Emerging Technologies for Evolving Retailers
The importance of a CUSTOMER in the Retail business cannot be over-emphasized. Retailers down the ages have discovered innovative techniques to focus on customer acquisition, retention and improving customer servicing. However, Technology is under-rated as a means to enhance the ‘customer’ angle of a Retail business.
Technology indulgence most often begins with a perspective to automate the transactional operations of a business, and rightfully so. However the rising cost of endless software applications, coupled with the lack of a measurable Return on Investment (RoI) dissuades a continual evolution on adopted technologies. To add to the misery, software vendors fall short in appropriately articulating or implementing the true business benefits of technology.
But the fact of the matter is that Technology’s raison d’être is to bring in value-addition to the business, either by easing operational processes, or providing means to improve revenue and profitability. Likewise, software applications can be an appropriate medium to catalyze growth in revenue and profits, with an eye on the Customer.
The sections below outline some customer-centric software applications that Retailers should pin onto their strategic planning.
What makes these software applications more prevailing, is the emergence of innovative technology platforms which encourage easier and affordable adoption, and faster dissemination. Love them or hate them, you still cannot ignore them!
Nascent, seemingly “effervescent” and hence most often considered “vapourware” – the CLOUD platform is currently ridden with controversy. Nonetheless, the CLOUD is potentially the most disruptive of technology platforms, which can singularly change the landscape of software adoption.
One of the biggest hurdles to technology adoption is the Total Cost of Ownership (TCO) in implementing a solution. This includes not just the expensive licensing fees of the software, but added costs of the hardware and infrastructure to run the software, and the subsequent cost of skilled manpower of varied expertise to implement and support the application.
The “cloud” is a collaborative initiative of hardware and software vendors to provide outsourced facilities on a “pay per use” model, instead of selling the facility on a “one-time fee”. The vendors deploy solutions on a “shared” basis rather than “dedicated” to each customer, and the ownership vests with the vendor, allowing the retailer usage rights at a fraction of the cost.
Metaphorically, this is akin to retailers today renting stores, instead of purchasing them outright. The upfront capital expenditure is a huge strain on cash flows, and hence the “rental” model, even for technology is an ideal solution.
Deployment on the “cloud” has one mandatory stipulation – internet connectivity. Typically the resources used on a “subscription” basis, be it hardware or software, are located remotely, and need to be accessed through the internet.
With internet becoming ubiquitous, and costs of bandwidth being cheap, the connectivity to the cloud is getting more approachable.
Technology vendors realize the opportunity of mass adoption through the cloud model, and are evolving matured models for subscription-based delivery. Hence, software applications which will be available on the cloud in the near future are immense.
True and mature “cloud” offerings are limited in the market today. A large number of technology vendors are mis-representing the cloud, by devising “installment payment” schemes and disguising that as a “cloud” offering. This leads to a huge erosion of confidence, and makes the platform suspect. With vendors creating specific cloud offerings, this challenge will be mitigated.
Retailer business owners have high concerns about the privacy of their critical business data, and the “cloud” being a “shared platform”, is perceived as high-risk to data security. However, since the business for cloud vendors relies on this, vendors have a highly evolved data privacy and data security architecture in place, much more robust than what Retail organizations would put in place in case of in-house hosted applications.
These however are teething troubles of a new technology wave, and is just a matter of time that education and evolution will make it a commercial mandate.
Mobile devices, when the technology emerged two decades ago, resembled brick blocks in both size and weight. Over the next 15 years, technology research aimed to get minimalistic about the form factor of mobile devices. Lean was in. Functionally, mobile devices were predominantly utilized as cell phones. Email usage was the other favored application, but was relegated to a small fraction of the user community.
Cheaper and easier data connectivity on mobile devices has ushered in a revolution in the last five years, whetting the appetite of a larger percentage of users to seek out email, internet and other applications on mobile devices. This led to a reversal in trends on the form factor of mobile devices – with more useful and complex applications, bigger screen sizes are becoming the order of the day.
Effectively, the mobile device has transformed from mere cell phones to complex computing devices!
Time is the most critical resource in today’s age. Time is always in short supply, and everyone handles multiple responsibilities. The need of the hour therefore is, the ability to operationalize non-productive time, like being driven in a car, or waiting to catch a flight at the airport.
Competition is cut-throat in the Retail space. Response time to situations, events and exceptions are shrinking, and hence everyone in the eco-system expects instantaneous reactions. This is further catalyzed with availability of technically advanced mobile devices, as well as high speed internet connectivity on mobile devices.
Besides the regular email and browsing features, existing software applications can be easily integrated onto the mobile platform, to transform the device as a self-sufficient powerful computer. Retailers can use the mobile platform to internalize operational efficiency, as well as to engage with customers and suppliers to maximize effective delivery.
