The Christmas trading period has offered retailers valuable lessons on customer expectation, supply chain and fulfilment.

So what did we learn from Christmas 2014? A trough follows a peak. The customer wants a better product for the same price or the same product for a lower price. If it is hard to differentiate on price and range then it has to be about differentiating the customer experience, giving the customer more reasons to shop with you than with your competitor.

The customer has to get more out of that journey than just the product at the end; the journey has to have made a good impression be this through in store theatre, great customer service or a frictionless transaction.  Every retailer should seek to find out which part of the customer experience requires the most improvement and which will serve to differentiate them the most.

With customer paths to purchase being longer and using more touch points than ever before, it’s essential that retailers think about the journey as a whole.  Measuring conversion rates online and basket abandonment might be missing the point.  Customers might be just doing part of their research with no intention to buy there and then. Equally they may visit a store as part of their research. 

The retailer has to understand where each customer is on that particular journey and see how they can move the customer on the next stage whilst keeping them within its own channels and not going over to the competition.  The true conversion rate is based on whether the journey converted to a sale. 

If the path to purchase has become complicated then the delivery path is changing to match.  And there is no point in having a great front end if the back end systems don’t match.  Again the customer would like everything – fast and free to a location of their choice.  The challenge is how to build the supply chain for tomorrow, or to have one that is so agile that it can be easily adapted for tomorrow when  we are not sure what tomorrow might bring.  Will online sales double?  Will click & collect become 20% or 80% of online sales?  How do retailers minimize returns and maximize the speed of getting a return back on the shelf? Building a supply chain for an artificially created one day peak does not make a huge amount of sense.

Convenience is becoming ever more important and in particular the grocers and the department stores are exploring what this means though small store formats, which offer a limited range but access to the full catalogue through click & collect. At the other end of the scale the store in the major regional centres is becoming the best possible embodiment of the brand – extensive ranges, great store design, access to all the services, a meeting place and even a place to be entertained.

As a result, it is important that retailers understand the local customer base and their wishes in much more detail and invest accordingly.  What is right for one store is going to be wrong for another and the old store grading system needs a complete overhaul.

It is a time of change in the industry and retailers should think about how to invest so they are positioned for future success. The key will be prioritising where and when to invest in order to grow sales, manage costs and maximise the return on investment – but having the right data and analytics capabilities in place to help retailers make data-driven decisions that can deliver a more personalised experience for the customer is crucial.

  • Fiona O’Hara, managing director retail, Accenture UK & Ireland