It’s a buyer’s market—and we aren’t just talking about houses. E-commerce, the sharing economy and competition overload have given retail customers the upper hand. And customers can be relentless when it comes to what they want.

Deloitte’s 2019 Retail Outlook report declares that “Consumers are becoming more powerful, with expectations of ‘having it all.’” It’s an attitude putting retail survival at risk. The past few years have seen the mass shuttering of some of our country’s most iconic retail brands. More than 9,100 retail outlets shut their doors in 2019 alone, including a series of Walmart’s, Party Cities and Forever 21s.

For the retailers who want to stay solvent in 2020 and beyond, it’s time to make bold, customer-centric changes. This is where design thinking can help.

Retailers that use design thinking can discover innovative ways to improve their products, transform their brand experience and, in some cases, disrupt their corner of the market. Consider the team at Warby Parker, who used design thinking to transform the way people buy eyeglasses, or Bookings.com, whose focus on customer feedback led to them attracting more than 1.5 million customers per day.

These companies dared to challenge the status quo, and it helped them gain an edge in a crowded marketplace.

Loyalty: Don’t Let it Go

For retailers who have not (yet) disrupted their own corner of the industry, Deloitte suggests focussing on the loyalty of existing customers and building from there. Here are a few tips from their report.

Start with loyalty programs

US consumers belong to a staggering 13 loyalty programs and, on average, actively participate in 6-7 of them. Yet retailers aren’t terribly innovative when it comes to how they put these programs to use. That’s a mistake. Loyalty programs hold a goldmine of data, offering an opportunity for retailers to build long-term connections with customers who’ve already demonstrated a willingness to buy their stuff and turn over personal information. Sending them weekly coupons and a barrage of product ads isn’t enough to keep them engaged.

Deloitte predicts that, in the future, loyalty programs will need to be customized to the individual user’s needs if retailers want to maintain customer interest. “We expect to see a disruption in personalization driven by artificial intelligence (AI) tools spilling over to rewards and loyalty programs,” the authors write. They believe value-added content, games and experiences will define the new world of loyalty program engagement.

Tie the brand to customer values

Millennials and Gen Z consumers want brands to prove that they are making positive investments in the environment, the community and their employees. Their willingness to shop with these brands can be contingent on that value proposition.

This means that retailers need to actually do good in the world, and communicate what they stand for as part of their brand messaging and experience. Consider Lush, the body-products store that actively promotes its environmental practices, thus staying aligned with the values of its customers. Lush’s vocal commitment to sustainable practices differentiates the company in a sea of competitors, and helps it win Customer Experience Excellence awards.

Before pursuing your own values-driven brand campaign, talk to customers about what they look for in a brand, and why they like—or hate —what you stand for. Then be authentic in your messaging and practices. Consumers won’t be fooled by an ad campaign touting your inclusivity, sustainability or other feel-good behavior if you can’t back it up with results.

Build a community

Many retailers have recognized that their stores and websites can be more than a place to buy goods. By hosting events and connecting with the community, innovative retailers are giving customers fun new ways to engage with their brand. Whether it’s offering a yoga class at Lululemon, serving coffee at a Capital One café or launching a running club at Fleet Feet Sports, retailers are creating experiences that keep customers coming back.

The retail world will continue to evolve as customers make increasingly tough decisions about who deserves their loyalty. The retailers that use design thinking to reimagine the customer experience will be best positioned to succeed.

About the Author:

Tom Merrill is a Master Facilitator at ExperiencePoint and has facilitated sessions for Microsoft, Cisco Systems, State Farm Insurance, Nationwide Insurance, Watson Scientific, Exelon, Bayer Pharmaceuticals and other Fortune 500 companies.

Prior to joining ExperiencePoint, Tom was a professor and the Associate Provost for Academic Initiatives, Innovation and Strategic Planning at Xavier University in Cincinnati, Ohio. The Xavier University Center for Innovation (CFI) works with students, faculty and staff across the university to help bring new ideas to life, adapt to change, develop new products and systems and serve as a conduit to the regional startup ecosystem.

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