By M. Isi Eromosele

In today’s evolving global marketplace, retailers face a world characterized by unprecedented complexity, intense competition and market polarization. Customers are increasingly demanding relevant value propositions that meet their individual needs and preferences and will seek out those retailers able to provide them.

This new environment requires a shift in thinking, as growth and perceived customer value migrate to opposite ends of the competitive spectrum. Retailers thus need to become truly customer-centric in strategy and execution to avoid being overtaken by more sophisticated competitors.

By developing unique, proprietary insights about their customers, retailers can create a more customized and relevant shopping experience which sets them apart from the competition.

Five Global Retail Trends for 2012

Shifts in demographics, attitudes and patterns of behavior will result in the creation of micro-market segments within customer segments. Customers will be trading up to premium brands even as they simultaneously trade down to low-cost providers.

Overwhelmed and time-strapped customers will wield greater control over their interactions with businesses. Empowered by new technologies and social media, they will more aggressively dictate marketing tactics.

Global boundaries will be broken. The world’s top retailers are rapidly expanding across geographies, formats and product/service categories, blurring market

segments.

Partnering becomes imperative.  Leading companies are creating flexible “value networks” based on strong integration and collaboration with alliance partners.

Competitors will be challenged to match the responsiveness and agility of these

connected market leaders.

These trends will propel the retail industry to a world where customer diversity and individualism are pervasive and traditional segmentation is rendered inadequate. Customers will demand low prices for basic goods, but pay premiums for products that matter more to them personally.

Driving Innovation Through Deeper Insight

Customer value drivers are inherently multidimensional and getting more complex all the time. Traditional classifications that are largely based on demographic characteristics are increasingly inadequate to accurately predict which new retail initiatives will succeed in generating the desired customer response.

Retailers can no longer think of their customers in traditional, demographic-based segments to successfully deliver a differentiated experience. Customers do not walk into their favorite store simply to buy. They walk in with a specific shopping mission, driven by fundamental, personal values and attitudes.

Developing deeper insights through more sophisticated approaches to segmentation and innovative analytical models is a key step toward creating a more customer-centric  shopping experience.

Retailers need to know how their customers make decisions, why they shop there, and what their needs and preferences are for a given set of shopping occasions.

Armed with these insights, retailers can develop merchandising, marketing and store services strategies that are better aligned to their target customers. Going forward, advanced retailers need to develop innovative ways to identify these different types of customer needs.

The more customized and personalized the experience that retailers create for their customers, the greater the differentiation from their competitors and ultimately, the greater their success will be.