While being driven to work every morning, reports from the Business Intelligence (BI) application can be consumed on smart devices like iPad, iPhone, Blackberry and the like. This would ready a retailer with his plan-of-action for the day, even before he steps into the office.
SMS messages can be delivered from ERP / BI applications, instantly reporting violations of any prescribed thresholds. This enables immediate responses to situations by triggering alerts to the appropriate personnel. In the supply chain, such alerts can be directly driven to supplier channels for instant replenishment needs.
Intensive customer engagements can be mobilized. Keeping in touch with the customer base using SMS notifications of promotions, store / product updates are elementary. Mobile applications have evolved to enable serving bar-coded discount coupons directly onto customer mobiles.
Location based services are customer-centric services informing consumers, based on their current geography, of retail opportunities, promotions, like-to-like comparisons of products / services, etc. Retailers would gain in participating in these mobile-driven services to upsell their wares, and have a healthy competitive environment.
The merchandising team is baffled that all their Mumbai stores sell one pair for jeans for every three T-shirts sold, but the single store in South Mumbai only sold one pair of jeans for every eight T-shirts. The team’s first reaction was to check for a possible stock-out situation for jeans in the South Mumbai store. But there was ample stock of jeans, and this aberration had the retailers baffled.
If they deployed an Analytics solution, they would have immediately discovered that indeed there have been stock-out situations for a particular high-end range of jeans, though the other low-end range of jeans were over-stocked. The instant co-relation would indicate that the South Mumbai store did not recognize customer buying preferences, and were stocking standard assortments of jeans, even though the customers of that store were shoppers preferring the high-end range.
Every irrational situation in Retail has a very logical explanation, if there is a “Wizard Jeeves” to throw up instant answers from the reams of transaction history, for random exploratory questions. Business Intelligence is this highly efficient tool which provides almost instant answers to any permutation of conditional questioning. And this is just the elementary benefit.
BI solutions can be trained to be the crystal ball, assisting in predictive analysis and forecasting scenarios based on scientific and statistical models.
The immense value a BI solution imparts to a Retail organization is undeniable. However, BI solutions have traditionally been highly expensive and time-consuming to implement.
With changing scenarios in today’s technology revolution, “Retail ready” BI solutions are now available on the cloud, which bring down the cost of acquisition drastically, and have pragmatic implementation timeframes.
Though e-Commerce hit the Retail sector over a decade ago, it is the lack of penetration that relegates it to a “yet to be discovered” phenomenon. Retailers in India have failed to prioritize on this channel, citing a multitude of unfounded excuses to neglect this platform.
Today, customers have ruled in favor of armchair click-purchases, throwing caution to the wind in the face of security concerns regarding online payments. Besides the desire for a ‘touch-n-feel’ experience in shopping, there are ample standard products and services in every sub-vertical of Retail, which are periodic buys of a consumer, and the customer would prefer a desktop transaction rather than an in-store visit for these.
The e-Commerce initiative is just another channel for Retailers to complete their bouquet of offerings, and will serve a long way in enhancing Customer Retention. It is commonplace for a consumer to switch his in-shop buying to a Retail chain which also offers an end-to-end online shopping channel, away from another Retail chain without the online shopping option.
Though an e-Commerce channel is much more than just technology involvement, there are specialty services available for Retailers to outsource the composite e-Commerce process, including the technology, logistics and payment collections.
The customer reaches the billing counter and hands in loyalty membership card, to start the billing. The salesman at the till, before ringing in the products, greets the customer with, “Good morning Mrs. Singh, last month you purchased the mauve tunic. The matching stockings for that are now on a 30% discount. Can I show you those?” The salesman has just notched up the “loyalty” of Mrs. Singh a few levels up, making her feel special, and offering her discounted products relevant to her historic purchases.
In a competitive Retail space, a Customer Loyalty program is the basics of recognizing individuality amongst the consumer fraternity. CRM solutions can be driven to high levels of sophistication, and innovative applications can be construed from very humble beginnings.
Again, Loyalty solution vendors abound in all flavors, and these solutions can be completely outsourced as well.
From time immemorial, “referential sales” are a coveted source of growing business. The internet today provides numerous means to consumers to voice their opinion about products and services purchased. Not just that, consumers today have developed behavioral patterns to scavenge online for references and recommendations from the fraternity. The power of public referendum is immense.
Moreover, every reputed retailer encourages a “grievance cell” for its esteemed customers to voice their dissatisfaction. Online social media provides the same facility with unparalleled ease, with an eye on customer satisfaction being of utmost consequence.
Thus, online social media is a very effective digitization of an age-old accepted phenomenon.
Implementing a Social Media initiative is as simplistic as providing for BLOG and CUSTOMER FEEDBACK options on a Retailer’s existing website. Online social collaboration is a phenomenon which will only grow inorganically, and early adoption of Social Media solutions will prove highly beneficial.