Despite pioneering multichannel adoption, UK retailers still have some way to go, finds Miya Knights.
UK consumers have embraced the choice and convenience of shopping online, spending more than in any other European country. According to a report by the Centre for Retail Research, commissioned by shopping comparison website Kelkoo, the UK last year accounted for 30 per cent of total European online sales. So why is it that a product or deal displayed in a retailer's store may not be available to buy online or vice versa? Or why is it sometimes not possible to return a product bought online to the same retailer's store?
Andrew Joiner, chief executive of web content management software company Autonomy Promote, says such problems occur because of the move from just bricks and mortar, store-based operations to sales that have more to do with bits and bytes. "In the past, there were off or online channels," says Mr Joiner. "But now there are mobile and social channels as well as still having to support the voice component. Once you have that fragmentation, the business doesn't have a single place to go for insight into customers or performance anymore."
Having such insight can, for example, help optimise the integration of social or user-generated content into an eCommerce site to dramatically improve conversion rates - no mean feat when a frustrating online checkout experience will lead nearly two- thirds of customers to abandon a purchase.
In fact, a recent survey, by enterprise management software company SAP, of 100 IT decision-makers within large retail organisations, highlights that the challenge of turning the explosion of data generated across multiple channels into insight was the biggest barrier to the deeper understanding of their customers.
Yet it also revealed that 78 per cent of retailers see customers as being more responsive to promotions and offers, and more demanding of personal service (75 per cent) than they were one to two years ago. Chris Osborne, retail principle in the UK and Ireland for SAP, says: "Emerging technologies and analytics are now allowing retailers to respond in real time where, with the growing popularity of the smartphone, personalised offers could even be targeted at participating customers according to which aisle they're in."
Brian Hume, founder and managing director of retail training and consulting practice Martec International, says so called digital natives are also driving the need for customer insight. "These younger people grew up with the internet where the shopping journey may start and end in any channel. This is why click and collect or in-store ordering services are just about offering them convenience," he says.
Multichannel insight and strategy are also driving the likes of Apple and Oasis to use mobile devices or kiosks in assisted sales, or for self service and queue busting. And this is why, despite TV's Mary Portas lamenting the fact that one in six shops now lies vacant, even eCommerce giant eBay decided to open a pop-up shop in London before Christmas.
As technology supports both the proliferation and blurring of sales channels, internet retail trade body IMRG says mCommerce sales via mobile devices already accounted for 3.9 per cent of eCommerce transactions during the third quarter of 2011. And that is without the pending impact of near-field communications (NFC) technology for enabling the convenience of contactless mobile payments.
Razat Gaurav, senior vice president in Europe, Middle East and Africa of supply chain software company JDA, adds that retailers could no longer afford to operate separate supply chains for each channel in the back office, just as they ignore at their peril customer expectations front of house of a seamless experience. "Pooling inventory across channels to drive sales is part of an integrated approach that can help serve customers better and more costeffectively," he says. "Knowing your customer and what inventory you have available is key."
Case Study
Boden is a successful UK clothing brand that has adapted to the emerging multichannel retailing environment with great success, ensuring it stays one step ahead of the competition.
Founded in 1991, Boden launched its UK website in 1999 and a US presence in 2002. After opening a new, larger warehouse in 2003 to meet demand, it launched its first shop in London a year later. Since then, it has steadily expanded into new ranges and to more than 60 countries around the world.
Boden already maintains supplier relationships that support its multichannel business, including with fulfilment partner P2P Mailing for example, whose knowledge of the global postal market has helped save the retailer thousands of pounds on eCommerce shipping costs. But it recently worked with Hitachi Consulting to identify broader, supply chain related opportunities to use systems and technologies that could also improve its design, buying, and merchandising and administration capabilities.
Matthew Dalton, Boden IT director, says: "We are continually challenging ourselves to make better products that our customers will love. Much of this focus is on the products themselves, but periodically we review the processes and systems that support these creative activities. With the continued growth of Boden and the increasing international expansion, we are facing new challenges that, if left to develop organically, could lead to significant additional complexity and associated risks to the health of the business."
Mr Dalton adds: "Hitachi understood this and could demonstrate clear thinking and insight that helped us in turn to understand the areas we need to address. They helped our internal team to focus their efforts on the areas that would drive most benefit to our customers, and this direction gave us confidence that we were concentrating on the right areas and developing robust processes for the future."
This article orginally appeared in a special report on The Future of Retail, produced by Raconteur Media and published with The Times (UK). Please see www.raconteuronthetimes.co.uk for further articles from this report or follow us on twitter @Retail_Reporter.