This article is part of our Retail Reloaded series. It offers a new vision for retail businesses through an evolved use of technology. In order to SAVE, ACCELERATE, and SHARE, retailers will need to both use technology and develop new capabilities, new skills, and, importantly, a new vision for the future.
In this article, as part of the ACCELERATE strategy, we have compiled a couple of ideas on how retailers must think and act now in order to speed up their revenue recovery by adopting disruptive business models and technology to meet the rapidly changing needs of customers.
Retailers are constantly challenged to meet the ever-evolving customer demands for higher quality, more value for money, sustainability, and social accountability. At the same time, the competition is constantly pushing innovation with new products and ever-faster product releases.
These market conditions, combined with the newest blow served by the pandemic, are putting more pressure on an already high-velocity retail industry. The need for speed and reinvention requires retailers to rethink their supply chains, online and in-store experiences, workforce management, delivery, automation, data utilization…and the list goes on.
With these concerns in mind, what practical steps can retailers take today to get up to speed?
Speed of change
Those who can adapt will survive and thrive, resulting in near-boundless financial success and market dominance. The needed change comes from people—leaders, employees, and, of course, customers.
Whilst people change an organization, the change is propagated through the use of technology. In this respect, some of the more traditional retail companies have much to learn from startups. How their teams organize to produce innovation and implement it through technology.
In order to future-proof your retail venture, there are a few changes to be aware of.
Speed of service
Convenience has become a euphemism for speed.
In the world of almost unlimited supply, the convenience perceived by the customer is often measured by the speed of service. Examples of the most crucial elements include the speed of product delivery and returns, the speed of an e-commerce website when a customer appears to be infinitely scrolling to find their desired product, the speed of the checkout process, and most importantly—the speed of customer service in answering any questions or complaints and, consequently, the speed of actually resolving the issue.
To put this into perspective, 74% of buyers are likely to switch brands if they find the checkout process too difficult. Similarly, 7 out of 10 U.S. consumers say they’ve spent more money to do business with a company that delivers great service. — more stats on Help Scout.
The speed of service will affect:
The likelihood of future purchases.
The likelihood of customer recommendations.
Your brand being viewed as superior.
Because we live in an era that stresses instant gratification, customers have been conditioned to expect the product as soon as possible after making their choice.
Speed of innovation
The fluidity of today’s business requires a new set of tools. These tools must take into account a number of initial (as well as continuous) unknowns and provide the basis for quick testing of ideas through experimentation. Agile businesses that lead innovation are rooted in this philosophy.
In order for an idea to succeed, which usually means to become a successful feature, product or even new business, it needs to survive a number of trials, tribulations, and transformations. Businesses famously fail at testing ideas before going forward with their implementation. But not all businesses fail! And those that don’t, have developed strategies to beat the uncertainty and succeed in extremely fast-paced and volatile environments.
When the COVID-19 crisis hit, the champions of transformation emerged quickly, offering innovative solutions that would help their customers shop without friction and save lives. A good example is our client, REEF — the largest mobility, parking, and logistics hubs operator in North America with a network of 4,500 locations.
They figured out a way to help communities by transforming their parking locations in New York into safe and convenient COVID-19 testing hubs used by thousands of people. Additionally, they developed a touchless mobile experience that allowed their customers to find and pay for parking without contact, friction, or fear.
Some of the most innovative companies in the world, like IDEO, have developed a methodology that derives from a design thinking mindset. Why is this methodology different and how does it help businesses gain the vital speed? Find out in our special feature on Discovery-driven planning for agile companies.
Speed to market
Ground-breaking innovation is being brought into the world as we speak.
Design, product development, material and work sourcing, speed and agility continue to present the biggest challenges for retailers. More flexibility in the supply chains, diversified sourcing, as well as a significant shift towards hiring external teams have all helped to speed up technology development and save on product innovation, have all brought improvement opportunities for the retail industry.
