Archive for the ‘Retail’ Category

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Providing the entire range of products in the catalogue, in as accessible format as possible, strengthens the offering of a retailer no end. Providing a fully joined up view on delivery options including premium and store pick-up is a challenge in its own right as it dictates that stock management and whereabouts are completely accurate all of the time. Co-ordination of different delivery methods amongst numerous partners need to be effectively managed so that data feeds and access to order tracking is fully transparent for not only the customer, but also the customer service agents.

Now the customer is only interested in how they are going to get their hands on the merchandise but ensuring that they are not disappointed or misled is paramount in providing a great customer experience. This is an area where taking a customer centric standpoint is vital and in combination with a service led approach can reap enormous benefit. The result of these approaches should be the provision of choice to the customer in how to receive their goods in a timely, and convenient fashion. No one solution fits all but by centrally co-ordinating the delivery options as a repeatable service amongst the various channels will provide the required choice. This means that all channels can obtain the same delivery services whilst the management of them is centralised

Customer Service is the lynchpin behind a multi-channel strategy but it is so often cast as the fall guy in attempting to cobble together a solution from legacy systems. The “poor relations” in the call centre have been seen as the last resort to support the inadequacies of IT solutions in reconciling customer orders, refunds and returns. This behaviour towards a retailer’s customers is the antitheses of a truly customer centric approach and one to be avoided at all costs. Empowerment of the customer service agent by a robust CRM system is paramount in delivering quality customer service and can save both time and money if implemented correctly. More importantly, it can be the last resort in retaining a disaffected customer when systems or processes do break down. Providing transparent visibility across all channels, coupled with empowerment to view and alter order details is the very minimum functions that need to be provided.

But it really does matter!
It is having the single view of the customer, stored in a single data store that unlocks the true potential of multi-channel retailing in providing marketers with the data that enables customer behaviour to be analysed and utilised in driving forward the customer plan. Presenting the right offer at the right time can only be consistently achieved by getting a grip on the customer’s behaviour and developing this capability. Architecting the CRM strategy to achieve this must take into account not only the qualitative data about customer numbers and orders, but also combining this with less qualitative data such as web statistics and responses to marketing campaigns and Customer Service centre contact. Identifying the trends in this data empowers marketers to create campaigns targeted at specific audiences as well as allowing merchandisers to select appropriate products in the right channels.

Visibility of stock within distribution centres and fulfilment partners, as well as stock held locally in bricks and mortar stores, provides the customer with clearly defined options on where they can source the items they are looking for in either their preferred or alternative channel. Having the ability to directly purchase through a transactional website/telephone ordering system, or reserve stock at a local branch guarantees the customer is satisfied without them reverting to a competitor. This approach of guiding the customer to alternative channels in order to provide timely fulfilment is one of the key factors identified in retaining customer loyalty. There is not necessarily a right or wrong method for managing stock levels across channels, whether it is a federated or singular view within channels. But the most important feature of this is the speed in which stock can be made available between channels so that demand can be satisfied without the need for drawn out processes in transferring stock, whether it is physical stock, or merely logical partitioning in a warehouse.

The Practicalities of Multi-Channel

The “multi-channelness” of a retailer is only really determined by the ultimate ambition of the organisation coupled with the appetite for some serious change. Those early trail blazers that managed a seemingly coherent multi-channel offering often got there by smashing various legacy systems together by brute force in the pursuit of an integrated solution. Often, this meant some behind the scenes issues in customer service, delivery and order processing that failed to provide a single view of the history of an individual customer over multiple channels. The impact of this ultimately hit the customer at some point in preventing them from switching channels for returns, combining deliveries or tracking the statuses of orders. Ultimately, these legacy “smash-ups” present longevity issues by their very nature in that they are difficult to maintain, extend and above all, have problems scaling as demand for their services grow.

These issues are only resolved by initiating substantial change in the backbone of a retailer’s information system so that there is one source of the truth for critical product and process data such as:

  • Catalogue
  • Inventory (stock)
  • Orders and Order History
  • Returns
  • Customer
  • Delivery
  • Payment

Providing this coherent and centrally managed view on both data and processes gears the organisation for efficiency. Consistent product information and management forms one part of Catalogue management but there is also a distinct need to better manage the whole product lifecycle from birth to grave with particular reference to performance across channels. This can only be achieved by having a single strategy in information systems, product induction, categorisation and reporting. As an end goal, this is a tough challenge to resolve as any major change in catalogue management is often unpalatable with the more established areas or channels. Legacy systems in these areas rule the roost and require substantial re-engineering to accommodate the demands of the newer routes to market. However, those retailers who endeavour to undertake this challenge and implement a successful solution can reap the benefits.

The business of retailing has undergone a transformation beyond all recognition since the widespread availability and adoption of broadband internet. This transformation has been largely dominated and truly exploited by a handful of retailers who trail blazed their way on to the computer screens of the UK. Companies such as Amazon, Play.com and Tesco have all exploited this phenomenon in providing compelling offerings in the early days of this online retail explosion. But now this early adoption is moving to one of relative maturity and so, what should retailers be doing to ensure that they are not drowned out by the noise?

