Managing the Channel Balance

Managing the Channel Balance

It may seem very obvious, but it is of great importance in the fast moving customer facing environments of today, that, having invested in cross and multi-channel functionality, retailers are able to control their own destiny rather than being driven by the differing priorities and journey concepts between digital and in store-channels which can limit the necessary evolution required to ensure competitive advantage. Indeed, as the blend and capabilities of these channels change and evolve, this drive becomes a constant and ongoing process, and its management becomes increasingly important.

The rise of Omni Channel approaches to retail transactions has meant that there is a trade-off between the various capabilities inherent in differing channels; each offers customers different choices and processes.

In trying to consistently manage these differentials compromises are needed and it is sometimes very difficult to make the choices that will serve both the retailer and the customer best.

This is not helped by software suppliers pushing “One Size Fits All” solutions which allegedly only require configuration. On the surface such applications seem to offer everything retailers need, however the difficulties arise when changes need to be made in the processes themselves, not just their appearance and parameter settings.

Such changes are often necessary for competitive advantage – to continue to project and grow a retailers brand or to offer unique and compelling customer journeys. The pace at which such changes need to be made is often far quicker than can be managed with standard packages and configuration techniques. Often, by the time that the retailer has managed to spec, source and implement the new process across the channels, early adopters have stolen a march, and the opportunity is lost.

Because eComm platforms don’t have to offer the myriad customer -facing functions provided by store systems, such as gift cards, in-store stock, HR functions and management reporting a disparity can open up very quickly in the functionality delivered in each channel. This can be very confusing for the users who expect to see a consistent set of functions available in the various customer journeys. The continuing future of store systems (which now need to encompass the rollout of more channels) is dependent upon integrating digital capabilities coupled with processing and workflow capabilities.

There needs to be a better way for retailers to change the processes in a face-to-face customer environment together with the resulting new business flows at a speed and frequency to match the changing business requirements. This would allow for continual and frequent innovation, with an ability to “fail fast” and move on, resulting in customer journeys that reflect and integrate the realities and pace of todays digital world. This would really place retailers’ destiny back in the hands of the business, avoiding the frustration of lagging behind in the Omni Channel marketplace.

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The Pace of Change

The Pace of Change

In quite an eventful week for British retailers, we have seen Budgens and Londis sold to Booker giving the wholesaler almost 10% of the UK convenience market (although this purchase is to be yet ratified by the MMC). Earlier in the week, the Daily Mail continued its campaign against self-checkouts and automation installed in retailers and banks, quoting real people with real problems and real issues. One of my mantras has been that customers will not deal with retailers who do not treat them in the way they wish. The “trust us – we know best” approach to customer service epitomised by the use of technology perceived to reduce retailers’ costs rather than assist customers is in full retreat and is being avoided by technology aware customers who will not accept poor service, or indeed any type of service they do not like.

This changing face of the food marketplace in the UK means that innovators need to change the point of attack in providing useful technology to retailers. Smaller convenience stores have less room for bulky self-checkouts and need more, real, customer assistance in store. So what are the new areas of innovation in this changing target marketplace?

In the Grocer this week an article by Tony Middleton highlighted eco-label fraud as the next big global issue facing retailers and consumers. The desire of customers to support ethical products and producers opens up the real possibility of fraudsters targeting the market by using sophisticated fraudulent labelling. He points to the near impossibility of counterfeiting the supply chain information which should be included with the product, and I predict a high return for the organisation that can harness the new technologies around the Internet of Things to provide fraud prevention and reassurance to customers that the food they buy is genuine.

Beyond food, in the speciality area, technology innovation moves on apace. It would appear that where such change is aimed at assisting the customer rather than cutting costs for the retailer, it is much better received. New payment methods, assisted selling, clienteling and information distribution are proving beneficial, and many of these technologies are being provided by smaller more agile providers as opposed to the giants of the retail technology industry, who are finding it difficult to innovate at a cost and pace demanded by the business.

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Back to Basics

Back to Basics

Back to Basics

In the four months or so that I have been setting up my own business, some exciting changes have been taking place in the retail sector. My move from large firms to small has given me a different perspective from which to observe these seismic movements, of which the most highly visible has been the response of the UK’s largest supermarket chain to the “perfect storm” of financial woes compounded by the unceasing rise of the discounters.

