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What Do Retailers and their Partners Need to Know in the Transforming Retail Landscape?

Guest Blog by Bryan Nella

Mike Relich, COO of Guess, Inc., spoke earlier this month about the massive transformation that’s occurring in the retail industry today. One attention grabbing statement he delivered was that one billion square feet of dead mall space exists today. This can be attributed to several causes ranging from e-commerce growth, to showrooming, to same day delivery.

But one thing that all of these factors have in common is the customer. It needs to be continually stressed that retailers have to be prepared to engage the shopper at all points in the omni-channel chain – from e-commerce interfacing to the in-store shopping experience. Successful retailers will habitually evaluate the performance of their stores and strategically fuel their supply chain accordingly.

Smartly Engage Your Most Profitable Customers
Relich suggested making investments wherever your strongest customers are – and decreasing investment in areas of weak performance. For example, re-tool weak-performing stores as fulfillment centers and take advantage of the wealth of excellent CRM data that exists in strong stores. Every member of the sales staff should be empowered with data around who the most valued customers are as soon as they step foot in the store. Their shopping profile should include their preferences and recent online and in-store purchases, allowing the sales associate to then smartly engage these customers and anticipate what they might be looking for today.

Surprising to most, this isn’t today’s shopping experience reality. Consumers hear about retailers tracking them in the store via their cell phone, heat maps or line of sight. So why is it that retailers still have it wrong? Relich used an interesting comparison to illustrate the current typical scenario: when you enter the grocery store and purchase everything you need for the week, you might spend $300. You then have to wait in a long line to check out, but the least profitable customer with 10 items or less receives a fast lane checkout. The changing retail landscape means knowing where you’re profitable and being agile enough to make changes that center around your most valued customers.

Here are a few emerging trends we’re beginning to see firmly take hold in the shifting landscape today:

  • Specialized and Flexible Production: Consumers can order custom goods online and receive them in just days. The order is fed directly to factories who then interpret the data, create the customized product, and pack, scan and ship the item direct-to-store or direct-to-consumer.
  • Personal Shopping Experiences: As we have already mentioned, consumer shopping patterns, when tracked effectively, provide unique insights. This data allows retailers to provide a personalized shopping experience. Suppliers who specialize in specific goods can benefit here. How? By becoming a driving force behind a targeted customer program that caters to the individual while eliminating costs related to inventory, warehouses, and retail stores. If the supplier has access to the right data, they lend an essential hand in the shopping experience – ensuring it is fast, convenient, and customized.
  • Delivery in Demand: As consumers, we all want to receive our orders immediately and we want it to be correct every time. It’s understandable that same day delivery is having a huge impact on the industry right now. Taking that one step further, retailers are beginning to offer free delivery and returns in addition to the same day delivery option to capture more sales and greater loyalty. But retailers need to ensure they have the right infrastructure to communicate and collaborate as a network with trading partners and suppliers in order to do this

Is Brick-and-Mortar Dead?
The retail transformation is all about providing value to customers. But on the back-end, it’s all about how much product to carry and where, how to ship, and how far suppliers and trading partners can contribute to the customer experience while continuing to add value. The one billion square feet of open mall space doesn’t mean that brick-and-mortar retail is taking its last breath. Instead, it will see a transformation.

And in order to ensure a smooth transformation, it will require an agile supply chain where products can be shipped to both customers’ homes and stores. E-commerce customers are demanding more aggressive delivery schedules which call for even better supply chain collaboration. The only option, with so many points of contact, is to create a networked supply chain where all partners share a single view of the truth and work together to deliver goods as rapidly as possible without sacrificing cost or quality.

Bryan Nella is Director, Corporate Communications with GT Nexus

Keep Your Front Line Staff Smiling

Guest blog by Gina Smith

Front line staff are the face of your company. Whether you are a large retailer or small business, your employees will leave a lasting impression on each and every customer. That impression will determine whether or not that customer comes back and/or refers others. Keeping your front line staff positive and happy increases the likelihood staff will enjoy their jobs and go above and beyond to ensure customer satisfaction.

There are so many aspects to owning and managing a retail establishment, employees sometimes unintentionally fall by the wayside. When staff do not feel valued or appreciated (either actual or perceived) the likelihood their discontent will spill over into their customer interactions increases significantly. Spending time on staff development is key. This article will discuss some ideas to help keep your front line staff smiling.

Truly Appreciate Them

This may sound simple, maybe too simple. Unfortunately, an amazing number of managers and business owners tend to overlook it. You do not have to offer every member of your staff a five-day cruise to earn their respect and loyalty. Sometimes, a simple pat on the back with a “thank you” or “great job” does the trick. Remember, a little appreciation goes a long way. Here is an interesting read that expands on the importance and impact of simple appreciation.

