2012 UK/EMEA Retail Outlook-Part 2: The New Consumer and the New Tools They Use

by Quantum Retail • May 9th, 2012 • Write a comment »

The new consumer of 2012

Just as the retail industry is changing, so are consumers and what retailers once knew about them no longer holds true today. Traditional, impulsive shoppers of the high street are a thing of the past; today’s modern customer is constantly connected thanks to the rise of smartphones, tablets and social media. Retailers will need to build trust in order to shape lasting, meaningful relationships and to gain a shopper’s full attention.

Who is the new shopper?

Knowledgeable, empowered, dynamic, smart. The consumer of today is technologically savvy and increasingly smarter seeking more and more information than ever before with access to an ample amount of date through a variety of sources: mobile devices, tablets, apps and social media. It’s through these platforms that shoppers are connecting, learning everything about products and brands and seeking and giving advice to friends, family and even strangers on purchase decisions. A study by Interactive Intelligence of 4,000 UK consumers showed 41% of the participants that use social media said they are affected by both positive and negative comments about a brand or company.

Trends like these are only going to grow stronger throughout 2012 with consumers constantly taking breaks from their busy lives to shop online or to chat with friends about products they like or don’t like. In fact, today’s consumers are now defined as the “information shopper”.

Why trust matters

Retailers previously thought loyalty and rewards programs were the best means to communicate and connect with consumers. The truth for today’s consumers is that retailers need to redefine their relationships and determine what it means to be loyal to their customers, not the other way around. Anticipating behaviors, attitudes and preferences and engaging with them on their terms and through their outlets are key to winning over the shopper of 2012 and to creating mutual trust. So why does trust matter?

Shoppers now check two or three different sources before finally purchasing a product. Some even go so far as to say they would wait ‘as long as it takes’ to insure they are getting the best value. In a survey by Rakuten LinkShare, 1,000 customers were surveyed with more than half (56%) claiming they would buy from a brand they have not previously bought from if that brand offered the best price.  Additionally, the IBM Institute for Business Value surveyed more than 28,000 consumers from around the world. They discovered that although consumers continuously engage in, critique, promote, and sometimes dismiss a brand, they dedicate their loyalty to only a select few retailers.

Andrew Mennie, general manager of eGain EMEA, a leading provider of cloud and on-site customer interaction software, said, “Today’s consumers are highly sophisticated and demand universally high service across interaction channels. When expanding a relationship, customer experience becomes even more influential.” It all comes down to one factor: trust. Retailers need to listen, become involved with and become valued members of the communities that connect shoppers to one another as well as shoppers and brands together. By immersing their selves into the worlds of the 2012-consumer, retailers have the ability to know everything about a consumer.

Trust is about more than simply understanding customer wants and needs. From privacy concerns to shopping cycles, retailers can evolve their processes demonstrating loyalty to consumers and building trust and transparency. Because trust is the foundation of all relationships, opening up and giving people the opportunity to talk about a brand is going to be the expected norm. Today’s consumers demand trust. Retailers would be wise to deliver on expectations in order to create loyal brand fanatics.

For the love of the customer

It costs five times as much to find a new customer than it does to keep an existing one.

Improving customer loyalty and making consumers love you is a lot easier said than done. However, the idea is simple and it just takes a little bit of ingenuity and creativity: make your customers feel special.

The UK GCVA, the trade body for the gift card and loyalty industry, agrees stating that an essential part of the customer relationship is being made to feel special. Andrew Johnson, managing director, believes the best loyalty driver is about personal recognition. Addressing customers by name, delivering products in personalized packages, or making personal house calls. “You want to feel special and have access to something others don’t have,” he adds.

This is an especially easy and true task for small businesses and retailers where unique experiences are limitless. Sage, a business management group specifically for the UK market, points out that there doesn’t need to be a complicated points scheme, but simply sending an invite to a store party or a handwritten thank-you note will get the job done. “The goal is not to overthink it, but to understand your customers and reward them with thoughtful, special gestures.”

Some other tips to consider when trying to make your customers love you:

  • Put merchandise on sale that people actually want to buy.
  • Don’t enforce too many limitations on coupons. Make them worth something to the customer.
  • Make sure your prices are competitive. Everyone has to have loss leaders.

Learn more about loss leaders and how product strategies can drive value for your business here>>

Consumers have provided retailers all the tools they need in order to build trusting relationships and brand loyal customers. However, shoppers are continuously changing and, failing to understand them at any given moment, will put retailers even further behind. With that said, once a retailer earns a customer’s trust, that retailer needs to ensure every channel in a supply chain carries the correct inventory to maintain a high service level.

Learn how Q’s allocation and replenishment capabilities can react to unique customer behavior in real-time across all channels >>

Don’t be afraid to embrace the new age of the shopper—they are giving retailers a chance to be creative and personal. Learn what customers want most, earn their trust and then sell it to them.

The Ecommerce Revolution

Ecommerce is rapidly developing with endless opportunities. For retailers, ecommerce provides tremendous potential to take advantage of data along with consumer wants and needs to boost conversion rates and create personalised experiences for consumers. It also provides potential for smaller retailers in which they can take a piece of the online sales pie, so to speak, from virtually anywhere.

As for the history of ecommerce, it’s short but brilliant, taking centre stage in the 1900’s with the evolution of eBay and Amazon. However, the rate of innovation and competition over the past 10 years has accelerated recently with the advent of multi channel and mobile initiatives.

Here are some interesting stats on the Internet and ecommerce:

  • Almost half (45%) of UK Internet users are going online via mobile phones, according to the Office for National Statistics.
  • The most rapid growth is among younger people ages 16-24.
  • Of the 19 million households in the UK, 71% have Internet access.
  • According to the Financial Times, the UK Internet economy is now valued at £82 billion.
  • Ecommerce is one of the faster growing markets in Europe with 2012 online sales expected to grow by 16.1% to a new total of £197.19 billion.

