“Today, virtually every shopper is looking for a great deal; in fact, in many cases, among today’s shoppers there is greater allegiance to the deal than the dealer.” [Robert Spector in Category Killers (pg. 55)]
The Dealer. Spector essentially defines a Category Killer as being a retailer which is determined to dominate a distinct classification of merchandise all the while taking out the competition.
The Deal. Low prices. Through competition within Category Killers and with the ability of price transparency from online and offline comparison shopping tools, consumers practically demand the lowest possible price.
So ... given The Deal and The Dealer, which Category Killer retailer is doing better than others to foster less allegiance to the deal and more allegiance to dealer? I asked Robert that question and he replied …
Costco has a very loyal clientele (who pay a membership fee). Costco understands the taste level of this group and caters to their wants and needs--for wine, apparel, technology, jewelry, etc. Costco communicates with those customers through an excellent monthly magazine, the Costco Connection. Because many of Costco's customers are small business owners, the magazine (and, of course, the stores) cater to their needs and interests.
Now, Costco's customers are also attracted by the deals. There is an implicit understanding that Costco is offering the best possible price on that particular product on that particular day. The product may not be offered tomorrow. So, if you want it, you better buy it today.
Staples, which I consider the best of the office supply category killers, offers a Business Rewards frequent-buyer program, which help encourage customer loyalty.
When it comes to frequent-buyer programs, like Staple's Business Rewards program, I’m not sure I agree with Robert.
Do frequent-buyer programs perpetuate fostering loyalty to the deal and not the dealer? The deal as in ... loyalty to the rewards ($ OFF, redeemable points, etc) and not loyalty to the dealer? Office Max could institute a similar 'rewards' program and siphon off 'cherry-picking' customers from Staples and thus continuing the Pavlovian conditioning of consumers to appreciate the deal more than the dealer.
That’s my take. What’s yours?
In Category Killers, Robert Spector explores how big box retailers have come to overpower department stores, regional chains, and mom-and-pop stores. He also discusses the societal and economic impact category killers have had on reshaping the retail industry.
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