Generating growth in today’s flat economy is one of the problems
that keep retailers up at night these days. Taking share from the competition is always expensive and frequently unprofitable, so where
else can they turn? Consider disruptive innovation. Here’s one example.
Each year the management
consultancy Centigo AB produces, Centigo Retail Outlook, a major report on
seven new retailing trends they’re seeing across the world. The reports are always full of creative
insight and this year is no exception. Håkan Bengtsson, one of the report’s
authors, is also a BMC Black Belt. We talked with him recently about some of
the things they’ve learned during the work. Here’s a sample of what the team at
Centigo is seeing.
The retail stats compiled in a recent Business Intelligence
report drive home the fact that “online retail is growing faster than offline
retail,” but closer interpretation is required if you want to really understand
what’s going on. For one thing, offline retailers probably have more
opportunity to capture business than the buzz suggests.
We know that it costs a lot more to acquire a customer than
to retain one and that customer turnover is a major expense for retailers. But are we putting enough resources and
thoughtfulness into customer retention? I was reminded of this challenge by a personal experience in
which a little more investment in customer retention could have resulted in a
big increase in the lifetime value of a customer.
“Is the human touch important in retail?” Of course it is. It can also be the key
driver for sustainable competitive advantage, as Susan O’Neill Gear suggests in her recent blog. To make the commitment (and reap the benefits), brick and
mortar retailers must answer two questions first.
Stuart Armstrong was pushing the boundaries of using POS data at
IRI to understand shopping behavior when I first met him. Today, he’s pushing
the boundaries of using digital screens to communicate with shoppers inside
stores at ComQi. I think he has important things to say about where we’re going
with the technology-enhanced shopping experience, which changes in the retail
environment are most transformative, and how retailers and brands are using
interactive screens to build customer relationships.
The Poncho app, now in pilot with Duane Reed, caught
our eye because it nails the requirements for effective shopper communication. Shoppers
want information that’s personalized and relevant – timely, interesting and
useful for the task at hand. Messages that don’t meet these criteria
won’t have much impact and risk being irritating.
Working with retailers, brands play an important role in
driving the sales of their products, so it’s a concern that only a handful have
taken the steps needed to extend that influence to mobile. This gap needs attention.
Taiwanese convenience stores use a success formula that retailers as diverse as Trader Joe’s and The Container Store have tapped into. It’s
about having a different value proposition than other stores selling the same
types of products, and about finding ways to “engrain” themselves into the communities serve. It's the same thinking that's laid out in the NACS/CCRRC Playbook for Success.
To shorten delivery times, Amazon
offers sellers the option to have their merchandise comingled (pooled). The theory sounds good – but the practice builds a subtle, but potentially important
vulnerability into the design and operation of Amazon’s supply chain.
Digital coupons are popular, but there’s always the issue of
how smoothly they fit into the shopping experience. The new mobile app Checkout
51 seems to resolve many of these issues. It also makes coupon delivery more
efficient for manufacturers.
decision to offer customer service through its iBeacon trial instead of
promotions is intriguing. Retailers can hurt themselves by delivering promotions and selling products because they
were paid to do so, not because their customers wanted them. Tesco's choice will benefit
shoppers while allowing them to warm up to the new technology slowly.
When conflict erupts between a major retailer and a large
consumer goods manufacturer, the damage can be quite costly. The recent disagreement between Target and P&G didn’t go
that far, but the lesson is still clear: if these conflicts cause participants
to take their eye off serving the ultimate customer, they can create real
The in-store experience delivered by
retail sales clerks varies widely, and when it translates into higher productivity that’s
worth paying for. GAP recently raised its minimum pay to $10 an hour and this should definitely help them attract more of the type of people who
are essential to winning in today's retail world. This feels like the
right time for a fresh approach to the way stores value their first line