Sources: Office of National Statistics, Centre for Retail Research, Financial Times

The look of ecommerce in 2012

The success of ecommerce has been primarily built on personal recommendations as well as retail and product personalisation. But retailers have begun to see an increasing amount of data at their fingertips. According to Ross Carroll, UK managing director of Shopping.com, an eBay company, retailers will become increasingly targeted and will personalise outreach so that shoppers receive product information and offers that are timely and relevant to them. The retailers that take the data and learn everything there is to know about each customer will be the best.

Additionally, Dean Browell, EVP and partner at Feedback specialising in communication technology, agrees with Carroll stating, “Smart commerce players will use the tremendous data for inventory and bulk purchase decisions as well as custom recommendations in ways that only the largest online retailers have realized before now.” Browell emphasises that ecommerce has had one of the biggest shifts in recent years especially with the integration of reviews and recommendations.

For information on managing ecommerce inventory visit>>

 F-commerce and the Facebook Store

“There was a lot of anticipation that Facebook would turn into a new destination store, a place where people would shop. But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
- Sucharita Mulpuru, Forrester Research analyst

The retailers that were once taking to Facebook opening storefronts as a means to generate profit and achieve business goals are now shutting their Facebook doors. But just because Gap, JCPenney, and the like are closing up shop doesn’t necessarily mean Facebook is a fail. So, do social networks and commerce mix?

A year or so ago, analysts and investors hailed F-commerce as the next big thing and perhaps this is still true today. It’s been said that retailers may be to blame for their own demise, not understanding the true ways to create revenue through social media, especially Facebook, and not taking the right approach. Justin Thorne, digital marketing director at Blank Page, a UK-based digital marketing management consultancy, lists ways retailers can use Facebook as a means to accomplish measurable business objectives. According to Thorne:

  • Unless a retailer is offering a specific incentive for their fans to purchase from its Facebook store, why would a consumer purchase something anywhere other than a website?
  • Facebook storefronts need to be optimised for the Facebook experience. The real cost of it all is building a Facebook-friendly community and engaging the fan base. It must be a win-win relationship.
  • Retailers have to provide exclusive content or exclusive pricing to win the conversion, not replicating entire inventories.
  • Just because a retailer builds a Facebook storefront to sell products and services, it does not mean that prospective customers will find the store.
  • If retailers want to succeed, they need to respect that consumers are in a very different mind-set when socialising on Facebook as opposed to searching the web.

Read more about building a Facebook community to support the store by accessing the full Econsultancy article here>>

Maybe Facebook stores do deserve some of the blame, but retailers shouldn’t dismiss the variety of creative ways Facebook and F-commerce can be leveraged to boost sales, increase service, and engage consumers. Retailers shouldn’t just shove products onto Facebook users – people drive social commerce – so build a feature or service people actually want to use and share with their Facebook friends.

Pin It

The days of cork bulletin boards are gone making room for a bookmarking social media site that lets users collect and share things they like on the web via virtual pinboards. The site, also known as Pinterest, has registered more than 700,000 unique visitors in the UK and is driving more traffic to company websites and blogs than YouTube, Google+ and LinkedIn combined, according to a recent report from content-sharing site Shareaholic. Additionally, Pinterest directs 12% of its UK traffic onto retail websites which is already higher than Facebook’s 9% despite the websites infancy, Hitwise Experian, a consumer behaviour agency, determined.

Check out Pinterest here>>

As a powerful tool that allows companies and brands to display images of products on Pinterest boards linking them back to websites – sort of like a viral store catalogue – is reason enough for retailers to take action launching their own boards on everything from apparel and beauty to travel destinations and recipes. However, the key about Pinterest users in the UK is about demographics. UK users are primarily male, earn higher incomes than those in the US, and are younger with 42% between the ages of 25-34. Brits’ interests are also much different than their US counterparts with UK users top interests including: venture capital, content management, public relations and SEO.

However, Pinterest like other social media platforms is a conversation that involves and requires contributing other content or sharing other users’ pins to be successful. It’s also important for retailers to stay away from images and pins that can be deemed too promotional. But as Pinterest becomes a top traffic driver for retailers, the format has yet to prove itself as a potential commerce channel. While ecommerce retailers may see more tangible benefits, Pinterest gives businesses the ability to syndicate content, helping brands to tell their story.

Find more ways to change the game in retail here>>

Building Digital Relationships

Digital relationships are all-important in the social media sphere. It’s with these relationships that retailers can shape and steer experiences, and reach and engage customers. Retailers are now the architects of the relationships they have with consumers building bridges that help customers make decisions in a retailer’s favour now and over time. Regardless of the format – Pinterest, Facebook, website – creating direct, digital relationships is the ultimate strategy to achieve the ultimate results whether they be increased traffic or higher profits.

Look out for our next post on the tech trends that will define 2012

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Retail Sciences-Part 5: When One Item Influences Another Item

by Ziad Nejmeldeen • May 8th, 2012 • Write a comment »

Every shopper’s basket has a story to tell. Buried deep in the bottom, are stories of item relationships. Understanding these relationships – whether positive or negative – is extremely beneficial for retailers. By discovering the influence an item has on the demand of another, retailers can gain margin and market share, drive more profitable targeted marketing and advertising, and increase ROI. But it’s more than answering, “What items are more likely to be purchased together?” It’s about uncovering and utilizing item relationships to empower accurate decision-making throughout the supply chain.

Case Study 5: What are the relationships between my items?