Value Their Insight and Input

Your front line employees are the ones “in the field”, so to speak. They tend to have a good pulse on rapidly changing customer needs and demands. Take time to not only listen to your front line staff, but ask for their insight and input. Doing so helps make them feel important. Remember, feeling like a valuable part of a team improves self-esteem, attitude and outlook. Don’t be afraid to engage their thoughts on everything from showroom paint color to company re-branding. Your employees just might come up with some interesting and outside of the box ideas to help generate sales.

Recognize Accomplishments

Always take time to recognize employee accomplishments. Whether they have performed well on the sales floor or have made a significant contribution or impact outside of work, make every effort to acknowledge and commend them. This can be as simple as a handwritten note from the boss and mention in the company newsletter, to gift certificates or a special lunch or outing. Recognizing staff accomplishments will always put a smile on their face. Click this link for more ideas of how to recognize employees.

Make Their Job Easier

In an age of budget cuts and layoffs, employees are being tasked with more and more responsibilities. Be careful about just how much you are having your front line staff manage. When they become stressed, it definitely shows. There are ways you can lessen the burdens on your front line staff. For instance, having dedicated employees to handle returns can help free your sales staff.

If you sell a product that may require some sort of support, directing customers to online, chat or phone support can help alleviate the number of walk-in customer service related inquires. In fact, many retailers are finding they can outsource this responsibility to an experienced, reliable call center for much less than it costs to manage in-house. Less burden and stress makes for more content employees, and content staff tend to do a better job of developing a rapport with customers.

Remember, it does not take much to put a smile on an employees face. Front line staff are the backbone of any company. They are too often overlooked, when they should be the ones management pays plenty of attention to and appreciates the most.

Gina Smith writes freelance articles for magazines, online outlets and publications. Smith covers the latest topics in the business, golf, tourism, technology and entertainment industries.

Staying Afloat

Guest Blog By Chris Horacek

It’s no surprise that brick-and-mortar stores have been suffering a slow decline for years. Recently, Radio Shack announced that it will be closing more than 1,000 stores. Staples: more than 200. Increased competition from online retailers means less foot traffic and revenue, making it more difficult to justify expansion and growth.

Now more than ever, retailers need to identify where they can squeeze extra value and where hidden cost savings lie. The most comprehensive way to do so is by examining their supply chains, end-to-end, to understand all current costs, by category, department, supplier and brand.

To start this process, here are four methods that you can use to optimize a retail supply chain and as a result, improve profitability.

Purchase as a Company
Like with anything, the fundamentals are the most important, but often overlooked, ways to achieve savings goals when sourcing retail merchandise. Three procurement or supply management techniques that separate the retail leaders from the laggards are:

* Leveraging: When two different divisions or departments combine volume of purchases with the same supplier to get better pricing or terms.
* Normalizing: Ensuring that if different division or departments are sourcing the same product, that they’re all paying the same price.
* Rationalizing: Using one supplier for similar items across several categories.

It all depends on how aggressively you manage your supply base, but most retailers using these techniques see double the savings, at minimum, with the most aggressive seeing a tenfold cost reduction.

Revaluate Transportation
Once you begin to purchase smarter, it’s time to dig into the specific categories that are costing you the most. These days, many retailers find that transportation, logistics and shipping costs can easily total upwards of 20 to 30 percent of the entire cost of goods sold. In the most extreme cases, it skyrockets to 50 percent.

Transportation is one of the hardest aspects of the retail supply chain to manage because it’s so dynamic – rates change daily across hundreds (or thousands) of carriers.

To tap into this savings opportunity, retail teams must understand not only the cost difference, but other, critical decision-making criteria, including on-time delivery rate, fuel surcharges, handling costs, etc.

The solution: use technology to do the heavy lifting for you. E-sourcing tools give you full visibility beyond just pricing and allow you to analyze all the factors that can impact a transportation strategy, by seeing an apples-to-apples comparison of what each transportation provider offers.

Lower Maintenance Costs
In addition to transportation, retailers have a huge opportunity to drive savings when it comes to store maintenance and operations. On average, this category accounts for seven to 10 percent of the cost of goods sold.

In order to avoid passing rising product costs onto your customers, there are a few techniques you can use to save on facility services. First, make sure that you compare national and local suppliers on the same criteria during the proposal process. Ask each of them to list specific costs for each region rather than just an average price. Drilling into these details will help you make the most cost-effective decision.

Another technique is to consolidate services so that you’re using fewer suppliers. For example, you may find that the vendor who does the nightly cleaning for your store may also have capabilities to manage security. Why not use one supplier for multiple services and benefit from volume-based discounts?

Lastly, bring in as many suppliers into the proposal process as you can. The more suppliers you end up evaluating, the better idea you will have of the average pricing for that specific service.

