innovative thinking: talking trade
The changing role of the retail store Despite fears of their demise, there’s life in bricks and mortar stores yet. But only if the technology is right, according to Martec International chief executive Brian Hume and HSO Microsoſt Technologies enablement lead Robin Coles
T
he digital revolution in retail is confounding expectations. At first, the shift from traditional to
online was dramatic, yet also relatively straightforward. But now the retail environment is becoming increasingly complex and the customer journey more labyrinthine. It seems that reports of the death of the bricks and mortar store were exaggerated. It’s as if the whole industry has turned upside down. Waitrose stores have sacrificed retail space for changing rooms for click-and- collect John Lewis customers and native online businesses have opened physical premises. Once we thought physical stores would turn into showrooms only, but now customers are as likely to do their browsing online and then make their purchases in store. Evidence shows that when a store closes
in any given area, online sales decline too – and when a store opens, the reverse happens. So it seems customers like to have access to all channels – and all options open. For the retailers, in-store customers, even those collecting goods ordered online, provide the opportunity to increase transaction value, something that is more difficult in pure online sales. A cover for that
new iPad? Some extra dust bags for the new vacuum cleaner? Good customer service will ensure the shopper buys more than planned, but enjoys the experience and comes back to shop again. For a clue as to why shops still have a place – it’s worth looking at perhaps the most successful online retailer – Amazon. The reason why customers keep returning to Amazon is that it keeps to its promises; in other words, it’s reliable. So it’s not about maximising profitability per square foot in the store anymore, it’s about optimising trust value in the brand. But unless you have a budget similar to Amazon’s, it’s difficult to translate service into the digital world. It’s no longer a single channel journey, it’s whatever the customer wants a retailer to do to deliver its brand promise. This all returns to the back office and how
that feeds the front office. If a retailer doesn’t take care of their back office operations, they risk not being able to deliver on their promise and misplacing the customer’s trust. And then this brings us round to technology – and yet not every retailer can afford to be like Amazon. In reality, ERP (enterprise resource planning) systems are often up to 14 years old and survive because of continual enhancements; which makes them more
difficult to replace. Yet once the cogs really turn on this 24/7, on-demand world, many such systems may not be up to the job unless they are upgraded. This is why many retailers today are either replacing all of their legacy ERP systems or investing in improvements.
Change is needed to
accommodate the new omni- channel customer journey
Also, when we think of ERP, we often
don’t consider CRM (customer relationship management). Historically ERP systems looked after logistics, distribution, product management and finance; the customer module did not exist. But if you look at the main enterprise resources retailers actually own, it’s their stock and their customer information. ERP can no longer be hidden in the back office. The more that can be opened up to different business areas using straightforward user interfaces and new cloud integration patterns, the more retailers can deliver on their promise. So it’s down to a single view of stock and of the customer – and both easily accessible to staff via mobile or tablet, whether they are in the warehouse or on the shop floor. But it’s also going to take a change of mindset; a transformation of the traditional physical store replacing wrapping and sales points with kiosks for online browsing and beacons for checking a customer’s buying history and directing them to relevant areas. Although often quick to embrace creative
Consumer behaviour is changing, with customers expecting to be able to browse, compare and buy across multiple channels for any given transaction
February 2017
trends, the retail industry has been slow in appointing chief information and technology officers into the executive board. More technology experts in high places will allow for a mind-shift, with someone at the top empowering the business and creative minds to think freely without worrying about the supporting technology. So legacy technology architecture is a challenge, but then so is legacy thinking and legacy business processes. Change is needed to accommodate the new omni-channel customer journey which often includes an in- store visit, perhaps to see and feel the product, perhaps to buy. If a brand can remain reliable regardless of how the customer prefers to act, then they will win in the end.
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