Problem

When one item positively influences the demand of another item, the impact of the influencing item on the receiving item is called Halo Effect due to the positive nature of the relationship. When that relationship is reversed such that the influencing item negatively impacts the demand of the other item, the impact is referred to as Cannibalization Effect because of the cannibalizing nature of the relationship. Understanding both Halo and Cannibalization Effects can be very useful prior to making a number of retail decisions. Approaches taken to measuring the two types of effects are widely varied, with Cannibalization Effect arguably the more difficult to measure.

In this study, we focus on the measurement of Halo Effect through the computation of product affinities. Affinities are a measurement of the increased likelihood of one product being purchased given that another product will be purchased. Affinities are used, for example, on Amazon’s website to cross-sell products. However, the usage extends well beyond the recommendation to a customer that “Customers who bought product X also purchased product Y”:

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Retail Sciences–Part 4: Creating Proper Assortments

by Ziad Nejmeldeen • April 24th, 2012 • Write a comment »

New products enter the realm of retail every day and it’s only natural for retailers to jump at the chance to gain a piece of the market share. But as new merchandise continues to enter the supply chain, retailers are left with too much inventory. It’s difficult for retailers to decide which products to trim; retailers aren’t so good at retiring products in stores or taking items out of catalogs that no longer sell or have lost their place in the merchandise mix.

However, it doesn’t end there. Retailers need to understand how consumers will respond to the de-listing of an item and the overall economic impact it will have. It’s a balancing act that requires going beyond individual product profitability and instead considers the interests of the business, manufacturers and consumers.

Case Study 4: How many items should I carry in a particular category and location?

Problem

The task of creating proper assortments is referred to as Assortment Rationalization, a term that encapsulates a variety of assortment related problems. Here, the concentration is on a very specific assortment question, the answer to which defines the breadth of the assortment: How many items should I carry in a particular category and location?

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2012 UK/EMEA Retail Outlook–Part 1: The Consumer Economy

by Quantum Retail • April 23rd, 2012 • Write a comment »

A look forward at 2012: The year of transformation

Low wage growth, low consumer confidence and high unemployment continue to dampen the retail outlook, but lower inflation and interest rates as well as strong GDP growth help to even the playing field.

With early signs of stabilisation, but mixed indicators of progress, the European economy doesn’t find itself completely out of the clear in 2012. The economic outlook remains subject to high uncertainty, substantial risks and the sovereign debt crisis that both retailers and consumers have to deal with. With that said, growth in 2012 will be much less than that of 2011 with the U.K. only seeing a 0.9% increase in real volume retail sales.

 

Source: Cushman & Wakefield, “European Retail Report”

However, investors feel retailers came out of 2011 with more momentum than originally thought, according to Richard Griffiths, London-based equity strategist at Royal Bank of Scotland Group Plc. And with lower inflation and interest rates, spending power will get a boost in 2012. But retailers shouldn’t dismiss the continued uncertainty, high unemployment and higher taxes that will keep consumers subdued. Stephen Robertson, director general, British Retail Consortium said, “Consumers remain reluctant to spend unless encouraged by promotional activity. Total sales growth is still below inflation, so overall customers are actually buying less than a year ago while discounts are eating into margins.”

This is a great opportunity for retailers to innovate and invest in a tool that manages promotions and markdowns effectively to overcome the challenges of the economy while appealing to the submissive consumer and increasing profits.

Learn more about managing markdowns and margins here>>

 Further considerations

The current conditions in the U.K. are serious. Faster economic growth is needed to rebuild the economy before the inevitable toll of empty stores and declined sales take over. Here are some further considerations in regards to the economic forecast from the Centre for Retail Research (CRR):

Eurozone. The U.K’s growth depends on how quickly the Eurozone resumes growth and trade with them.

Unemployment. A particular problem with the young, it will take many years to get permanent employment for the jobless.

Business confidence. The willingness to take chances is low and companies are delaying investing as the future continues to look uncertain.

Mid-market retailers will see the more negative impacts as luxury remains in high demand and retail warehouses offer convenience and cost effective purchasing. Other beneficiaries of 2012 will be clothing, DIY and pharmacy. The “Big 3” – Germany, France, and the U.K. – will continue to dominate retail sales. With that said, the CRR believes the U.K. will see most of its improvement in the latter half of 2012 where they predict a good chance of the economy picking up, where the Eurozone will do just enough to deal with their problems and where retailers will not want to postpone investments later than summer 2012. The CRR also expects these improvements to increase confidence putting more demand into the economy.

 

 Source: Cushman & Wakefield, “European Retail Report”

 

Economic success = global collaboration

“Henry Ford was right. A prosperous economy requires that workers be able to buy the products that they produce. This is as true in a global economy as a national one.”
– John J. Sweeney, former President Emeritus of the AFL-CIO

In his keynote speech “Embracing Our Common Humanity,” former President of the United States Bill Clinton spoke about the future of retail in relation to the global economy at NRF’s 101st BIG Show. Clinton spoke about how nations need to respectfully work together in order for the each economy to recover fully. Clinton emphasized the need for a system that has shared opportunities and shared responsibilities with the rest of the world in which we all share the misery or share the prosperity.

“We live in a world where all the borders look more like nets than walls” and “we have to share the future; we cannot get away from this world” were prominent messages Clinton conveyed to thousands of retailers at the BIG show. Clinton talked of generating net increases in income if all countries were to have a similar corporate tax rate. Retrofitting buildings to make them more energy efficient in order to keep small businesses successful, investing in the future, and reinventing retail along with ever-changing technology were other opportunities Clinton noted. “We need to look for examples of problem solving from other countries to invest in and protect the future of this world,” Clinton said, making his point by referencing examples of problem solving from Brazil where the country is trying to create new energy sources to meet the needs of its growing economy.

Despite these economic problems, he spoke with optimism of the future of retail. However, he stated, “I wouldn’t minimise the challenges” before the retail industry today adding that “retail is truly global – much to learn, much to teach.”

