Customer Service Excellence - Essay Example

Introduction Supermarkets are unique organizations because of the way they serve their s and offer them range of products and services whichfulfill most of the daily needs of the consumers. Supermarkets however, work in an industry which is driven by low margins and high volumes and pricing is one of the key factors to remain in the competition for long period of time. In order to retain the competitive advantage within the market, it is therefore important that supermarkets must be able to deliver more value for their consumers so that they can generate the required level of loyalty on long term basis. Post-financial crisis era is a different era and is fast changing the way consumers actually buy and make their buying decisions. In such a period where consumer preferences and tastes are fast changing, it is critical to understand that organizations, to survive and prosper, have to actually develop unique competitive advantages which can help them to sustain themselves within tough market conditions. One such way through which supermarkets can actually create and sustain competitive advantage in such an environment is that of the offering excellent customer experiences. Meeting and exceeding customer expectations can actually help supermarkets to continue to serve their customers and exceed their changing expectations in the wake of post-economic recession changes taking place in the market. This paper will discuss and explore as to how the customer expectations have changed in the highly competitive UK Supermarkets and to what extent these expectations have been met by supermarkets. Customer Excellence Modern organizations are complex organizations as they require more effort and innovation to actually excel at what they do. International as well as local organizations need to focus more on their customers and deliver experiences and value which exceeds the expectations of the customers. Customer excellence is one such dimension where organizations have to develop a shared culture of offering unique experience and value to the customers in order to exceed their expectations and achieve customer excellence. (Hunt, 2002) On strategic level, organizations have to develop strategies to actually ensure that they follow a well-thought policy. Whether it is to retain the customers or create the brand awareness, organizations have to engage with their customers in unique manner through which they can actually help generate competitive advantage for themselves and sustain it. (Kotler and Keller, 2012) What is important to understand that there has been a consistent increase in pressure on many organizations to deliver more value for their customers through effective customer care and service delivery? Organizations are now required to radically change the overall experience of their customers or face the chances of being forced out of the competition by those who does it better than others. As such, organizations need to strive towards achieving a consistent increase in the service delivery. UK supermarket industry has traditionally remained a price-driven industry where the competition was largely based upon offering low cost products every day. However, the overall trends are changing within the industry in the wake of the economic recession just being witnessed by UK. UK Supermarket Industry UK Supermarket industry is one of the largest employers in UK with approximately 1 million people working in the supermarkets at various positions. Over the period of last five years, the growth rate in the industry has remained relatively flat with bigger supermarkets registering relatively slower growth in the market. Though the industry is dominated by over 60 businesses however, most of the retail supermarket business is catered by four largest supermarket chains i.e. ASDA, Sainsbury, Tesco and Morrison. (Neville, 2013) Historically, UK Supermarket industry remained fragmented in nature as smaller firms also existed side-by side with large ones. However, over the period of time, due to extensive acquisition strategies, smaller firms were overtaken and industry now comprises of four big firms which control most of the market share. This consolidation in the industry has actually made the overall level of competition more complicated in nature. Apart from this, the average shop sizes were homogenous in nature offering customers relatively large space to actually buy almost everything under the one roof. This trend has also seemed to have changed as small convenience stores have also been set up to offer customers almost same level of product range at relatively shorter distance from their homes or offices. This trend has also resulted into gaining more market share as location play a critical role in serving the customers with best available solutions. The UK Supermarket industry however, is a highly concentrated industry with few top supermarket chains controlling most of the market share. With high level of concentration in few large firms, the industry remained dominated by these firms who attempted to define the overall market dynamics in the past. Considering the overall size of the market and the dominance of few large firms, the overall degree of competition within the industry is relatively high thus making it difficult for one player to dominate the market and set the discretionary prices and capture the market for sustained period of time. It is also critical to understand that UK retail industry has changed during last 20 years and this process has quickened after the economic recession. Right from the acquisition of Asda by Walmart to the introduction of loyalty cards and mobile phone apps, the change has been consistent and radical during this period. Since retail business involves offering goods and services of essential nature therefore the overall competition is relatively high and in order to continue to dominate the market, organizations have to actually continuously innovate themselves so that they can actually create and sustain their competitive advantage within the market.  (Wilcock, 2013) The recent trends in the market suggest that all big four firms are facing tough competition from smaller discounters such as Aldi and Lidl. Supermarkets such as Waitrose, Aldi and Lidl now combine control over 11% of market share especially in the grocery segment of the market. The overall change in the market can be attributed to different reasons however, one of the key reasons as to why these large firms are losing the market is the way they promote their businesses and develop the competitive pricing strategies. Changing Trends in Industry A closer analysis of the industry dynamics would suggest that the industry is witnessing new changes and at the rapid pace. Though the traditional supermarkets are still in dominating position however, a further segregation in the market is clearly visible. Convenience stores, online sales and discounters are the new players in the market offering relatively affordable alternatives to the consumers especially in the grocery business. The emergence of convenience stores have made it possible for the consumers to make multiple smaller weekly trips to such stores instead of one weekly trip at large supermarkets. These trends clearly indicate that the consumers prefer to shop during the week provided location and pricing are suitable to them. Topping up the weekly grocery and other supermarket items through smaller convenience stores is creating widespread changes in the way consumers shop and stock their essential items for consumption. What is also important to understand that post-recessionary era has actually forced people to stock smaller quantities in order to avoid food and other wastages while at the same time allowing consumers to take advantage of the price changes during the week? This may due to an increase in inflation as well as fall in the salaries of the households due to economic recession which started during 2007 and whose impacts are now visible in almost every facet of life in developed world.  (Thomson, 2012) The underlying changes in the market are considered as complex in nature because changing digital world and economic chaos are actually making it difficult for such organizations to continue to achieve the success required. In order to continue to retain their customers and becoming robust and responsive to the customer demands, firms in UK Supermarket have to actually offer what is called customer excellence. Universal Expectations Cultural changes over the period of time suggest that consumers at the global level developed what is called universal expectations. They expect that the businesses they deal with often should not only be courteous with them but also know their customers and what they are selling. Customers also expect that products and services they are demanding are available in timely manner. Though the universal expectations of the consumers are equally applicable to the UK consumers and especially to the customers of retail businesses however, the element of low pricing and customized discounts is also another dimension which has been added to the growing list of universal expectations. UK retail industry has been offering low priced products as one of the universal expectations to meet as the overall basis of competition has largely remained based upon the pricing. However, these trends are changing as pricing remains no longer the most important factor as issues such as developing loyalty, meeting the exact needs of the customers, offering customized discount coupons as well as quick and swift return and refund services also play a key part in retaining the customers.  (Yin, Pei and Ranchhod, 2013) Online Shopping Retail items are relatively low priced in nature therefore they are mostly offered through the traditional brick and mortar model in physical stores. However, recently, there has been a new change to offer groceries online. Many supermarkets such as Asda and Tesco has separate services through which they offer the facility to shop online and get the deliveries within allotted time even without charging anything to customers. Some estimates indicate that UK consumers spent approximately 91 Billion pounds on purchasing retail and grocery items online during 2013. This figure is expected to increase as consumers will be preferring more to buy online and serving customer expectations online may be one of the biggest challenges for the companies. What is also important to understand that online commerce is shifting towards the mobile and with the technology, new mobile phone apps are offering facility to purchase from within the apps. Can existing companies can actually successfully meet this challenge of meeting the customer expectations through mobile phone applications by offering them a robust and easy access to make online purchase decisions on their mobiles remains an important question to answer. Online retailing therefore has been a new trend and so far existing supermarkets are catching up with this with relative success. Though the industry is still pre-dominantly a brick and mortal model industry however, with the changes in the consumer preferences, firms are responding also and creating opportunities for the customer excellence and exceeding their expectations. Even firms like Amazon which have traditionally not dealt in items like grocery are now offering grocery items online along with offering other complete range of services online. If we also include online portals such as Amazon and eBay into the fold also than online landscape of the market is becoming more competitive in nature also. Amazon offers its customers to review the products they purchase online and make them available for other users to read before they can actually make a decision to buy or not. Apart from this, Amazon also applies intelligent algorithms which evaluate consumer buying behavior and offer them unique and customized recommendations thus making it easier for consumers to buy relevant products at low cost. Ocado is another online supermarket and the largest food retailer in the world offering an easy alternative to the customers to buy online. Due to its customer focused strategy, Ocado has been named as best online supermarket in UK since 2010 based upon the user reviews by Which? Ocado works in partnership with the Waitrose and offer groceries and other products either branded in its own name or in the name of Ocado.  (Ruddick, 2014) The new frontier for the meeting the customer expectations as well as delivering customer excellence therefore may be online with traditional large firms slowly catching on with the new change and developing alternative channels to deliver their products and services online considering the new changes taking place in the market after the recession era since 2007. What is critical to understand that smartphones have actually made shopping a casual and leisurely activity by offering a new and alternative way to actually engage with the brands and the business. The click and collect model is becoming a new norm in the supermarket industry and firms have to respond in order to actually cater to this new and emerging trend being witnessed in the industry with specially young and tech savvy consumers who want to buy on the move. Customer Excellence The above discussion clearly outlines that there are certain changes in the way consumers shop now at the supermarkets. With the improvements in the technology, supermarkets are now being able to understand the customer needs clearly and easily. It is also because of this reason that supermarkets are now developing themselves into different diversified businesses such as offering mobile phone contracts, credit cards, loyalty schemes etc covering almost every aspect related with their core business of offering retail products at low cost and with more convenience. (Kotler and Armstrong, 2010) As discussed above, there is also an effort to actually build small convenience stores at smaller distances so that different segments of customers can be targeted with ease. Young and single consumers with no families can easily be targeted through small stores located at the places which are being frequently visited by young people. Tesco has specially been establishing smaller stores at locations such as bus stands, railway stations and city centers to offer more convenience to the customers. However, when judged from the perspective of the responsiveness of the existing firms to the changing customer needs, it may easily be concluded that the firms are still slow in responding to the rapid changes taking place in the market since 2007. Conclusion The above discussion clearly suggests that UK supermarket industry is going through a radical change especially after the economic recession of 2007. Consumers now prefer to shop at places which offer convenience, ease, low prices and deep discounts. With increasing economic uncertainty, lack of consumer credit and reduction is salaries, it is expected that the near short run may be difficult for the industry. In order to survive and thrive during the tough times, it is therefore important that companies must innovate to deliver consistently high customer value. Exceeding customer expectations through innovative ways is what is required during the current times by the companies working in the industry. A closer look at the current situation clearly indicates that the companies in the supermarkets industry are catching up with the new changes and are innovating themselves to offer products and services which now better suit to the overall customer needs. However, it is also evident that some firms are ahead of others in terms of offering online facilitation to the customers whereas some firms are focusing on improving the overall customer services and are achieving customer excellence through their traditional brick and mortar stores by offering better loyalty programs, deep discounts and other related facilities. References Hunt, S. (2002). Foundations of marketing theory. Armonk, N.Y.: M.E. Sharpe. Kotler, P. and Keller, K. (2012). Marketing management. Harlow: Pearson Education. Kotler, P. and Armstrong, G. (2010). Principles of marketing. Upper Saddle River, NJ: Pearson. Mercer, D. (1998). Marketing strategy. London: Sage in association with Open University Business School. Neville, S. (2013). New landscape for big four supermarkets - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/comment/telegraph-view/10461521/New-landscape-for-big-four-supermarkets.html [Accessed 12 Nov. 2014]. Ruddick, G. (2014). Can Ocado out-punch its rival in the grocery war? - Telegraph. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10612068/Can-Ocado-out-punch-its-rival-in-the-grocery-war.html [Accessed 12 Nov. 2014]. Thomson, R. (2012). Analysis: The rise of the supermarkets. [online] Retail-week.com. Available at: http://www.retail-week.com/analysis-the-rise-of-the-supermarkets/5041355.article [Accessed 12 Nov. 2014]. Wilcock, O. (2013). Future trends in UK groceries and analysis of market participant strategies | Bristol Banking and Investment Society. [online] Bristolbis.co.uk. Available at: http://www.bristolbis.co.uk/future-trends-in-uk-groceries-and-analysis-of-market-participant-strategies/ [Accessed 12 Nov. 2014]. Yin, Y., Pei, E. and Ranchhod, A. (2013). The shopping experience of older supermarket consumers.Journal of Enterprise Information Management, 26(4), pp.444-471. Read More