to reach and manage customers in the digital era, they have been analysing their operations that support consumer expectations, particularly around showrooming, promotional activity, purchasing and delivery channels, analytics and overseas expansion.
As we look forward to 2015 here are 5 touch points that are likely to impact retailers and their retail value chain that supports their customers.
1) The rise of Omni-channel courier services: With more than 10% of retail sales now being transacted online, the need for more flexible shipping options will become more prevalent in 2015. Progressive retailers have identified that impulse purchases are more effective if they can offer same day delivery, office drop off and after work (5pm) delivery. Watch out for more focus around logistics specialists and expanded services in 2015 to meet this growing demand.
2) Personalised supply chains: In an ever increasing customer driven market look for supply chains to be more customer centric. Gene Tyndall of Tompkins International said in 2014 "We will see massive changes of operations strategies - which determine capabilities, business and operating models, customer experiences, and supply chain strategies - not just by retailers, and CPG companies, but by all businesses”. The evolution of personalised offers has been on the incline over the last couple of years. Supporting this are platforms such as customer relationship management (CRM) repositories, powerful promotional engine capabilities and marketing automation toolsets. The challenge moving forward will be to provide personalisation while still remaining profitable. Customer service is expensive but needs to be balanced with infrastructure, process and technology.
3) Customer centric reporting and software: Increased market pressures have heightened the need to be more resourceful and proactive. Enabling real-time decision making through reporting and analytics will be one of the keys to unlocking this. Ever since the birth of ‘Big Data’ experts such as Gartner have been focusing on the importance of data to meet the growing expectations of customer demand. For retailers this translate into being able to effectively capture data, measure the organisation’s performance, and turn this into actionable insights. For example retailers might already be reporting on sales, profit and GP%. What about customer sentiment, weather or localised events? This is some of the most difficult data to capture and is rarely linked to reporting analytics. Look for more software providers, particularly ERP (Enterprise Resource Planning) to integrate real-time analytics throughout their solutions turning transactional data and external inputs into a real-time decision making. This level of integration provides a level of insight that was previously cost prohibitive for most enterprises.
4) Omni-channel requirements hit the mid-market: Mid-market retailers have been watching closely as enterprises have been battling with how to be effective and efficient online and in store. The complexity of omni-channel platforms has placed pressure on wholesalers and manufactures as they are asked to meet shorter timelines. In 2015 look for mid-market retailers to increase their online presence, but more importantly lean on supplier to make available direct to customer models. This is likely to increase pre-release incentivised orders to assist in predicting demand as well as personalised promotions. The velocity and variety of information has been increases and so will the challenge for suppliers to incorporate predictive analysis around customer demand. The goal for suppliers will be to work with mid-market retailers closer to drive product through to market, streamline inventory and reduce overheads.
5) Our global market: OK, nothing new there, but there’s no escaping that the internet and in particular ecommerce has made retail a global enterprise. This means that regardless of size, progressive retailers have identified the potential to increase market share both locally and overseas. The challenge will be whether to consider direct expansion, licensing or even franchising as viable options. Overseas expansion has increased via master franchising agreements, or setting up virtual and physical locations. The Spanish company behind fashion retailer Zara, has reported a rise in quarterly profit as it pursued a global expansion setting up new stores in Japan, China, Australia and Russia. Zara now also sells online in 23 countries. In the case of franchising the International Franchise Association (IFA) reporting that franchising contributed to roughly 10% of new U.S. jobs, increased 1.4 percent in 2014, despite the overall market downturn and is now 3.4 percent of the U.S. GDP. Franchise.com have stated that multi-unit franchise operators control 55% of all franchised units in the U.S. with the average multi-unit franchisee owns 5 franchised locations, up from about 3.5 in 2007. Whether setting up overseas or expanding locally one of the challenges businesses face is having a flexible platform that provides the operational capabilities to support expansion. Look for software and supply chain vendors to increase their offering by providing multi-currency, multi operations trading support.
As market and customer expectations evolve, so must retailers, suppliers and their supply chains to remain competitive. Focused omni-channel initiatives, improved operational insights and expansion flexibility are just some of the touch points that continue to drive interest and innovation in 2015.