What to know how far we’ve come in the past 12 months? Check out 2011 Retail Analysts in Review report here>>

 

Let the Games Begin 

It’s a big year for the UK having been granted the honor of hosting the 2012 Olympics in London. The Olympics, kicking off with the opening ceremony on July 27, 2012, are expected to be a catalyst for growth, but only if leveraged correctly. However, at a time when the British economy doesn’t have much to lose, engaging in the Games will generate a boost. Large or small, any amount of increase is better than none at all.

With that said, the Olympics are likely to produce a £200 million increase in the region according to research from Retail Economics. And although this predicted sales growth is modest at best – less than 1% of the total retail spending throughout the year – the U.K. is anticipating to benefit from tourism and international visitors staying in the area after the games have commenced generating a £5.1 billion sustained growth over the next four years for the British economy.

Marc O’Brien, managing director of Visa U.K., is hoping for a “ripple” effect in which the economic output of London and the United Kingdom will increase and the benefits will be felt in people’s pockets. “This immediate, positive economic boost will translate into sustained economic stimulus and job creation – impacts which will be felt long after the games have finished,” O’Brien said.

Grocery, apparel, footwear and gift related retailers are expected to profit the most from the London Games with supermarket sales to increase to £80 million. Additionally, the games will provide an excellent opportunity to raise the profile and awareness of retail brands to an international audience.

Learn how grocers can improve inventory management practices here>>

The 2012-year shows indications of an economy in the midst of recovery with retailers trying to take advantage of every opportunity to increase sales and instill confidence back into consumers and businesses. Retailers need to gather their resources and cultivate transformation to succeed in the year ahead. 

To learn more about embracing transformation and adapting to the new retail market visit>>

Look out for our next post on winning over the empowered shopper of 2012

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Retail Sciences-Part 3: The Different Types of Clustering

by Ziad Nejmeldeen • April 11th, 2012 • Write a comment »

In the past, retailers used limited technologies and imperfect, inaccurate approaches to clustering. These technologies assumed that stores in the same volume group or geographic region has similar customers and sales patterns when, in fact, shoppers are not the same within each market served.

The key to clustering is understanding that it’s not simply grouping stores together, but rather a descriptive, well-executed strategy that puts a retailer in the best position possible to optimize profit, revenue and margins. Clustering is meant to deliver the optimal set of store clusters to retailers for better assortment planning and category management. Thus, what is the best approach to clustering?

Case Study 3: How should I cluster?

Problem

Store Clustering refers to grouping stores together according to common attributes in order to facilitate a business process that can be applied to the stores as a set, instead of on an individual basis. Based on this definition, it is impossible to answer the question of how stores should be clustered until the business process in which the stores will be used is defined. A natural starting point is to describe the main uses of Store Clusters that are observed:

  • Assortment Clusters: Each store in a cluster receives the same assortment (breadth)
  • Volume Clusters: Each store in a cluster receives the same volume (depth)
  • Price (Markdown) Clusters: Each store in a cluster receives the same price changes (markdowns)
  • Size Clusters: Each store in a cluster receives the same percentage of size distribution

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Retail Sciences–Part 2: Planning and Optimizing Merchandise Space Allocations

by Ziad Nejmeldeen • April 3rd, 2012 • Write a comment »

 

In the retail industry, real estate and rent are becoming more expensive, prime locations are becoming scarce, spaces are getting smaller and opening new stores in the same area to compensate for the lack of space just isn’t realistic. With that said, there is a critical need for retailers across all verticals to effectively manage available space, as the effective use of space can mean the difference between being profitable and under performing.

Case Study 2: How do I plan and optimize space allocations?

Problem
It’s not the size of the space that matters, but what you make of it.

Merchandise strategies and space allocations are hard to predict and can be out of a retailers reach. From the beginning of the supply chain to the shelf in a store, the execution of space plans and allocations needs to be streamlined and simplified to increase service levels and customer service as well as increase sales and inventory ROI. In order for this to happen, retailers need to address several questions first and our Retail Science solution of Space Planning has the answers.

There are several questions related to Space Planning:

  • How much space should I allocate to a category?
  • Which categories should be placed in high-traffic areas?
  • How should I place categories to take advantage of cross-category demand?
  • How should I split categories by floor?
  • How should my layout be affected by specific structural nuances of a given location?

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Retail Sciences–Part 1: Purchasing and Distributing by Size

by Ziad Nejmeldeen • March 27th, 2012 • Write a comment »

As trends, choices, and competition evolve and change, new limitations and challenges arise contesting what retailers once knew about their business. Retailers are constantly making choices and trying to discover appropriate approaches to these challenges. Finding a holistic perspective towards inventory management and transforming the supply chain through the use of Retail Sciences will help retailers define and solve any problem. Retail Sciences are a collection of analytically based service offerings that address an array of questions and challenges retailers are faced with.

Some questions retailers are asking that Retail Sciences answer are:

  • How should I cluster stores for allocation? For assortment?
  • How much product should I purchase by size? How should I distribute by size?
  • How many packs should I have? What should the configuration(s) be?
  • Is my markdown cadence working? What can I do better?
  • How much space should I allocate by category?
  • In what categories should I be increasing or decreasing my product range?
  • How much of an impact have my promotions had on the promoted items and the items not on promotion?
  • What affinities do products share?
  • Am I carrying the right amount of inventory?
  • How should my weeks of supply vary by location?

Regardless of the questions being answered, every Retail Science service should share three key objectives that will enable retailers to overcome these challenges:

  1. Minimal impact on the retailer.

-      The goal is to minimize the effort required by the retailer’s business and technical teams.
-      Lean data requirements are imposed in which only enough data is requested to perform any particular Retail Science with flexibility in regard to data formats.
-      Additionally, once data is in hand, interaction with critical resources on the customer side is kept to a short weekly call – enough only to give status updates on progress as well as ask relevant questions that come up in the course of executing the service.