The customer is always right, and the flight to a more basic shopping experience has been remorseless, forcing a rethink by the Supermarket chains around their offer to their customers. Back to Basics is a well-used term, but represents exactly what these organisations are attempting. Tesco is busy divesting itself of as many of its non-core businesses as possible, Homeplus, Blinkbox, Tesco Broadband and Dunhumby, the data company, powering its Clubcard scheme.

Tesco is not alone in this response to the lean and mean, no frills approach by Lidl and Aldi, and there is recent news that the retrenchment of both business diversity and product margins may be slowing their inexorable rise in the UK.

An interesting effect of this “Back to Basics” approach by the besieged supermarket sector has provided rather a shock to the large companies that provide retail hardware and software innovation to accommodate the historic growth in this area. Morrisons, who had placed much faith in using technology to underpin its position in the UK retail ranking, asked its customers what they did and didn’t like about their stores. The result will have surprised all the vendors of hi-tech. The company, having already scrapped automated queue management, discovered that the customers’ responses indicated that they did not have much faith in self-checkouts. Morrisons’ response was immediate, introducing manned, express checkouts for customers with 12 items or less. Inevitably this will lead to lower requirements for self-checkouts.

It has always been my contention that, if retailers don’t interact with shoppers on the customers’ terms, they will lose their loyalty and custom. It was fascinating to see that this decision came about through asking customers. Perhaps the providers of retail hardware and software also need to talk to the end user, before their market shrinks

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All I want for Christmas is a lot less waste

All I want for Christmas is a lot less waste

December 2014

One of the major talking points in the media recently has been the enormous amount of food waste that the UK produces. At a time when we’re hearing more about the growing use of food banks, and how much food the UK needs, the amount of wasted food is striking. This is not a diatribe against food retailers, but an attempt to shine a light into one of the areas that may assist in resolving this issue.

The relentless drive for growth has led the UK supermarket industry to offer more and more promotions which increase the food bought by customers beyond the level at which they can reasonably consume it. Buying products in a 2 for 1 “Buy One Get One Free” or “2nd half price” offer appeals to the search for a bargain. Even with the reduction of such offers, the increasing industrialisation of the supply chain, which turns away deliveries of food to Distribution Centres when they do not precisely meet strict timeliness requirements, coupled with families throwing away over 7 million tonnes of food and drink every year, is a scandal for which we are all responsible.

The knock-on effect of this waste leads to over 10% of our greenhouse gas emissions being used on food that is never eaten. The government, the food industry and many other interested parties are bringing the might of legislation and radical thinking to bear on this problem. In addition, however, there is some new technology in the form of predictive analytics that could really help the supermarkets contribute to solving this issue, while saving some of the dramatic levels of expenditure on wanted out of date fresh food thrown out at the end of each day.

Forms of predictive analysis have been around for a number of years, but the compute power required to achieve meaningful results has always been both expensive and difficult to justify in terms of a return on Investment. With the advent of cloud-based and virtualised capability, this has changed and offers organisations such as Fujitsu, with a large presence in retail and massive global infrastructure capabilities, the opportunities to deliver these analytics on a store-by-store, product specific and almost real time basis. This makes the dynamic management of fresh food sales a much more affordable proposition, and one that is attracting a lot of interest from the major players.

By harnessing thin-store communications, automated digital barkers, the provision of sophisticated predictions around expected buying patterns on a highly granular time line, and the ability to automate markdowns at the Shelf Edge and the Point of Service simultaneously, retailers can assist in controlling the speed at which fresh produce will leave the shelves. Therefore instead of a major discount at the end of the day when the store is empty, the product can be progressively reduced through its shelf life to ensure much more precise management of stock turn, leading to a massive reduction in food throw-out.

While this will not solve the national issues by itself, it will help to reduce the problem, by utilising some of the same consumer desire for a bargain in a much more controlled manner, and allowing the supermarkets to get optimum stock turn and margin. I call that a win-win.

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Omni-Channel Retail – it’s not just technology

Omni-Channel Retail – it’s not just technology

December 2014

Retailers today are besieged by technology providers offering advice and products for them to bring all their sales channels together in order to better serve customers. Termed Omni-channel in the retail industry, much of this approach includes the use of new and powerful technology, some in-store and some in the smartphones and homes of these customers.

There is no doubt that offering these new ways of buying provides an enhanced shopping experience, while offering the retailer deeper information about their customers and their shopping habits. This data, not previously easily available, offers retailers the potential to be highly specific about the offers and products they can provide.