Improve Capital Spending
And finally, the stretch goal. Most retail procurement operations don’t get involved in capital spending – but the truth is, they should, in order to stretch this approved money and then reinvest it back into the business.

Every brick-and-mortar retailer knows the challenges of today’s economy; however, it’s often difficult to pinpoint the solutions. Procurement and supply management teams have a major opportunity to help their businesses not only survive, but thrive.

Chris Horacek is vice president at BravoSolution

This story originally appeared in the summer 2014 issue of Supply Chain World

The Challenge of Mobile-to-Physical Retail and How to Change the Dynamic

Guest Blog by Scott Pulsipher

Mobile retail is facing some major challenges today.

More and more shoppers now turn to their mobile devices for product information and advice. But their trust of retailers has diminished. A Retail System Research survey found 54 percent of shoppers want knowledgeable store associates more than any other service. Yet 59 percent of them believed they knew more about the products than the people paid to help them.

These stats illuminate two important facts. First, shoppers want knowledgeable help they can trust to help them make their buying decisions. Second, they feel they are more likely to get that kind of help online—or on their mobile devices—than at a store. This shows shoppers want their product information from unbiased, knowledgeable, and available sources before they buy. This behavior also demonstrates that retailers are largely viewed as biased and untrustworthy.

This isn’t for a lack of trying. Retailers are staying on top of quick-developing trends and shopping habits. They are combatting general consumer distrust toward traditional marketing. As retailers accept these challenges as opportunities, they are ways and tools to help them adapt quickly in order to make up ground and change the web/mobile/in-store dynamic.

The Challenge of the Mobile to In-Store Dynamic

It starts with mobile devices. Consider what happens as a shopper enters a store with a mobile phone on their ear or staring down at one in their hand. Inherently, the shopper blocks themselves off from in-store associates. And 49 percent of shoppers do this. What hope do in-store associates have of interacting or building trust with shoppers?

This problem is only compounded by the broad availability of information on the Internet. Couple that with the general feeling online of distrust toward marketing messages. Now more than one-third of consumers trust a stranger’s opinion on websites more than branded marketing, according to recent article in Forbes.

It doesn’t stop there. The more shoppers use their mobile devices to shop, the more they turn to online retail sites from their mobile devices. Unfortunately, too many retailers fail to make their sites responsive to mobile devices. Although this may seem like a trivial concern, studies show that mobile responsiveness has significant effects on shoppers. Sixty-one percent of mobile shoppers will move on if a site is not responsive. Fifty-five percent said a frustrating experience on a mobile website would hurt their perception of the retailer’s brand.

This has created a startling deficit of trust between retailers and shoppers that threaten to keep 84 percent of shoppers away from the brands that have lost their trust.

At this point, retailers have two choices: wage a war on mobile devices and the Internet or use mobile and the Internet to regain the trust they’ve lost. The first has a low probability of success. The second is really the only viable way forward for retailers. Their adoption of technology to interact in personal, meaningful ways with their shoppers could make all the difference.

The Pathway to Restoring Trust

First, embracing mobile has to be at the top of the list for any marketer looking to overcome these challenges. This inevitably has to include updating any web properties connected to retail to deliver a fluid, responsive experience for mobile users. Considering that 67 percent of users are more likely buy or convert after a visit to a mobile-friendly site, the development will be well worth the investment.

Second, retailers need to ensure they have the right people talking for them online. According to BazaarVoice, time spent on social media is not always about personal relationships. Users also use these tools to gather feedback from experts with common interests to inform purchasing decisions. These advocates are two to three times more effective in persuading others to buy recommended brands, according to Comscore.

If your shoppers distrust marketing messages, who better to help them regain trust in a brand than unbiased, knowledgeable advocates? They might just be the most powerful—and often underused—tool retailers have at their disposal.

The Benefits of Embracing Mobile

Mobile has threatened most retailers because they are unprepared for the shift and evolution it created in shopper behavior. But mobile could also be the thing that keeps them relevant. Using advocates to regain the trust of mobile shoppers have been shown to significantly increase conversion and customer loyalty alike. When credible, trustworthy advocates directly engage online shoppers at the moment of decision, they are more likely to make a purchase. This avoids the sale-killing delay that results when shoppers postpone buying until they get back to their computer. Better still, retailers who do this successfully will have built up priceless trust with shoppers.

Scott Pulsipher is President & COO of Needle and previously served as the general manager of Amazon Webstore

Are You Willing to Pay the Price?

Instant Gratification May Spell Trouble for your Personalized Marketing Efforts

Guest Blog By Genia Chechersky

They say that “good things come to those who wait”, and when it comes to managing a personalized marketing program, these simple words of wisdom ring loud and true.