Across the globe, retailers are discovering that winning in the multi-channel arena is fundamentally all about putting the customer first and it is those that truly embrace this philosophy are those that will survive and maintain, if not further grow their own position. Creating a compelling multi-channel proposition is the current obsession of the industry and making it easier for customers to seamlessly slip across the various channels available today is a key part of the evolving retail landscape. Traditional high street or out of town units, e-commerce, mail/phone order and the evolving m-commerce (mobile commerce) all have their place in the retailing artillery but presenting these as a truly coherent offering is proving a far harder conundrum than the end consumer will ever realise. Central to this, is a realisation that creating the right architecture is not just about how the IT solutions are constructed, but also about how the business architecture is positioned, managed and driven. By getting both of these right, the customer can be correctly positioned at the very centre of these enterprise architectures so that they are the focal point of what all leading retailers aspire to creating…… “Great Customer Service”.

For retailers, addressing the challenges facing them isn’t as straightforward as it may seem. Both leveraging existing assets and embedding customer centricity in decision making are easier said than done.

This point is clearly highlighted by a recent study Charteris did on Multi-Channel Retailing in the UK. We spoke to 32 multi-channel UK retailers covering all the main retail sectors, with total sales exceeding £41bn. Retailers scored themselves in 6 areas…

  1. Strategy
  2. People
  3. Processes
  4. Information
  5. Metrics
  6. Technology

What we found is that retailers currently face a lot of challenges, with only metrics scoring acceptably in the survey.

The lowest scores across were in these six areas.

  1. Responding to customer needs
  2. Improving customer experience
  3. Leveraging Existing Systems
  4. Integrating Existing Systems
  5. Shifting from a product focus to a customer-centric culture
  6. Shifting to a cross-channel culture

We can aggregate these to highlight three key problem areas that we feel retailers should be focusing on

  1. Changing culture
  2. Doing more with existing assets
  3. Linking assets together

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Probably the most critical issue/trend facing Retailers right now is the Credit Crunch.

Credit Crunch

As you must know, the subprime mortgage crisis in 2007 has had a massive global financial impact. From a retail consumer perspective it seems however, that the recession effect still has some way to go. ONS figures for last month showed a rise of 1.2% in sales, although retailers are not convinced and the rise is being attributed to a number of reasons from massive price reductions to the high street being a “lagging indicator” to general volatility shown by the May surge and July drop.

Either way, the immediate impact is uncertainty. Lenders are uncertain about future sources and costs of funding, while consumers are unsure about how much further house prices will continue to decline, and whether or not widespread job losses and mortgage rate rises are really going to happen.

All expectation is that this is a recession that will deepen and the trend towards careful spending is going to put increasing pressure on retail margins. As it stands, the policy of reductions that retailers have employed to boost sales is seriously hitting profits. The John Lewis Partnership recently underlined this by announcing a 27% fall in first-half profits attributed mostly to price cuts and increased marketing spend.

Finally apart from the direct impact to profits discussed, the credit crunch is also severely impacting investors and share prices, and nervousness in the financial markets is making it harder to raise investment capital for new initiatives.

The effect of the global credit crunch on business and consumer spending thus means that retailers must look to innovate and create competitive advantage without the luxury of profit growth and flexible budgets. In short it means they need low cost / high benefit customer propositions that involve linking up existing assets to improve customer propositions rather than involving large spend on new systems, staff or channels.

Let’s start with a quick look at some of the key trends in consumer behaviour and the retail industry. I’ll pick out 3 each.

3 Deepening Trends in Consumer Behaviour:

  1. Customers are becoming more demanding – the Web 2.0 revolution has provided a forum for sharing opinions to the point where consumers really do call the shots. They expect choice and convenience or will go elsewhere.
  2. Social Media online is exploding – and is becoming a key vehicle for both strategic marketing and customer engagement.
  3. Premium products and services still sell well and Green is becoming iconic – many of the less price sensitive consumers are still highly style and status conscious, and consumers are going to increasingly great lengths to boycott brands that have poor eco-credentials

Ok, so that’s 3 consumer trends. How about the Retail Industry in general?

3 Deepening Trends in the Retail Industry:

  1. The credit crunch is getting worse – and negatively impacting retailer profits
  2. The e-channel is still growing fast – online spending in July for example reached £4.8 billion, up 80% on last year to a new all-time high. Retailers are expecting a major shift to online this Christmas.
  3. The leaders are merging channels – and providing seamless brand and customer experiences across them all. Consumers in return are becoming rapidly less tolerant of pricing, availability or service differentials online and offline.

We attended the ARC Retail Conference this morning and gave a breakfast briefing on Cross-Channel Retailing – see slides below.

The slides cover the 3 critical challenges that retailers are facing right now and how they could start addressing them by developing low cost, high benefit, customer propositions through leveraging the channel assets they already have. Here’s the slides. The presentation is extremely visual so it should be easy to scan through quickly.

If you want to know more just drop us an email on info@charteris.com or contact as us as below and we’ll be more than happy to have a chat.

Enjoy!