However – this brave new world was brought into sharp focus for me recently, when a retailer said to me: “That’s all very well, but it’s Tuesday. If I go to any of my stores, I will find a selection of shoppers, mostly 55+, higher spenders, with no smartphone or indeed understanding of how this new shopping paradigm could help them. So what’s in in it for us?”

I could see his point. We can very easily get carried away with the bright shiny toys that we all use daily, forgetting that there is a world of shoppers who are unsure, nervous and in some cases downright distrustful of this new technology.

So how to proceed? Perhaps a look at their local bank might help. Although not loved by everyone, the Barclays Digital Eagles project has sought to address these very issues. Helping customers to use the new technology, in a comforting and appropriate environment, assists the Bank and its customers in coping with the massive changes that our high street banks are undergoing.

If retailers offered similar programmes, aimed at helping their customers find their way around the new Omni-channel world, they would be able to introduce them at their own pace to the advantages on offer. When self-checkouts first arrived on the market, the retailers who offered training, and more training, and even more training to their shoppers reaped massive benefits from the technology, while those who just plonked the units in the store very soon started to wonder why they had bothered.

It is a similar scenario with the new journeys offered by Omni-channel – and some of the retailers may even get to sell their customers additional new technology!

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Click and Collect – the unexpected retail saviour

Click and Collect – the unexpected retail saviour

November 2015

Click and collect is set to bolster high street footfall across the festive season this year amid estimations that the service will bring average consumers into town centres an additional three times.

What’s more, the value of goods purchased online and collected in store or at collection points is set to jump to £3 billion over this period – an impressive 40 per cent increase on last year.

It’s great to see retailers beginning to respond to this demand in increasingly innovative ways: Amazon collection lockers have become a familiar sight across shopping centres and transport hubs,

eBay customers are now able to collect certain items at Argos stores and a number of big supermarket names now offer collection at London tube stations.

What’s interesting about this is that according to retail consultancy Conlumino, the average consumer spends an extra £27 on various spontaneous purchases during trips to collect pre-ordered items – resulting in a boost of 1.15 billion for the tills of high street stores across the UK.

This is clear proof that physical retail locations are still incredibly important – even for online businesses. Although companies are operating in a highly digitalised, mobile-driven market, the interplay between the high street and online store allows customers to remain at the heart of the shopping experience. Never has it been more important for retailers to ensure that they are flexible in their approach to customers, and are offering options that work for them.

This figure also reinforces that clicks are not set to replace bricks any time soon, and according to Fujitsu’s Pan-European Retail Survey, 65% of retailers believe the importance of stores is increasing significantly within Europe.

Ultimately, if retailers are looking for profitable growth, the high street must remain an important channel for business. The most secure way to achieve this growth is to provide a seamless customer journey – delivering the capabilities to be found in all channels – and allowing connected customers to interact, amend an order and purchase anything, anywhere, anytime.

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Are physical stores relevant in a digital world

Are physical stores relevant in a digital world

Recent reports indicate that the number of empty shops on the UK high street is falling at its fastest rate in eight years. This is great news for retailers and consumers alike, and a telling indicator that the UK retail industry may finally be bouncing back from the repercussions of the Global Financial Crisis.

The latest figures from property agent Colliers International show that the vacancy rate on the UK high street has fallen from 15.1% to 13% in the last six months alone. This has been driven by a more stable, growing economy, a drop in the number of well-known retailers going into administration and an increase in retailer confidence.

What this news also highlights is that in an increasingly digitally-enabled world, the bricks and mortar store is still important – even for business with a strong online presence. The popularity of Apple stores, for example, is testament to the fact that the shop front is as important as ever, giving shoppers the opportunity to see and feel the physical product and directly interact with staff in a way that can’t be done online.

Retailers clearly agree that the physical store is far from redundant – our 2013 Pan European Retail Survey highlighted that 65% of retailers believe the importance of physical stores is actually increasing significantly within Europe. So although retailers are operating in a highly digital, mobile-driven market, high street stores still remain at the heart of the shopping experience.

To achieve profitable growth, then, the high street must remain a key channel. Every customer is different, and by providing both online and offline retail experiences, companies enable their buyers to shop in a way that works for them.

The best way to achieve this is to ensure a smooth, integrated customer journey – one that encompasses all channels and puts the customer first by allowing them to purchase any available product anywhere, at any time.

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