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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

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