  1. Speed to value

-      Retail Sciences are lean and fast – six weeks on the low end and up to three months in extreme cases after data is in hand.
-      Answers are provided to the retailer quickly with the cost of the Retail Science more than offset by retailer gains within months of initiating the service.

  1. Well-defined delivery and usage

-      Results have two types of deliverables:

1.) A presentation/training describing the analysis performed, key findings, and how the results should be used.

2.) The data output in an agreed-upon format that can be used by the customer in addressing the original business problem.

-      Prior to executing the service a conducted discovery as to how the results of the service can be utilized by the business are presented. Post-execution, results will be revisited to ensure that maximum value is obtained.

To illustrate the types of problems retailers are facing and the benefits of executing a Retail Science solution, consider a series of case studies.

Case Study 1: How much should I purchase and distribute by size?

Problem

For retailers, especially those that specialize in apparel and fashion, the question of purchasing and distributing by size is a significant challenge and needs to be addressed during both the buying and allocating processes.

As the range of stores for which a product is being purchase is determined, an early size-related question that needs to be answered is “How much of an item should I purchase by size?” Once the product is in hand and store allocation is taking place, the next question is “How do I distribute by size?” Quantum Retail helps answer these questions for many retailers.

One customer in particular faced even bigger challenges of solving these questions as certain technical considerations needed to be addressed. At the time of allocation any size profiles that were provided to inform the distribution decision could not be made at store-level with the retailer’s current allocation solution because it could not handle the volume of data.

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2012 Retail Outlook-Part 4: The New Look of Social and Digital Media

by Quantum Retail • March 7th, 2012 • Write a comment »

The Ecommerce Revolution

Ecommerce is rapidly developing with endless opportunities. For retailers, ecommerce provides tremendous potential to take advantage of data along with consumer wants and needs to boost conversion rates and create personalized experiences for consumers. It also provides potential for smaller retailers in which they can take a piece of the online sales pie, so to speak, from virtually anywhere.

As for the history of ecommerce, it’s short, but brilliant taking center stage in the 1900’s with the evolution of eBay and Amazon. However, there hasn’t been much innovation in the past 10 years, until now.

Here are some stats on the Internet and ecommerce:

  • North America’s Internet audience will continue to expand in 2012 to 78.3% of the total population – 272 million users in total.
  • Online buyers will reach 154.6 million, up from 4.4% in 2011.
  • The top 2 purchases made online are clothes (3.6%) and books (4.6%).
  • Some analysts go so far as to say that ecommerce will reach $278.9 billion by 2015.
  • The percentage of new shoppers is fewer every year and overall growth in ecommerce sales will come from existing shoppers simply buying more.

Sources: US Census Bureau, Nielsen, Forrester Research and Pew Research Center

The look of ecommerce in 2012

Basic economic principles of new media require that, in order for ecommerce and the media channels it utilizes to have value for its users, consumers need customization and personalization capabilities, a sense of community and the ability to share and receive relevant information. The ecommerce revolution will be just that: truly engaging consumers in 2012 and beyond.

The success of ecommerce has been primarily built on personal recommendations as well as retail and product personalization. But retailers have begun to see an increasing amount of data at their fingertips. According to David Selinger, CEO and co-founder of RichRelevance, “Personalization will be the differentiating factor in ecommerce and digital commerce going forward, especially for multi-channel retailers and new entrants online.” The retailers that take the data and learn everything there is to know about each customer will be the best.

The fact is that right now retailers are merely making suggestions of what other shoppers who bought a certain item also purchased, or recommendations of items similar to what that particular shopper purchased. But there is an endless amount of social and in-depth purchase data that retailers need to acknowledge and source to help increase sales. Starting now, ecommerce is about to get more personal. After all, people become more invested in a retailer who knows their preferences and will be more likely to return.

For information on managing ecommerce inventory visit>>

F-commerce and the Facebook Store

“There was a lot of anticipation that Facebook would turn into a new destination store, a place where people would shop. But it was like trying to sell stuff to people while they’re hanging out with their friends at the bar.”
- Sucharita Mulpuru, Forrester Research analyst

The retailers that were once taking to Facebook opening storefronts as a means to generate profit and achieve business goals are now shutting their Facebook doors. But just because Gap, JCPenney, and the like are closing up shop doesn’t necessarily mean Facebook is a fail. So, do social networks and commerce mix?

A year or so ago, analysts and investors hailed F-commerce as the next big thing and perhaps this is still true today. It’s been said that retailers may be to blame for their own demise, not understanding the true ways to monetize social media, especially Facebook, and not taking the right approach. However, RIS News put together a list of retailers and the ways they are using Facebook as a means to accomplish measurable business objectives:

  •         L’Occitane Lures Facebook Fans with Giveaway: Offering a voucher for a free tube of hand cream built store traffic and boosted the retailer’s Facebook fan base by 80%
  •         FYE Boosts Facebook Fans 56% with ‘Twilight’ Promotion: The entertainment retailer used a chance to attend the Los Angeles premiere of the latest Twilight movie to significantly increase its Facebook fan base
  •         Sephora Boosts Brand Awareness with Facebook Fan Fridays: Weekly deals are shared first on Sephora fans’ news feeds, where they can then share offers with friends
  •         American Eagle Interacts with 6M Facebook Fans in Real-Time: After reaching a goal of 6 million Facebook fans, the retailer rewarded those fans with an exclusive 20% off coupon

Read more about retailers recent Facebook activities by accessing the full RIS News article here>>

Maybe Facebook stores do deserve some of the blame, but retailers shouldn’t dismiss the variety of creative ways Facebook and F-commerce can be leveraged to boost sales, increase service, and engage consumers. Retailers shouldn’t just shove products onto Facebook users – people drive social commerce – so build a feature or service people actually want to use and share with their Facebook friends.

