). The most recent Consumer Expenditure Survey from the section of Labour indicates that 58 percent of food expenditures are on food consumed at home and Groceries represent a $700 million business in US alone (George, 2005).Due to the market size like a shot retail sector is not only growing in the rapid pace but too becoming more competitive, even the customers have become more demanding than ever. Retailers have realised that the only way to sustain in the competitive market is through differentiation Rita Heise of Cargill says differentiation mustiness be a top antecedency of almost any company today (Tuck, 2003). Today differentiation in toll of pricing, product offering are also becoming commonplace so companies need new ways to differentiate themselv es.In the verge of finding differentiating strategies, retailers have realised that the only way of differentiating them form others is by being customer centric(Gomez et al. , 2003). Today customers are vital for the retail businesses, treating customers like a King is really important because this leads to more cheerful customers. The more satisfied the customers are, the more loyal the customers give be- which in turn helps in maintaining customer truth.Therefore customer gladness, customer loyalty and customer memory all these three terms are interrelated which has a significant bear on on the profitability, sales and market get by of the businesses. Customer satisfaction Customer satisfaction and retention are generally considered among the most important long term objectives of firms (Cooil, Keiningham, Aksoy, & Hsu, 2007). The satisfied customers will remain loyal to the company and also create a decreed brand image by backchat of intercommunicate. In recent researc h of over 1,000 kiwis, respondents said they were twice as believably to tell others about a corky experience over a despotic one.With stories being told online, rather than person-to-person, they are neighborly to a much wider audience and live on long after the sign compromising incident occurred (Meyer, 2011). Therefore businesses which fail to meet the customer expectations will not only lose customers but also may create a shun brand image. Linking customer satisfaction and customer loyalty/retention The marketing concept suggests that a satisfied buyer will likely return to purchase again, or at least, consider purchasing again(Keith, 1960). tally to Reichheld and Sasser repeat customers cost less to come than new buyers, benefiting a firms cost structure. Additionally, maximizing customer retention rates and minimizing customer defections are patriarchal strategic objectives for most firms because of the competitive retail environment and low switching be(Reichheld, 1990). Customer satisfaction is positively linked to loyalty and customer retention, therefore businesses should be customer oriented in order to exploit the profits, market share and also to join on the sales. Linking profitability or market share to customer satisfaction and customer loyaltyAccording to one study, a 2 percent increase in customer retention has the same effect on profits as cutting costs by 10 percent. Similarly, a 5 percent reduction in customer defection rate can increase profits by 25-125 percent (Min, 2011). It is logical that both satisfaction and loyalty are directly related to profitability(Pleshko & Baqer, 2008). Loyal and satisfied customers will increase the customer root word by positive word of mouth advertising, which in turn increase the market share and also the sales, even lowers the market retention costs. fulfil and loyal customers gives businesses a clear understanding about their involve and wants which helps the retailers to grow businesses and profits based on their deep knowledge and understanding of customers. Satisfied customers also create brand fairness and even retailers will be ascertain with better protection during downturn- due to more loyal customers. Therefore today retailers are continuously focusing on keeping their customers happy and satisfied.Businesses which do not punish the customers run the risk of customer base eductions, smaller sales and also lose the market share for the retailers who serve better to the customers. Being customer centric cannot be treated simply as the strategy of an individual company because modern food arrangement is complex, dynamic and international (Schaffer, 1998). It includes suppliers of work inputs, agricultural producers, packaging suppliers, processors and manufacturers, commodity merchants, wholesalers, food retailers, restraints, institutions, and facilitating industries etc. (Schaffer, 1998).Therefore to be undefeated and competitive, all the players in t he food system should be customer centric. Businesses in the food supply chain have realised this and every businesses are taking customer centric approach in the recent years. Todays retail market in the developed world are becoming more customers centric and treating customers as Kings because retailers have realised that customer centric approach is directly linked to profitability of the firm and also can become a key source of competitive differentiation.By excelling at the strategic customer-centric approach can deliver a best shopping experience that could not only result in consistently high customer satisfaction but also might encourage customers to shop more often and spend more with their favoured retailers. Therefore we can say that today businesses have realised that customers have the power to arrange their profits, market share and also the sales in the businesses, so treating customers as Kings has become vital for the retail businesses success today.