Staying competitive in the new reality is like a giant question mark for most retailers. Industry experts seem to agree that it’s not about just a simple act of selling something anymore — it’s about offering a gratifying and preferably unforgettable experience to shoppers.
In the U.S., e-commerce has shown a 10-year growth rate in the span of just three months, while 29% of buyerssay they may never be comfortable making offline purchases again. Meanwhile, in the U.K., 17.2 million people, or roughly 25% of the whole population, are planning to keep on shopping online exclusively. Thus, even as brick-and-mortar stores are reopening, e-commerce is here to stay and reign.
With this in mind, retailers need to rethink their approaches to creating a rewarding shopping experience. Today, customers perceive all the selling channels as one — e.g., they expect to be able to order online, be it on the website or via a mobile app, and pick up at the store at a convenient time smoothly. And retailers should be able to live up to these expectations.
There are three "bricks" which are used to build the "bridge" of the right customer experience between retailers and buyers: pricing, supply chain management and in-store experience. Nothing frustrates customers more than unfair prices, unavailability of expected products and disorganized in-store operations.
As shoppers' expectations evolve, these "bricks" need to be optimized.
1. Use technology to optimize pricing
According to a recent study by McKinsey, 40% of US consumers stated they’d jumped to other brands or retailers for the past few months. The first two reasons they named were lower prices and a better price/value ratio. Thus creating the right price perception across all the selling channels is what retailers should focus on.
“If you are a mature retailer with thousands of products under management and a variety of selling channels, maintaining the price perception you need will be a true challenge, especially today when everything is changing at an unprecedented speed as online is gaining momentum,” comments Alexander Galkin, CEO at retail price optimization company Competera. “It’s an impossible task for ‘unarmed’ pricing and category managers if you will. A feasible option here would be to “hire” advanced technology like artificial intelligence. AI has proven its ability to optimize pricing in a way that would allow offering prices that would be perceived as fair by customers and profitable by retailers at any given time and any channel. It’s possible since AI can process billions of data points and suggest a combination of optimal prices across the whole assortment in near-real-time. From my experience, using AI can bring a 4.5% uplift in gross profit.”
“But again, it’s a viable option exclusively for assortments too vast to manage manually,” he adds.
2. Make your supply chain management more flexible
Inventory management excellence translates into better customer experience and, as a result, a growing turnover. That, in turn, makes the retail company by far more competitive and drives customer satisfaction and loyalty.
“This year, unfortunately, managing inventory is more challenging than ever. No one can forecast demand 100% accurately or predict the availability of products at the supplier side,” comments Alex Koshulko, a co-founder and product manager at GMDH Streamline, which offers supply management software.
He adds: “Therefore I’d recommend focusing on the other side of the equation, namely flexible ordering. It means that retailers should be ready to place a valid order any day when the demand changes unexpectedly. Other suggestions would be to order fewer products more frequently and invest in automation. These improvements will make retailers more efficient and boost their financial performance.”
3. Switch to data-driven digitized in-store operations
Online has changed how customers shop by providing a personalized, seamless and service-oriented experience. The impact from the pandemic, and subsequent reliance on e-commerce during the lockdown, has only gone to heighten the expectations that customers now have returning to stores. But how prepared are retailers, and more importantly, their sales force, for this shift in expectations?
“The first step here should be equipping staff with instant access to product information, company-wide inventory, digital content, customers’ profiles and wish list. They will then be able to use this rich source of information to deliver superior customer experiences,” states Olga Kotsur, co-founder and CEO at Mercaux, a company that helps retailers bring digital experiences into their operations.
She adds: “Using tech to place this information into the hands of sales associates opens the black box of in-store data. This way, retailers can understand what actions contribute to a sale (or a lost basket) in a customer’s path-to-purchase by revealing customer behaviors, staff performance and product funnels. Using these insights will result in more engaged and loyal customers, fewer lost sales and bigger baskets.”
“The second step would be adding more advanced in-store capabilities (such as clienteling, self-serve devices for customers and mobile POS) and expand their reach outside of the store by giving store staff the ability to sell remotely to customers unwilling to return to offline shops after the lockdown (such as 121 email or SMS communications with customers, appointment setting or chats on their websites) — further improving the productivity of store staff."
Ultimately, the rise of online shopping during the lockdown has welded a new type of customer with an entirely different set of expectations. To meet them and offer the “bridge” of a harmonized customer experience across all the selling channels, retailers need to upgrade their operations across a variety of business areas. Focusing on pricing, supply chain management and digitizing of in-store operations may be a feasible option to do that.
Andrew Mulvenna is managing director, Americas and EMEA sales at Competera, a retail price optimization company. After eight years as co-founder & building Brightpearl, Andrew spent three years investing in AI startups as a VC, before returning to his operational roots to build a Competera.