Philip Clarke , head of one of the UK’s largest multichannel retailers, this week set out some of the practical ways that traders can keep customers satisfied in a digital world.
The chief executive of Tesco told an audience of retailers that they now need to work harder to win the trust of their customers – and that digital technology can help them. “Digital does not just offer smart new ways to shop,” he said in his address to the World Retail Congress. “It gives us the opportunity for a warmer, more meaningful conversation with our customers, local communities, our colleagues and the suppliers who we work with.” To do that, he said, retailers needed to change the way they think, personalizing the retail experience around customers’ lives.
For Tesco , he said, that had meant “radical changes to the way we operate”. At Internet Retailing we’ve filleted Clarke’s speech for some practical insights and approaches to adapting to this new digital consumer reality, with examples of how Tesco has done it.
“In the new world,” said Clarke, “retail will not be about buying large swathes of new real estate.” To this end, he said, Tesco had “called time on the old retail space race”. Instead it has expanded its Click and Collect service, with its 1000th collection point now open. Click and Collect for grocery items is now available in more than 70 UK stores. It will also change its approach to stores, building smaller hypermarkets.
The number of Tesco online orders placed via mobile has doubled in the last year, said Clarke, and one in five UK online orders are expected to be made on a mobile device by Christmas. Tesco is approaching that challenge by bringing its apps into one.
Austerity and social media
This is the first downturn of the digital age, said Clarke, and technology such as smartphones is helping consumers to cope by giving access to choice, information, bargains, affordable entertainment and socialising. “Social media has given rise to the agnostic consumer, whose actions and tastes are heavily influenced by word of mouth, who moves quickly and seamlessly between channels, and who expects retailers to keep pace,” he said. Half of visits to Tesco.com are to check food prices.
Clarke cited research that shows 25% of consumers now shop across four or five channels. He also said that half of all research was made in the store itself. “In this world, retailers that have a physical presence, a face not simply a website, are in a strong position,” he said. “Of course all retailers have to compete on value, price and service: but those who are not just pure play internet retailers are able to demonstrate their determination to do their bit, to prove their wish to improve the communities in which they operate and to create new opportunities, new jobs.”
“Digital technology has heralded a new age of accountability,” said Clarke. “Millions of people can be mobilised, in minutes, across the world, to vent their anger at any organisation that is seen to be failing its social obligations. The bigger the company, the greater people’s expectations, the fiercer the anger should that company fail.”
Clarke said Tesco was approaching this challenge by building personal relationships with suppliers, staff and customers. “On high streets, in stores, via our delivery network – we’re turning our physical presence, and the personal contact we have with our customers, to our advantage, so we can meet challenges of the new age of accountability.”
Tesco says the offline and online retail experience should be personalised to customers in the same way as a bespoke suit: “seamless and personalised to meet an individual customer’s needs”. In practice that means personalising its Clubcard loyalty card, so that some customers can receive in-store vouchers, while others might be offered car insurance, meals out or trips to attractions. “This tailored approach is proving popular,” said Clarke. “On some days over 50% of covers in popular restaurants and around 10% of trips to popular UK theme parks, such as Legoland and Alton Towers, are made with Tesco rewards.”
All of this goes, said Clarke, towards taking Tesco into a new future that will be: “Fast, exciting, noisy, open to all, welcome to the new era of retailing: an era in which a seamless, personalised offer is critical to winning customers in a world of change.”