Are retailers overlooking their communities?

Jun 28, 2018

A study from University of Alabama at Birmingham’s Collat School of Business finds community involvement by stores can help make customers less price-sensitive and less likely to patronize other retailers. While not a new strategy, researchers believe it is one too many retailers overlook.

Results from a survey of more than 1,700 consumers show that, as retailers’ community engagement increases, the importance of having a lower price decreases. Community engagement was also found to directly build consumer trust in, and commitment to, the retailer. As customers become invested in the retailer through such engagement, they tend to draw in additional customers through word-of-mouth.

The authors contend that local retailers, in particular, can use community involvement to offset the economic advantages that larger competitors have, such as greater buying leverage due to higher volume. Being able to offer same-day delivery is a newer challenge that many local stores face against larger rivals.

The study asserts that local merchants may not feel an immediate impact from community engagement efforts, but will realize benefits long-term as they develop stronger customer relationships.

The study pointed to a few “relatively low-cost” ways to drive consumer engagement: 

• Donations to civic groups
• Fundraisers
• Employee volunteerism
• Scholarship grants
• Sponsorship of community events
• Partnerships with other local retailers

Other studies have also shown that brands can benefit from their values and beliefs:

• Nearly eight-in-10 (79 percent) Americans say they are more loyal to purpose-driven brands than traditional brands, and nearly three-quarters (73 percent) are more willing to defend them, according to the “2018 Cone/Porter Novelli Purpose Study.”
• Roughly half of Millennials (52 percent) and Gen Xers (48 percent) want retailers to align with their values, according to Euclid’s report, “Evolution of Retail: The Brand Perception Effect.” Only 35 percent of Boomers said that was important.

Braintrust

“Larger brands might find some golden rewards and lasting loyalty if they let their local stores jump on this bandwagon.”