Pin It

The days of cork bulletin boards are gone making room for a bookmarking social media site that lets users collect and share things they like on the web via virtual pinboards. The site, also known as Pinterest, has registered more than 7 million unique visitors and is driving more traffic to company websites and blogs than YouTube, Google+ and LinkedIn combined, according to a recent report from content-sharing site Shareaholic.

Check out Pinterest here>>

As a powerful tool that allows companies and brands to display images of products on Pinterest boards linking them back to websites – sort of like a viral store catalog – is reason enough for retailers to take action launching their own boards on everything from apparel and beauty to travel destinations and recipes. Internal data from the marketing optimization technology company Monetate indicated the amount of traffic Pinterest has sent to brand and company websites has risen fourfold between September 2011 and December 2011 becoming a top five referrer for several apparel retailers.

 

 Source: Monetate

However, Pinterest like other social media platforms is a conversation that involves and requires contributing other content or sharing other users’ pins to be successful. It’s also important for retailers to stay away from images and pins that can be deemed too promotional. For instance, Whole Foods Market pins photos of food, food art and images of recycled and reused products to inspire customers to think and act with the environment in mind.

According to an article in Adweek, retailers including Gap, Nordstrom and West Elm are seeing referrals to their sites from Pinterest. Gap only created its own pin boards after noticing that consumers were grabbing images from its site to use, or pin, on Pinterest. But as Pinterest becomes a top traffic driver for retailers, the format has yet to prove itself as a potential commerce channel. While ecommerce retailers may see more tangible benefits, Pinterest gives businesses the ability to syndicate content, helping brands to tell their story. 

Find more ways to change the game in retail here>>

Building Digital Relationships

Digital relationships are all-important in the social media sphere. It’s with these relationships that retailers can shape and steer experiences, and reach and engage customers. Retailers are now the architects of the relationships they have with consumers building bridges that help customers make decisions in a retailer’s favor now and over time. Regardless of the format – Pinterest, Facebook, website – creating direct, digital relationships is the ultimate strategy to achieve the ultimate results whether they be increased traffic or higher profits.

Look out for our next series on solving retail problems with retail sciences.

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2012 Retail Outlook-Part 3: Technology is the Force of the Future

by Quantum Retail • March 1st, 2012 • Write a comment »

Retail Tech Trends

Retail chains are growing. Hundreds of stores, thousands of products, millions of customers, multiple channels with global locations. Retailers cannot remain tethered to past technologies and tendencies anymore. Companies need to innovate and invest in improvements and advancements to stay ahead of the competition. For starters, here’s a look at the top technology predictions for retail in 2012:

Reach for the clouds. Making data available and comprehensive to the consumer is key. Retailers will look to the cloud to get the right data in the right hands.

Technology optimization. While most trends tend to come and go, technology trends continue to evolve and build upon existing technologies. Optimizing inventory deployment for retailers will not only improve margins, but also will maximize markdowns and capture demand, missed opportunities and lost sales.

Embracing the omnichannel supply chain.  As one of the most sought after tech trends of 2012, retailers need to implement a solution that optimizes all channels within a supply chain creating seamless inventory movement.

Two worlds collide. Marketing and technology will converge as retailers begin to understand the value of content and commerce working together.

Ease the payment. Near field communication (NFC) and mobile devices shine in 2012 giving shoppers more, easier payment options.

The voice. As consumers literally talk to their technology devices these days, it’s just a matter of time before 2012 sees retailers using voice control and voice recognition technology to enhance customer experiences.

Technology migrates. Consumers will continue to migrate over to mobile, tablet, smart TVs and game console platforms to make purchase decisions.

These are just a few of the tech trends top of mind for retailers in 2012, some more important than others depending on a retailer’s business strategies. However, below we highlight the biggest, most beneficial technology topics that most—if not all—retailers should embrace in 2012 to get ahead of the competition and to stay ahead of the curve.

The Omnichannel Experience

“Seamlessly integrating the customer experience across all channels of interaction—including stores, websites, direct mail and catalogs, mobile platforms, social networks, home shopping and gaming.”

-Bain & Company

It began with a store. It evolved into a catalog. Then came this thing called the Internet that let brands and companies create websites to showcase products and services. Shortly thereafter, mobile phones became Internet enabled driving the e-commerce boom even further. Now, consumers can shop on any device from TV’s to gaming consoles at any given time. This is the evolution of omnichannel retailing.

Omnichannel isn’t just a buzzword of 2012 nor is it a passing trend. Omnichannel retailing and innovation are here to stay. It’s essentially the only way a retailer can succeed in today’s retail environment, but only if done correctly. Being a truly omnichannel retailer means that consumers have the ability to choose whatever channel they want to interact with, any device they want to do it with, and still get a very convenient, consistent, high-service shopping experience. It also entails flexibility in which a consumer can start the shopping process in one channel (e.g., browsing through a catalog) and complete the transaction in another channel (e.g., making a purchase on a mobile device or tablet) with ease.

However, in the current retail industry, a simple focus on the integrated business process isn’t enough. In other words, instead of just connecting channels, retailers need to blend channels and leverage all touch points – mobile, kiosk, social, brick-and-mortar, TV – seamlessly. It’s the right product, the right price, the right channel and the right time that will deliver a revolution in customer experiences and expectations that will increase margins, drive profit, and provide high service levels for retailers.