Retailers that achieve the most impactful results from their marketing programs don’t base their success on the performance of an individual campaign, as a significant amount of the value created through such vehicles can only be realized longer-term, after a minimum of nine to twelve months of operation. Instead, they’re using consistent and meaningful communications to bolster their relationship with customers, increasing the likelihood that they will shop with them not just during campaigns, but are also maintaining loyalty every day.

Although effective one-off campaigns can yield strong participation rates and immediate gains, the long-term value generated through an established and well-executed program presents a greater return. That’s because the most accurate marketing programs are executed to align with consumer insights and data from loyalty programs, including consumer shopping habits and key product preferences.

Retailers today have failed to see the big picture and are still seeking instant gratification as they drive their marketing teams to deliver immediate results, without assessing the trends inherent in consumer data, which can hurt their finances in the long run. The following are a few signs your marketing efforts are headed in the wrong direction:

•          You’re Delivering an Inconsistent Customer Experience:  One of the cornerstones of a successful marketing program is consistency. Customers need to know what to expect from a retailers’ communications, as well as when to expect them.  This conditioning is imperative to the long-term success of a marketing program.

When the pressure for immediate results is high and focus is lacking, teams begin to inundate customers with inconsistent, one-off messages. Consequently, developing any sort of relationship with shoppers becomes much more difficult, and opportunities for long-term value creation are greatly reduced.

•          You’re Not Measuring Long-Term Program Performance: While campaign-level metrics are important, the true value created by a marketing program cannot be correctly evaluated sans a long-term measure. A long-term control group must be established to help you compare the behaviors of shoppers who receive communications with the behaviors of those who do not, over periods as long as twelve months.

Marketers are rarely willing to forgo the short-term gains associated with higher circulation numbers for the sake of this analysis. By only measuring campaign results in the short-term, teams are more likely to understate the value that their programs create for their organization in the long-term.

•          You’re Focusing Too Much on Winning Back Lost Customers: Another major marketing misstep is to focus too much on your lost customers at the expense of your most loyal ones. While sending a rich offer to a lapsed customer may drive an incremental trip in the short-term, doing so won’t create a lot value for your organization in the long-term.

Instead, a minimum of 60 to 70% of your budget should be allocated to your best customers – the ones who account for the majority of your sales. By rewarding this group with meaningful offers and communications, you will not only maintain their current engagement with you today but minimize the need to reactivate them down the road.

At the end of the day, organizations that are serious about generating the most value out of their marketing programs – and measuring that value correctly – must abandon their myopic mindsets. Teams would be well-advised to commit to developing long-term customer contact strategies; designing compelling and sustainable marketing programs; and investing in the necessary program measurements, even if it comes at the expense of immediate gains. After all, “patience is bitter, but the fruit is sweet.”

Genia Chechersky is a Manager for emnos U.S. at the firm’s Chicago office, helping retail clients leverage their consumer behavior insights into actionable sales and revenue. Contact her at info@emnos.com.

The Art of Retailing in a Changing Economy

Decoding the Science Behind Consumer Motivations – Guest Blog By Brandon Hunt

After battling to stay afloat during the economic downturn, retailers are finally feeling optimistic again. According to The Commerce Department, Retail sales (which account for a third of consumer spending) are on the rise with March seeing the sharpest increase in nearly 2 years.

However, while spending is up consumers haven’t forgotten the recession and they are still being cautious with their purchase decisions. As the summer shopping season approaches, retailers who are aggressive with their promotional offers will be the ones to drive traffic both online and in stores.

The booming popularity of online deal sites is proof that shoppers are looking for a better way to save. In recent years we’ve seen a real shift in the retail industry. Merchants are recognizing that in order to spend, consumers need motivation and companies have become more committed to helping shoppers save money.

Consumers are taking the time to really do their research to find the best deals and make the best purchase decisions. Retailers would be wise to do the same, and many are. We’ve found that many retailers are using our site to research their competitors’ deals and promotions. Consumers have many choices when they shop, and for the most part they are not brand loyal. They are going to shop around, so it is a good idea to know what your competitors are offering and how your pricing and promotions compare. Taking it a step further, retailers have realized the benefit of technology that allows them to predict shopper behavior for individualized recommendations and promotional offers, and they are capitalizing on it.

Aggressive offers have multiple purposes. They drive new business, help retailers unload discontinued products, and convince consumers to act on purchases they’ve been contemplating.

Thanks to modern technologies, shoppers have more control than ever before over where they purchase goods, forcing retailers compete for their attention. Realizing that their survival depends on their ability to adapt to this customer-centric world, retailers are becoming masterful at keeping the attention of shoppers through aggressive offers.

Brandon Hunt is the co-founder of DealScience.com.