Reality Gaps: Little Moments, Big Holes in Retail’s ROI

By Gary Lee, InReality



We’ve all experienced it — the moment your soaring expectations crash head on with reality and then take a free fall towards rock bottom. More specifically, it could be the moment after opening the most beautifully wrapped, worst gift you’ve ever received. Or, the moment after you sit down at your favorite restaurant and order what you’ve been craving all week and hear, “I’m sorry but we’re actually all out of that tonight.” And finally, the moment after you find out that your totally legit, free Caribbean vacation might actually be a scam given the ridiculous taxes bundled with it.



We call these little moments reality gaps, and they occur whenever the reality of an actual experience fails to align with needs and expectations. These reality gaps are everywhere, but they occur most often for customers shopping in brick-and-mortar retail and carry a hefty price tag for retailers and brands living in these spaces. Why? Because when retailers and brands deliver experiences that fail to meet customer needs and expectations, these customers — left feeling confused, frustrated and angry — quickly terminate the relationship and seek other options from competitors.

Reality gaps: Retail’s golden opportunity

Without question, reality gaps could spell doom for brick-and-mortar retailers and brands who fail to address them. However, these gaps also represent a golden opportunity to drive growth, steamroll the competition and resurrect customer loyalty. How? By identifying and leveraging these gaps to delight customers by making their real life experiences in-store as compelling as the advertising promises wrapped around it — a feat that mere couponing and loyalty programs will never and could never achieve.



If we look at spending on in-store marketing in the United States last year, it increased 2.7% from 2012, reaching a total of $25.8 billion, and included coupons, product sampling, loyalty programs and mobile proximity marketing. However, a sampling of major retailers showed that these in-store efforts are not working effectively.



While online sales rose by an average of 14% last year, in-store sales declined for the same retailers by an average of 6%. At the same time, such top retailers as Barnes and Noble, Staples, GameStop, Abercrombie & Fitch, and RadioShack are all set to close a significant number of stores within the next year. What's more, store closings in general have started happening so frequently that “trending” might be the best way to start describing these occurrences.



Consumer pre-, mid-, and post-purchase behavior has transformed, creating new rules of engagement for those seeking their attention. However, in a surprising twist, retailers and brands have been extremely sluggish in recognizing and adapting to these new rules. As a result, many are now feeling the harsh effects of the reality gaps in their customers’ shopping experiences, which have given rise to the United States’ “brand-switching economy” and already put a significant $1.3 trillion in revenue up for grabs from customers unafraid to walk away in light of their poor experiences.



Clearly something is amiss and has to change to ensure brick-and-mortar retail remains vibrant and in-demand by consumers. Unfortunately, the most important step, identifying these gaps, is where many retailers and brands tend to fall short. To really identify their gaps, they should commit to starting with a Reality Gap Analysis, or a like model. This method collects and maps the disconnects among brand executives, customers, and in some cases even sales associates for a comprehensive view of the strengths and weaknesses of the in-store customer experience.



The benefit of this particular approach is that it not only pinpoints problem areas, but the size of problem areas as well, allowing retailers and brands to see where they are losing their customers the most and prioritize their efforts. And, if performed on a cyclical basis, as it should be, this kind of analysis offers a continuous stream of intel, which can be used to ensure constant relevancy among consumers. Not to mention, by also doing an occasional Reality Gap Analysis of competitors to uncover their gaps, retailers and brands stand to gain some powerful insights that could move them into positions of leadership.

The takeaway

Customers don’t want to constantly ride the brand-switch roller coaster, but they will if tested. For those in brick-and-mortar vested in reversing disappointing sales trends, avoiding store closings or simply surviving this new era of retailing, it’s time for a consumer-focused makeover. It’s time to start working to identify and shrink the reality gaps that exist between brand promises and actual customer experiences so that these gaps won't continue to carve big holes in retail’s ROI.



Gary Lee is the president and CEO of InReality, a customer experience and design firm located in Atlanta. He can be contacted at [email protected].

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