Source: Practical Analytics

How to win in an omnichannel world

Retailers who play follow-the-leader will not win in the new world of omnichannel retailing. With a clear vision, a strategy that attributes all channels and devices, and the right technology, these retailers are sure to rise above the competition. A few steps to navigate an omnichannel world:

Inventory planning is key. Proper inventory planning is crucial for omnichannel success. It’s a mix of knowledge, science and processes that have the greatest impact for retailers. A solution that combines these properties will make faster, smarter purchasing decisions, will optimize sales, will minimize inventory carrying costs and will make inventory movement unified – exactly what retailers need to achieve omnichannel status.

The idea for planning inventory for a multi-channel supply chain is to continuously optimize business performance using a deep understanding of item behavior and merchandise roles and strategies to keep up with the rapidly shifting purchasing patterns and the ways in which consumers choose to shop. A retailer’s product mix, locations, sizes, and online efforts all influence omnichannel models. Find a technology that takes all of these aspects into account.

Find more information on making the right moves with inventory planning here>>

Be the best of both worlds. E-commerce has its advantage: it’s huge and continues to grow and evolve, but brick-and-mortar, with its traditional roots, still has winning effects. Retailers will understand the importance of having an online presence as well as utilizing all the other channels that come with it, using technologies that will deliver the right experience to the right people. For instance, Nordstrom allows you to try on and exchange or return any orders placed through any outlet in its brick-and-mortar stores.

With 70% of retailers lacking multi-channel integration, the odds are in favor of the retailers who dive headfirst into omnichannel retailing. Learn more here>>

Gesture-driven Technology

As interactive as it is entertaining.

Gesture-driven technologies were a hot topic at this year’s BIG Show. They have a wide-range of prospects for the future of retailing with capabilities already for data, videos, images and text to be stored and manipulated on interactive whiteboards, projectors and touchscreens with simple hand gestures.

One such technology, the virtual fitting room or virtual fashion mirror, is making brick-and-mortar retail fun again. Popping up all over, especially in the United Kingdom, virtual fashion mirrors allow customers to select from an “endless aisle” of apparel and try it on without removing a single layer of clothing. Shoppers can quickly coordinate outfits by mixing and matching an array of garments and accessories from retailer’s online and in-store inventories.

Another example of gesture-driven tech includes digital signage, which captures attention like traditional static ads cannot. Multi-touch surfaces in store windows put consumer’s images into the ad making the shopping experience more personal by having consumers interact with the ad. Interactive floor ads similarly let consumers engage with the brand with simple movements. Shoppers can search for particular products, try on clothes, and make purchases with the move of a finger.

User interaction with technology is going above the glass. Explicit tools and direct manipulation are no longer needed to drive a user interface. With the ability of technology to see users’ movements in space, gestures are being added to traditional methods in new layers of interaction. However, retailers need to keep in mind that this new technology requires new thinking about dexterity, ergonomics, and whether someone might feel silly or offended with certain gestures.

Pay it Forward

With new priorities come new technologies. Cue the new POS system or, in other words, the mobile device. Mobile technologies will significantly alter the traditional approach to store operations and are a serious game changer for retail in 2012. According to RIS News’ Ninth Annual Store Systems Study 2012, there are two reasons for this:

  1. Mobile technologies are causing retailers to completely rethink the way in which sales associates interact and engage with customers
  2. Retailers are viewing mobile devices as a replacement for the old-school POS suite

Tablets have the most promising growth probabilities with 77% of the Annual Store Systems Study respondents considering purchasing iPads as their mobile platform. Results also showed Apple as the majority leader in the mobile arena. And as consumers continue to outsmart retailers, taking their smartphone with them everywhere they go, retailers cannot only deliver more product information, but can look into sales history to achieve higher service levels with the adoption of mobile technology. Nevertheless, the top function retailers are planning to add mobile devices for over the next three years is mobile POS.

 

Source: RIS News

Price Optimization

Another hot technology topic of 2012 is price optimization, which shouldn’t come as surprise seeing as the number of multi-channel shoppers out there continues to increase and consumers continue to be price-sensitive. 35% of retailers plan to focus on solidifying price optimization technology, as demand-based pricing by store/store cluster and SKU is needed in omnichannel supply chains. More targeted pricing based on individual or household behavior, lifestyle value, social influence, and more factors need to be addressed due to today’s competitive environment and empowered consumers.

Price optimization services will help retailers maximize profit margins while managing information about price changes due to competitor price changes, cost fluctuations, and aging inventory. Achieving top results from price optimization requires a holistic approach that takes into consideration core business concepts. But just as with other business solutions, price optimization is only one piece of the puzzle. It’s just a component of an entire plan. That isn’t to say it should be ignored, but to reap the biggest rewards from it, retailers need to look heavily into forecasting demand components. With forecasting abilities, pricing systems are able to take factors that are not necessarily related to price such as seasonality, events, cannibalization and halo effects, and accurately project the impact of these changes before they happen.

Check out more on seasonality, trends and merchandise behavior at the store, department and product level here>>

Technology represents an outstanding competitive advantage for those retailers who are open to innovation and willing to take on new perspectives of today’s unpredictable, complex retail industry. As supply chains become even more complex and consumers become more engaged and smarter, stay ahead of pack with next generation technology.

Learn how Quantum Retail Technology can adapt your business strategies to the pace of the new retail market.

Look out for our next post on the new look of social and digital media.

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2012 Retail Outlook-Part 2: The Age of the Shopper

by Quantum Retail • February 22nd, 2012 • Write a comment »

The new consumer of 2012

What retailers once knew about consumers no longer holds true today. Just as the retail industry has changed, so have consumers with 2012 becoming the age of the shopper. Shoppers now hold all of the power and retailers are forced to comply to win them over. Building trust is an essential component for shaping lasting, meaningful relationships with the new shopper and for gaining their full attention.

Who is the new shopper?