In his lecture at Mind the Product San Francisco, Marty Cagan, outlines the role of agile in product design. As a crucial feature of successful product planning and reaching the market quickly, he singles out an early involvement of developers, whose hands-on experience and creative solutions to complicated technical issues can prevent dead ends in digital product planning and delivery.
Speed in reaching your customers
Most retailers claim to know their customers. But how strong is their ability to put the right thing in front of their customers at the right time, place and price? How fast can they tweak and personalize their offers and messages to the occasions, moods or even social situations like COVID-19 or #BLM?
Consider the speed shown by Revolve in rapidly promoting workwear for WFH and Rue La La who targeted customers with ‘style for RSVPs to come’. Boden introduced face masks in classic Boden prints, while Baukjen, Henri Lloyd, Coach and Scotch & Soda also promoted non-medical face masks — Edited.
The most successful brands today are the ones that respond to a social context and create value within the lives of customers long after the product was sold.
As new platforms and media channels emerge and evolve, they are giving businesses a wider array of communication tools and selling opportunities. These evolving options offer opportunities to improve the precision and impact of marketing campaigns, at lower costs than ever.
The question pressing many retailers is how to be in the now with creation, distribution, and curation of products and brands.
Time is an important factor in the development of a synergistic customer reach for three major reasons:
First, retailers must take into account a product’s life cycle. Any change in a product, for example, might require a change in how that product is communicated to a customer—perhaps to emphasize a new use or value that it can bring into the customer’s life. This leads to a perpetual value creation and product improvements based on customer feedback.
Second, the customer’s knowledge and situation moves through its own life cycle, to which a product must know how to cater and adjust.
Third, customers have long memories.
The secret to reaching a customer at the right time with the right offer at the right price has three integral dimensions: data, process and communication.
Your selling power is increasingly fueled by Connected Things — all the devices and gadgets that customers use to make their lives better and easier.
Amazon, Alexa and Google Nest are the talk of the town and retailers are already thinking about the ways to tap into the possibilities an instant voice shopping. However, as this TechRepublic article rightfully argues, products need to transform to fit the new age of voice shopping and AI.
Speed of data
How much data a business can gather and how fast it can turn that data into knowledge is the Holy Grail of any business today.
It starts with customer behaviour analytics, through the analysis of store behaviour and purchasing habits, the tracking of sales and marketing campaigns and their impact, predictive analytics, and finally, organizational and supply chain efficiency measuring, improvements and predictions.
By utilizing data science and an omnichannel approach, retailers gain control and expand sales and operations. The next level of precision retail, where things get much faster, smarter and more interesting, is when AI enters the scene.
In his insightful lecture on the “Digital Butterfly Effect”, our colleague, Amer Mohammed from Stena Line, explains how his team approached the testing and use of AI, ML and predictive analytics to provide supreme shopping experience on their cruise ships.
Speed of processes
The present—Managing the core business in turbulent times requires processes that allow for quick pivots and methodologies that allow for different innovative strategies to be tested out on the go.
The past—Gathering key learnings from past projects, abandoning ideas, practices, and attitudes that could inhibit innovation and stand in the way of more effective new processes and automation.
The future—The essence of future success lies in accelerating your company’s ability to convert breakthrough ideas into new products and ventures.
By improving processes, retailers can achieve significant cost reduction, thus compressing the time-to-market of a product. The obvious improvement vehicle is technology, which allows for better tracking and utilization of resources.
In this regard, there are three major drivers of retail process improvements, propelled by the use of technology:
Stock accuracy and on-floor-availability
Supply change management
One of our former clients, Detego, who develop and distribute a cloud-hosted RFID software platform for the fashion retail industry, reports significant impact that this novel technology has had on their clients. It is a game-changer since it delivers Stock Accuracy of up to 99% and On-floor-availability insights.
Rebook has 70 stores. They found out that:
Every increase of 3% of Stock Accuracy contributes to 1% of conversion increase.
