Insight: retailers really do need to put the customer at the centre of things
Before commitments are made to technology solutions, it is imperative retailers fully understand the changing needs of their customers and then seek to use IT to address points of friction and improve shopper journeys across channels.
At Retail Bulletin’s recent Omnichannel Summit there was a sense that there has been much talk over recent years about building customer-centric businesses but that far too many retailers have not really talked to customers about their needs.
Talk to customers
Mairi Fairley, strategy & business development director at Hobbs, told delegates at the event that the digital transformation of the Hobbs business began with talking to the customer base: “We thought we were good at customer experience but the reality was we had a pretty good store experience but the customer experience is now much more than just this. As we talked to the customers we found over 70% had browsed online first [before buying in-store] and 30% shopped on both channels. We had to join the business up.”
Recognising the journeys taken led to the implementation of systems that have given the company a single view of stock across the whole business, which has enabled the roll-out of tablets into store that can take orders, and it has also given a view of customer behaviour.
Cultural change is biggest challenge
Although the project has been successful Fairley admits it has “not been without its challenges and the main one is cultural”.
Martin Newman, founder of Practicology and non-executive director of White Stuff, agrees: “A lot of the issues are about culture. To put the customer first is not about technology it is about culture. And it has to come from the top. A lot of leaders in the UK do not have the mindset and still see the world of the mid-90s. Everybody talks about digital transformations – it’s just an enabler for what customers want.”
One thing a new mindset would bring is a different set of metrics to measure success for retailers. Kate Franklin, former group marketing & omni-channel director at Outdoor & Cycle Concepts, says that as a customer-centric business retailers need to: “Measure things that are important to the customer and not to the business. If you give customers a better experience then they will be more loyal and spend more with you. Therefore measure NPS and internal drivers that impact the outcomes of customers.”
Don’t be scared of data
Andrew Mann, VP of insight, pricing & digital CRM at Asda, says that part of the change in culture that is required should include removing the fear people have about data. “People are frightened of it and think you’ve got to be very clever to use it. It needs to be [better] explained to people how they can use data. We hear about big data. This is not about the amount of data you’ve got. It’s how you use it.”
Tony Brown, chief executive of Beales Department Stores, highlighted how data was being used to tailor the offer at his stores through the running of a number of pop-ups in its smaller stores that housed a limited amount of furniture items.
“We use the data to individualise the items for each store. Millennials do not want to wait weeks for furniture so we have next day delivery. We have to hold the stock but [because it’s a tailored range] we sell it quickly. And our employees have tablets so this has also driven web sales,” he explains.
In-store technology serving a need
Utilising the likes of tablets should be very much about it solving a problem, according to Ed Duggan, chief financial officer & commercial director at Fishpools Furniture Store, who says: “We could adopt the latest technology but you have to find what fits. You need to understand it. If you introduce tablets then you need employees to buy into it.”
This was an issue that Stefan Schmidhammer, IT retail innovation manager at Swarovski, faced two years ago. He says: “We realised we had a lack of IT innovation and our stores had not changed. We had digital signage in some stores but no tablets. Compared to our competitors – with their tablets and smart-phones – we were behind.”
With the creation of a retail innovation team, investigations took place that has led to a number of trials involving technology in-store. These have included an artificial intelligence solution that recognises Swarovski products that are brought into its service centres purely though identifying it through its image when there is no receipt present.
A style finder has also hit some stores and involves the company’s online content reconfigured for a tablet in-store that enables the searching of specific types of items. This also includes a chatbot. Swarovski has also created a virtual try-on solution, which been tested in some outlets and involves taking a photograph of the customer and then allowing them to virtually try on the range of products.
Images and video increasingly valuable
Such solutions very much utilise the power of digital imagery and it is this that JML uses to promote its products in retailers’ stores. Ken Daly, chief executive of JML, says the company has 8,000 screens in UK stores that help sell goods by demonstrating the items: “The power of in-store video is perfect for product launches, and for creating retail theatre. There also needs to be a story to tell.”
Joe McEwan, UK head of brand at Innocent Drinks, believes that any communications with customers has to be meaningful – and ideally there is a two-way relationship created. This has certainly been boosted by social media, which Innocent uses heavily, but is very careful with how it handles this type of engagement.
“With social media we can now tell people about our drinks and get people to talk to us. We recognise that it’s not a TV ad break, we’re coming between people talking to family and friends. So we try and share entertaining content. Brands can go wrong by wanting to be in the conversation but having nothing to say,” he suggests.
For JML the real value of the digital content delivered to stores is when it is aligned with TV and online advertising. This combination has a multiplier effect on sales, according to Daly, who says it can often be the case that the cost of the promoted item does not make a profit for JML but the effects of cross-selling of additional items – often across channels – ensures the model stacks up.
Don’t forget other revenue streams
The cross-sold items could almost be a form of secondary revenue, which is definitely creeping up the agendas of retailers as they grapple with greater competition and squeezed margins. Richard Piper, business development manager at Webloyalty, says such revenues are defined as being derived from products and services outside the core of the business.
The airlines have been successful in this area selling lots of ancillary items like car hire, priority boarding and insurance. Retailers are following a similar path as they seek out extra revenue, according to a Webloyalty/BRC report, which found that as much as 67% of UK retailers have done business that has brought in additional (secondary) revenues.
The key areas he highlighted to drive secondary revenues for retailers are: advertising other goods and services from third-parties on the website; affiliates, which are effectively referrals from other websites; cross-selling of complementary items that do not compete with the retailers’ core range; and loyalty programmes that encompass internal and external such as Air Miles.
