Newsletter -The Future of Retailing

Newsletter The Future of Retailing

This Month’s Article – The Future of Retailing

Retailing in the next 10 years will change dramatically due to:

Influence of new media

• Retail growth slow or stagnant
• Retail has limited catchment area
• Media fragmentation makes traditional “local” advertising expensive
• Online sales growing at 19% year on year
• Online –   1.2b potential customers on PC

         – 3.1b on mobiles, other hand held devices

• 40% growth year on year in phone advertising
• Push/pull radio/sms advertising producing amazing results
• Online/hand held – pay per click, control spend

Apart from the sheer size of the market:

• Online/hand held allows instant profiling, segmentation and impacting.

In-store analytics will be much more important:

This year I conducted workshops at Intel/Microsoft about buyer behaviour, from where people go in the store (e.g. simple but important – 78% of men turn right when entering any store);  to the science of shelf positioning, heights, product groupings, intelligent labelling etc.; to positioning of digital screens (research shows digital screens performing poorly because of placement/content thought they have great potential), to the analysis of buyer characteristics to balance NLP variances as well as the use of music and scents, all of which can make a huge difference in store performance.

Customer knowledge and segmentation will be important.  For example, restaurants are already using facial recognition so that before a customer has reached him, the maitre d’s screen has advised the customer’s name, when he was last there, who he was there with, what he ate etc. so that the maitre d’ can make him/her feel important.

Supermarkets in the US analyze your purchase, search your purchasing patterns and make suggestions on what you may have forgotten and target catalogs, coupons, sms’s to your purchase behaviour.

The traditional approach has been a wide variety of product and promotion “generally” based essentially on price and selection.

These days are gone … differentiation and highly targeted profiling are now critical.  The retailer must focus on small groups of individuals with individual wants and needs.

This is where an online/retail strategy is critical.  Online you can generate a community, have like customers reinforcing others.  According to 1800Flowers, regular onliners outspend other customers 2.7 times.  Online you can offer an infinite range of products in a very targeted way, greatly increasing the potential of a sale.

Loyalty programs can be readily created online, customers analysed and targeted.  Some retailers now boast 300% increase in online sales, driven through traditional retail without cannibalisation.

Retail/sales are about relationships.  Targeting, profiling and analytics build relationships.

The areas to focus on are:

• Consumer fragmentation
• Competitive differentiation
• Breaking the “sale” cycle
• Combating increasing media costs

We need to segment and identify the segments (this can be quite complex – the Democratic Party in the US has segmented voters into over 2,700 segments, with pretty effective results).  Quantify the segments, locate the segments, get them to interact, validate results by segments.

Retailers should embrace the internet/phone marketing as part of an integrated strategy.  Retail is important to effectively drive online sales.

The public want a WOW factor, they want sensory satisfaction – touching, smelling, tasting and hearing.  The amount you sell is directly proportional to how long people are in the store.  You need to make it interactive and entertaining.

Get the mix right and a fortune can be made.

Re-Branding and Renaming

I have consulted to many Fortune 500 companies that have rebranded and renamed.  This is the ideal time to build in your complete offline, online, inline strategy.  You can be in 50 small towns and be a global online powerhouse, all the while building your retail presence.

One of the major keys is to have your staff buy in, they must own the change and company’s corporate culture.

We are working with a retailer who has had 12 million customers go through, yet doesn’t have an email or phone database.  Imagine if they had!  You could virally drive the name change and promotional opportunities to 30-40 million people.  The famous Axefeather email, originally to 30,000, has now reached 54 million.

There needs to be an integrated strategy or great opportunities could be lost.