10% On-Floor Availability increase also contributes to 1% of conversion increase.
British fashion retailer, Reiss, reported a 4% sales increase as a direct result of the increase in stock accuracy. Moreover, the retailer achieved a 21.9% surge in sales in the first half of 2019 and was awarded the Fashion Retail Business of the year at the Drapers awards 2019.
The company’s overall outstanding achievement was attributed to the change in the execution of operations and systems, both online and in the distribution of clothes, by the CEO Christos Angelides.
In-store manual processes such as stock counting, processing in-store transfers, and warehouse returns increase costs, errors, and losses. By introducing RFID stock control, such losses are almost nullified. Additionally, it brings the level of stock visibility necessary for a retailer’s omnichannel journey.
The situation is similar in the area of supply chain management. Detego lists three fundamentals of Supply chain 4.0 which move the needle forward:
Visibility: Quantifies the performance of the supply chain
Accountability: Identifies “the last known location of items”
Traceability: Inspects the history of items and even raw materials
Together, they allow retailers to hold suppliers and distribution centres accountable for mistakes and inaccuracies, which create leakage of efficiency and physical shrinkage as items become ‘lost’, damaged, or shipped incorrectly.
Finally, when it comes to workforce management, one of our long-term clients, Quinyx, is redefining what’s possible by empowering businesses with mobile tools for easier shift planning and work distribution. With the COVID-19 situation, shift planning and managing peak times have come to the front of retailers’ minds. Flexibility has to be built into schedules, with the possibility of changing shifts around and organising hourly workers in short periods of time.
Speed of engagement
The attraction of instant chatting and real-time customer engagement never goes out of fashion. Nowadays, the availability and humanity of a business on Facebook Messenger, WhatsApp, or any other instant chat truly makes a difference.
However, due to the sheer amount of support requests that your business may be getting, especially at peak times, it is understood that employees cannot always live up to the challenge. A quick way to automate customer support and sales processes is via a chatbot.
Thanks to the significant advances of artificial intelligence and machine learning, which harness enormous amounts of data, out-of-the-box technology solutions, and cheap processing power — chatbots are becoming a standard in retail. As they get smarter, they will be able to “converse” with customers on a more than basic level.
Many companies are developing chatbox technology to be used for customer support, to provide answers to simple questions, and, more importantly, tag and qualify leads who then get escalated to the appropriate human representative.
They can be custom-built, as we’ve seen in the example of Stena we mentioned earlier, and even spun-off as a solution for other companies to use and further develop; or, a quicker and cheaper solution — bought and integrated into your existing CRM solution.
Some companies even go a step further to develop customer service robots. However, at their current development stage, most robots still feel quite clumsy and not enough to substitute human service.
Both chatbots and robots are perceived as a waiting room, a kind of a digital assistant which collects customer data to speed up the process when the real help takes over. Human-to-human interaction is still extremely valued and sometimes even a crucial factor in customer purchasing decisions.
Now is the time to ensure you have the infrastructure in place to gain quick and actionable insights which will affect both your top and bottom-line revenues. Through efficient data utilization and business digitalization, retailers are already building compelling new digital experiences that engage and convert, on one side, while gaining unprecedented competitive speed and operational nimbleness, on the other, allowing them to keep their costs low and, consequently, their prices and service quality competitive.
Ask yourself if you have the capabilities in place to gain these insights, and if not, consider investing in them either in-house or through external partnerships.
Focus on new ways to add value right now. There will be a significant gain for those retailers who understand where to invest now to reinvent their retail game and offer more value in the years to come.
In our next Retailer Reloaded report, we will try to understand your new role in the community as change enablers. How to create long term value-based bonds with customers and increase the most important success metric — brand loyalty.
If you need help with your retail innovation strategy, we’d be happy to talk. Please use the contact form below to get in touch with our consultants.