Mobile is throwing the retail industry into a ‘channel revolution’ as smartphones and tablets become increasingly popular in the customer journey from browsing to payment. Not to mention the increased complexity of business processes and systems that support the various channels and the cross-channels e.g. click-and-collect. For retailers trying to create and effectively manage the seamless experience expected from consumers nowadays, they must create a single view of both customers and inventory. This challenge is much more difficult than meets the eye and retailers are facing a host of issues that can ultimately impact on their profitability and brand image.
According to Deloitte Digital, mobile influenced £18bn of UK retail in-store sales in 2013, up 45% on 2012. This is predicted to reach to 10%-15% of in-store sales by 2017, representing a possible £27bn-£41bn in sales, demonstrating unprecedented growth and adding more challenges to the retail industry as the omnichannel becomes increasingly diverse. Not only does this mean retailers must optimise their sites for use on smart devices where conversion rates are particularly high, they also need to ensure consistency across the expanding digital channels.
Far beyond the look and feel of the site, this also relates to issues that are much more likely to have an impact on brand reputation and consumer confidence. For example, discrepancies in pricing across the channels or delays in implementing promotions online, on mobile or in-store (unless offered as an exclusive to a particular channel) can look sloppy and even lead to customers overpaying for certain items. Real-time awareness of stock levels across an entire organisation, and a robust replenishment strategy are also essential. Have you ever made a purchase online for example, only to be told an hour, a day or even week later it is no longer in stock?
The rapid pace at which the omnichannel is expanding means that retailers, more often than not, don’t have enough time to update legacy systems and have to meet these new demands using multiple IT systems that aren’t made to work together. Fraud threats are therefore more prevalent, and with the industry housing more and more sensitive customer data, security breaches are increasingly worrying and have the potential to severely damage the reputation of a brand. In an industry dealing with smaller margins than most, and a large amount of variables such as suppliers, deliveries and commissions, the potential for financial loss is also particularly high.
With so many factors to consider, and a high price to pay in the case of errors, retailers need to have robust business controls in place to help manage the challenges in the current environment, and to deal with the continued growth to come. Sitting on top of multiple data sources and systems, business controls allow retailers to monitor data flow across all variables to ensure the seamless experience that customers expect, as well as comply with the necessary data legislation. Retailers should also look to tailor data analysis to their specific requirements, thus spotting, and rectifying abnormalities before they can have an adverse effect.
We have seen several high profile companies suffer the effects of data breaches in recent months. But errors in the system don’t have to be high profile to make a big difference to the bottom line. For example, food retailers have been carefully managing fulfilment strategies of perishable products for years, a process that only becomes more complex with the introduction of additional channels and the 24/7 environment. Using business controls, retailers can align orders, delivery, product lifecycle and sales across the channels in near real to dictate pricing strategies, inventory control and replenishment.
As well as minimising waste and/or the chance of having empty shelves, this also ensures that products are still in date when received by customers via home delivery or through click and collect. Even if this process is managed by several different departments, retailers can set rules to ensure the correct department is notified when a product is running low on stock. Beyond this, retailers can also use the information gathered to feed into customer-centric strategies like sending personalised offers related to frequently purchased items, or email prompts with various offers around the days/times individual consumers usually shop to enhance the customer relationship and ultimately increase conversion rates.
As the retail industry continues to adapt to the digital world, new challenges like those outlined above are guaranteed. In order to safe guard customer and employee data, take a proactive approach to customer relationships and protect and enhance their own bottom line, retailers need to have a holistic view of their organisation and empower teams to make good business decisions in real time. Those that take the necessary steps now will ultimately be in the best position to continue to enhance their performance by responding quickly to the evolving environment.
Maria José Gonçalves is director, retail market at WeDo Technologies.