Retail has become brilliantly efficient on its own terms. Most businesses can track conversion, basket size, fulfilment speed, cost to serve and retention in forensic detail. They are investing heavily in automation, data and optimisation to make the machine run faster.
The problem is that customers do not experience a brand through its operating model. They experience it through the pressures, priorities and trade-offs of their everyday lives. When retailers define customer efficiency only by what works for the business, they risk missing what customers are actually trying to achieve.
That matters even more in a market being reshaped by automation and AI. As customer touchpoints become more standardised, competitive advantage will not come from operational improvement alone. It will come from understanding your customers better than the competition does, and using that understanding to make life easier in ways that feel relevant and human.
A clear opportunity for retail efficiency
We recently tested this using Yonder’s Omnibus, asking around 2,000 UK adults a simple question: can you name a brand or organisation that understands you, your situation and offers support? Only 37% of respondents could. Of those that could, financial services brands were named most often, at 29%. Retail barely registered: just 5% of people could name a retail brand that they felt supported them. That should be a wake-up call, but it’s also a major opportunity.
Retailers have spent years investing in personalisation, loyalty and experience, yet very few people feel understood by retail brands in any meaningful sense. For a sector that talks constantly about customer centricity, that gap is worth taking seriously.
How retailers learned to ask the wrong questions
To understand how we got here, it helps to look at the underlying philosophy that has shaped modern business. For decades, companies have been taught to see their primary role as maximising shareholder value. In retail, that has translated into a model built around extracting as much value as possible from each customer interaction.
You can see the effects of that everywhere: in loyalty schemes, in automation strategies, in performance metrics, in the way growth itself is framed. The questions businesses ask tend to follow the same pattern. How do we drive frequency? How do we increase spend? How do we reduce service costs? How do we retain customers for longer?
They are commercially rational questions. But they are not the same as asking how customers see the relationship.
Most customers are not trying to build a deeper connection with a brand for its own sake. They are trying to get something done. They are weighing up price, quality, convenience, trust and effort. They are choosing the brand that best fits the situation they are in and the outcome they want.
Why customer satisfaction scores can be a false comfort
That is why many established businesses can feel more secure than they should. Existing customers say they are happy. NPS is steady. Service metrics look healthy. Tracking is stable. Those signals can be comforting, but they can also be misleading if the business is only asking questions in its own language, about its own concerns.
A customer can be perfectly satisfied with today’s offer and still be ready to switch to a competitor tomorrow if someone else better understands what they really value. Retail has seen this before. Established supermarkets assumed customers wanted wide choice at a fair price. Then discount retailers proved that many people were more than willing to trade range for lower prices and a simpler experience. The issue was not that incumbents ignored customers, but rather they misunderstood what customers were prepared to trade off.
The same pattern repeats across categories. Disruption often comes from a challenger identifying value in a different way.
What customers are really looking for from their retailers
This may sound theoretical, but we have the proof points. In recent work with a major high-street retailer, we carried out in-depth ethnographic research in people’s homes to understand how they were living, spending and making decisions. The aim was not to gather opinions about the brand. It was to understand the pressures shaping people’s choices, the trade-offs they were making and the criteria they were using when deciding where to shop.
What emerged was a much richer picture of value than the usual assumptions allow for. Even in the middle of a cost-of-living crisis, many customers were becoming more likely to spend more money in certain areas of their lives. The greater the pressure, the more important it became to find small ways to care for themselves and the people around them. Cost-of-living pressure was changing how people calculated value: treating themselves, avoiding waste, buying better and making spending feel worthwhile.
That understanding helped the retailer sharpen its offer. It leaned further into higher-end, higher-margin grocery lines, marketed in ways customers recognised and responded to. At the same time, it reduced waste and unnecessary spend by focusing more precisely on what it now knew was working.
This is what happens when you move beyond abstract brand questions and start understanding decisions in context. You begin to see the criteria that determine if your brand gets chosen, and how you can position your brand to be chosen, every time.
The customer’s KPIs
Retail leaders are fluent in KPIs, but most of the measures they rely on still reflect the business’s view of customer success, such as average basket size, visits per week and satisfaction scores. Useful though these are, they only tell part of the story.
The more important question is: what are the customer’s KPIs? They may be trying to save time, stay on budget, avoid regret or find enjoyment. They might be looking to make a choice that fits their values without making life harder. When a retailer aligns with those goals, it becomes easier to choose and easier to return to.
A broader definition of retail efficiency
This is why retail needs a broader definition of efficiency. Operational efficiency still matters, of course. But it is only part of the picture. There is also customer efficiency, that is, how easy a retailer makes it for someone to understand the offer, make a decision, feel confident in that decision and get on with their day.
This is not an abstract point. It has real commercial consequences. When customers find it easier to decide, conversion improves. When the offer is clearer and better aligned to what matters, returns fall. When friction is removed earlier in the journey, service demand drops and cost to serve comes down. When a retailer consistently makes life easier in ways customers notice, trust builds. Repeat purchase follows. Over time, customer lifetime value grows, along with the quality of that growth.
What retail leaders should do next
For senior retail leaders, the implication is straightforward. If you want to improve efficiency, you need to get closer to customers, not further away from them.
That means you should work backwards from your customers lives into your business. Understand your customers in their contexts through qualitative, ethnographic research, identify the points of cohesion and of friction and where you can build mutual value. It’s that mutual value that will accelerate your efficiency, and futureproof it for the long term.
Retail doesn’t need a narrower view of efficiency, it needs a smarter one. The brands that outperform in the years ahead will be those that stop treating customer understanding as a soft discipline and start using it as a serious operational advantage.