Knowledgeable, empowered, dynamic, smart. The consumer’s of today are technologically savvy and increasingly smarter seeking more and more information than ever before with access to an ample amount of date through a variety of sources: mobile devices, tablets, apps and social media. It’s through these platforms that shoppers are connecting, learning everything about products and brands and seeking and giving advice to friends, family and even strangers on purchase decisions. In fact, millennial Internet users showed a greater reliance on anonymous recommendations and reviews when making purchase decisions according to a study by Bazaarvoice.


Source: www.eMarketer.com

In addition, 42% preferred social networks such as Facebook and Twitter to post and share product, brand or service experiences.


Source: www.eMarketer.com

Why trust matters

Retailers previously thought loyalty and rewards programs were the best means to communicate and connect with consumers. The truth for today’s consumers is that retailers need to redefine their relationships and determine what it means to be loyal to their customers, not the other way around. Anticipating behaviors, attitudes and preferences and engaging with them on their terms and through their outlets are key to winning over the shopper of 2012 and to creating mutual trust. So why does trust matter?

The IBM Institute for Business Value surveyed more than 28,000 consumers from around the world. They discovered that although consumers continuously engage in, critique, promote, and sometimes dismiss a brand, they dedicate their loyalty to only a select few retailers. It all comes down to one factor: trust. Retailers need to listen, become involved with and become valued members of the communities that connect shoppers to one another as well as shoppers and brands together. By immersing their selves into the worlds of the 2012-consumer, retailers have the ability to know everything about a consumer.

Trust is about more than simply understanding customer wants and needs. From privacy concerns to shopping cycles, retailers can evolve their processes demonstrating loyalty to consumers and building trust and transparency. Because trust is the foundation of all relationships, opening up and giving people the opportunity to talk about a brand is going to be the expected norm. Today’s consumers demand trust. Retailers would be wise to deliver on expectations in order to create loyal brand fanatics.

For the love of the customer

Linda Hundt of Sweetie-licious and Dave Ratner of Dave’s Soda and Pet City opened Independent’s Day at Retail’s BIG Show. The two successful retailers discussed creativity and the ability to make customers love you more.

All it takes is a mix of ingenuity, creativity and drive to make customer’s love retailers more, just ask Linda Hundt and Dave Ratner. Hundt is an award-winning baker and entrepreneur who aims to give her customers the most unique retail experience she can offer. She uses pure originality along with her personal experiences and love of her customers and employees to make her bakery a success. She develops loyal customers by offering hugs to patrons and delivering products in personalized packages.

Ratner, another entrepreneur, has made himself spokesperson for his business and is featured in most of the company’s advertising. Ratner applies the same concepts of creativity and drive, just in different ways. For example, when his company has a sale, he will make personalized calls to the appropriate customers letting them know their favorite products are marked down.

Ratner offers some tips to encourage and achieve his mantra—you have to get customers in the door, then you have to make them love you:

  • Put merchandise on sale that people actually want to buy.
  • Don’t enforce too many limitations on coupons. Make them worth something to the customer.
  • Make sure your prices are competitive. Everyone has to have loss leaders.

Learn more about loss leaders and how product strategies can drive value for your
business here>>

It appears as if Ratner learned from the best referencing an anecdote about Walt Disney in which Disney was once asked why he continued to host multimillion-dollar parades in Disney World when he knew people would continue returning to the theme park even without parades. He responded that he did it to make his customers love him more.

It’s a celebration

Consumers are giving retailers so many opportunities to connect with and learn more about them. With so many different outlets and platforms, retailers should be thankful, taking advantage of what lies before them. Accessing technologies, whether it’s video, company websites, social media or mobile, retailers should be celebrating the new role of the customer and all the possibilities it brings.

At the session New Merchandising Strategies for Retailers at NRF’s BIG Show, executives from RiteAid, GlaxoSmithKline and ModCloth focused on six strategies to help drive in-store and online sales by engaging with their customers. Here are their recommendations:

  1. Be relevant, personal and solution oriented. Approach merchandising from the customer’s point of view. Forget SKUs and subclasses and instead group products along lifestyle themes that resonate with shoppers. To add more value retailers should offer personal advice for common human experiences and help solve customer’s problems – even if they are unaware of the problem.
  2. Turn traditional behaviors into digital habits. Take an offline, traditional behavior such as couponing and create a habit for the digital age. Rite Aid aggregates coupon offers from all around the Internet on a special landing page for members of its loyalty program to use.
  3. Coordinate and plan in advance. Work with other departments such as retail merchandising and promotions to coordinate calendars and campaigns. Plan new initiatives upfront and in advance with vendors, also.
  4. Add value to content. GlaxoKleinSmith recommends positioning a discount as a reward for customers that have watched a video or accessed an article, for example. It keeps content fresh and encourages repeat customers.
  5. Use data as information for strategies.When looking at data, ask questions and engage with it beyond product and price, sales and basket spends, and abandonment.
    Discover more about turning data into actionable knowledge here>>
  6. Listen to your customers. Train everyone on your team to be customer-oriented in which they constantly listen to and learn from consumers whether it’s via Facebook, in the store or in a survey.

Click here to read the entire entry 6 Strategies to Help Retailers Celebrate the Role of the Customer

Consumers have provided retailers all the tools they need in order to build trusting relationships and brand loyal customers. However, shoppers are continuously changing and, failing to understand them at any given moment, will put retailers even further behind. With that said, once a retailer earns a customer’s trust, that retailer needs to ensure that every channel in a supply chain carries the correct inventory to maintain a high service level.

Learn how Q’s allocation and replenishment capabilities can react to unique customer behavior in real-time across all channels>>

Don’t be afraid to embrace the new age of the shopper—they are giving retailers a chance to be creative and personal. Learn what customers want most, earn their trust and then sell it to them.

Look out for our next post on the tech trends that will define 2012

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