Based on the given scenario, how could these merchandise assortment changes affect the retailer’s standing with its current customers?
A retail clothing store has built a reputation by selling merchandise at very reasonable retail prices. The core customer, whose tastes range from conservative to classic, has been extremely faithful to the retailer. Although the business has been profitable over the years, the retailer has decided to add to some of the current product classifications some more upscale, fashion forward products that will have slightly higher retail selling prices. The proportion of the new line is 20 percent of the total merchandise that the retailer stocks. The intent is to attract high-end customers who are not currently shopping at the store.
The answer to this will depend greatly on the way in which the retailer markets its changes to its customer base. The changes may really erode the retailer’s standing. However, it is possible that the retailer will be able to present the changes to its customers in a way that will allow it to retain the bulk of their loyalty while attracting new customers.
There are at least two ways in which the retailer might do this. First, the retailer can emphasize that it will continue to carry the same classic and conservative styles that its customers have always loved. It can emphasize the message that it is not taking anything away from its customers and will still continue to have the clothes they love and the service they appreciate.
Second, the retailer might also try to persuade its current customers to branch out and expand their horizons. It might try to plant the idea that its customers can continue to love their classic old styles (which can still be bought at the store) while simultaneously experimenting with new styles.
It is not going to be easy to do this. If the store does not handle the marketing well, it will lose its reputation among its existing customers. However, if it does handle the change well, it can retain its old customers and, perhaps, attract some new ones.