Recent news that UK retailers, including high-street names such as Thornton’s, HMV, Comet and Peacocks, had a less than successful holiday season is not surprising to many working in the retail sector.
By Mark Collin, client principal Europe, ThoughtWorks
Difficult economic times, ever-increasing competition from online and cost-conscious and cautious customers make for a challenging climate. For the first time in 20 years, market-leader Tesco has issued a profit warning and said it would make a ‘minimal’ profit for the next financial year.
To survive and thrive, many retailers will need to adjust their strategies and make some rapid changes. We are not quite in hell, just in purgatory. Areas with immense potential include online sales and the use of new technologies in sales and customer support.
In contrast some retailers had their best holiday period ever, and US Retailers reported $475bn in December alone. Many traditional store-based brands that are 50, 60 or even 70 years old are making the jump to online. Marks and Spencer has just reported its best ever online sales – up 22 per cent in 2011 from the previous year.
However, just setting up a website is not enough. Online success depends on seamless logistics and customer fulfilment and, to achieve this, careful planning and implementation is required.
But, the even most innovative organisations realise that their legacy IT systems and processes can hold them back when it comes to online fulfilment. By implementing ‘softer’ software to complement and optimise fundamental tasks such as product availability, stock controls, supply chain movements and shipping, they can ensure that products ordered online are available, despatched and delivered on time and around their customers’ own time constraints.
Here are the top three technology trends that could make a real difference to the retail sector over the next 12 months.
Smart technology will transform traditional retailers into online successes
A great example of this is fashion chain Aurora (which owns brands such as Karen Millen and Oasis). It now offers a 90 minute delivery service from online order to home delivery, made possible in part through supply chain optimisation combined with amazing local delivery logistics via stores, thus reversing the dying high street trend.
Retailers that will succeed in the online space are those that can adapt to a model of continuous delivery, where ideas are turned into technology releases in a consistent, rapid and smooth manner. For example, companies being able to respond to create wide reach and optimised applications for a tablet or smartphone that include up-to-date stock inventory with immediate or next day delivery options.
Mobile technology will radically change the way retailers sell in-store
Increasing numbers of traditional retailers are lessening their reliance on the traditional till and introducing mobile point of sale and tablet devices. This is part of an ‘omni-channel’ strategy empowering their employees by giving them all the information they need at their fingertips, including product information and images as well as real-time ‘global’ stock availability. This can significantly enhance the customer experience.
However, as for the move to online sales, success will depend on how the technology is implemented. Several retailers, including Apple, Disney and fashion house Aurora are setting the standard in how to use these technologies to offer a seamless customer service, boosting their brand reputation as a result.
Technology will continue to drive and be driven by customer demand
By implementing both an online and an omni-channel strategy, retailers will be better able to create a customer experience that is unique to its store and/or brand. In these highly competitive times, where the customer voice is stronger than ever due to the rise of social media and ‘review’ sites, brand loyalty and reputation represent immensely powerful sales drivers.
This ‘cultural revolution’ is unlike anything the industry has seen in the last 100 years. We should be excited, not daunted, and retail is leading the road to recovery through application of appropriate technology.
No stone will remain unturned in the race for competitive advantage. New concepts such as virtual and pop up stores and for example subway ‘poster stores’ allow customers to simply scan QR codes on their smartphones and easily shop on the move. Tesco is testing this channel in South Korea and Proctor and Gamble are taking a similar approach in Prague.
Customers today demand an easy-to-use, efficient and overall seamless experience while shopping. The retailers which are innovative enough to harness the latest technology and agile enough to react rapidly to new channel opportunities and consumer demands, are the ones that will overtake the competition in the year ahead.