Data analytics, mobile commerce and precision marketing were all hot topics at this year’s NRF. Rebecca Thomson reports
The discussion around multichannel retailing reached fever pitch during this year’s National Retail Federation conference in New York, with retailers keen to understand it and technology suppliers keen to provide answers.
But rather than just the normal platitudes, speakers and delegates were more interested in the logistics - the different elements of this seismic shift in retailing and what the multichannel world actually consists of. There were in-depth discussions of data analytics, business intelligence, mobile point of sale systems and the role of social networks, as well as case studies of early adopters who were happy to talk about the challenges they faced.
One major trend that’s changing the way retailers operate is the increasing power and demands of consumers. The information customers get from the internet - and the interaction with each other that it enables - means their knowledge and choice is greater than ever, and retailers need to respond with new ways of selling.
The corresponding themes of quality, mobile commerce and personalised shopping are all in response to changing consumer habits, and the focus is now on data analytics and business intelligence software because these are the things that will help retailers get to where they need to be.
Driving the data
For the past 10 years, Tesco has shaped its business with unique insights from its Clubcard customer data, as a result enjoying increased market share and international expansion.
Now others are doing the same, with more data and the technology necessary to analyse it becoming readily available. “The recommendation this year is to get your multichannel roadmap in place,” says SAP head of retail, EMEA, Darryl Owen. “All you need is one large retailer to make it really easy to shop anywhere with a consistent interface - if one does, the others have to follow.”
Not everyone feels pressured by the changes - they can be seen as an opportunity. Tesco chief executive of retailing services and group strategy director Andrew Higginson pointed out it’s not just businesses that have to adapt. “Technology also offers consumers a lot of challenges. There’s more choice and it can be overwhelming. The opportunity for the retailer is to step in and help them make those choices by offering relevant information and ways of shopping.”
The right application
One company already doing that is French grocery giant Casino, which outlined its approach to “precision retailing” during the conference. Working with SAP, it has data on 50 million customers, including any product reviews they write and their past buying patterns, and has combined it with data on 500,000 products.
Consumers can either download an application onto their smartphones or use in-store devices to scan the products they want, and the company uses a ‘real-time marketing engine’ to create personalised recommendations sent to their device while they shop. It either shows the customer relevant offers, suggests alternative cheaper products or suggests complementary products.
It’s also possible for a customer to make a shopping list using the smartphone barcode scanner - for example, as the packaging is thrown away, the customer can scan the code to add it, and the company can also make suggestions for the list based on past purchases. Casino chief information officer Stephane Bout says the project, which has taken five years so far, has led to a “significant increase” in average basket size.
It’s not only the chief information officers who are talking about data-driven retailing - the chief executives are just as interested. Kingfisher chief executive Ian Cheshire said his company is just about to invest in data mining. “We don’t have a loyalty card so need a slightly different handle. We think there are huge wins to be had, particularly around home improvement projects and big life events like moving house. If you know a customer is doing a particular thing, you can look at what products they need. We’ve got a long way to go on this but we’re very excited at becoming much more data driven.”
Business intelligence software is also likely to be a canny investment this year. Mark Dorgan, former global head of retailing at Fujitsu, and now chief executive of consultancy company Mx Multiplier, said: “Everything retailers want to do at the moment needs good business intelligence applications underneath, and most don’t have this. There’s a tremendous push to get that in.”
Google is keen to be a part of this data collection. It wants retailers to collect and share product listings, and keep it up to date with what’s in stock, as part of its ‘nearby stores’ feature in its product search. Business product manager Paul Lee told delegates that purchases researched online but made in-store will make up 64% of total purchases by 2019, while pure online purchases will be just 15%.
People often find products by searching on their mobile or computer, and Lee says being able to tell them where a certain product is in stock locally will benefit retailers. “Lots of mobile searches are for local information,” he said. “If you can’t find a particular product on the shelves and want to find if it’s in stock nearby, Google will be able to tell you.”
Data analytics will help a company understand its consumer, but it will need more work to make sure the customer experience is seamless and consistent across the different channels. Most retailers at present run online and offline businesses as though they are separate, but to achieve the flexibility necessary for multichannel retailing, supply chains and planning systems need to be integrated. Bout reports investing heavily in Casino’s supply chain over the past few years, and technology supplier Oracle says an integrated supply chain will be “essential” in the coming years.
Slowly but surely
While it’s agreed that using data to market directly at individuals is a good idea, there’s reticence over some new technologies and a definite awareness of appearing too intrusive.
The Casino mobile application allows customers to use it without being identified, and both Bout and Higginson said there is a fine line when using social networks like Facebook where things can become too intrusive.
Not only do retailers have to be careful on social media, they have to be good at it. Ian Cheshire said decent online content will become a crucial part of selling in the future: “Online is becoming much more content rich, and as content publishers you have to be able to have conversations with customers. You need to have something to offer. If you’ve only got the same product as everyone else, you’re irrelevant.”
Macy’s chief marketing officer Peter Sachse agreed that when customers have so much information to choose from, you have to make sure you’re a trusted and engaging source.
One issue that didn’t touch on multichannel was the proliferation of retailers looking to expand internationally as growth in home markets continues to be flat. Fast Retailing, owner of the Uniqlo brand, announced a deal with Oracle that will see the company upgrade its systems to underpin its growth plans.
Meanwhile, Higginson explained that “there’s only so much food you can sell in the UK” and the challenge is to stay local. “It’s a balance between getting global knowledge, IT and marketing consistent, and being absolutely local in what we offer consumers.”
2011 looks set to be the year that many retailers think seriously about how multichannel retailing is going to affect them. The opportunity is there for those able to take it, but the transition will need investment and careful thought - it remains to be seen which companies will emerge as winners.