In 2014, as the next generation of consumers becomes increasingly more demanding, retailers must place the customer experience at the forefront of their retail strategy, and whilst striving for a high quality experience, they mustn't lose sight of profitability.
Recent research from Deloitte reported that Australian retailers are lagging behind in taking their businesses to the digital space. According to the survey, 38 per cent of respondents conveyed that online competition from overseas or local retailers is their greatest source of competition. From the survey, one in four survey respondents expected to generate no online sales at all over the recent Christmas period, relying instead on physical stores.
Scott Gillies, director of retail, APAC at Manhattan Associates commented: "2014 will not be the year for retailers to become complacent. As consumers seek a richer, more personal shopping experience, retailers need to be a few steps ahead and look for new ways to remain relevant to customers.
"The strongest contenders in 2014 will be those who develop a more sophisticated approach to make their existing assets work harder whilst continually innovating on their service offering. This will be the most effective way for retailers to increase customer loyalty and share of wallet."
Manhattan Associates has identified five trends that are likely to influence the ANZ retail scene in 2014:
1. Personal and profitable
In 2014, business conditions will force retailers to offer customers a more personalised service, while still being focused on profits. Consumers are now more demanding than ever before and expect a personalised and fast service from their favoured retailers. There is an expectation for retailers to deliver a wider range of products, faster, and in a more targeted manner. Herein lies the danger for retailers; a balance must be struck between offering high levels of customer service and delivering orders profitably.
One of the first steps retailers can take and one Manhattan Associates expects to see more of in 2014, is gaining enterprise-wide visibility of inventory and customer transactions via the deployment of centralised order management systems.
Embracing such technology will allow retailers to know exactly where their inventory is, to whom it can make it available and when it will get there, regardless of which channel is calling for it. This in turn will allow retailers to offer the best level of service to their customers.
2. Faster and more flexible fulfilment
Customers want and expect their purchases in an instant. In order to bring high speed innovation and break the practice of slow delivery service, retailers need to have a 360-view of their channels.
Greater visibility will allow retailers to manage inventory as a single, centralised pool and dispatch stock quickly and efficiently. It will also mean that a seamless shopping experience can be offered to increase the likelihood earning customers' loyalty.
Omni-channel retailers, with this 360-degree insight into their inventory and customers will seamlessly be able to view product availability across channels, and dispatch and fulfil orders both quickly and profitably. Shoppers do not want to wait whilst calls are made to neighbouring stores in a bid to source the item. This approach loses sales and customers in today's fast-paced retail world.
3. Greater supply chain control
The global horse meat scandal in early 2013 highlighted one of the biggest issues within the food industry - sourcing and traceability. It also challenged the industry to understand how the food supply chain can fall victim to opportunistic behaviours. This is key for retailers to take note of, as the Australian food supply chain is just as complex as its European counterpart.
As a result of globalisation, products are now crossing more international boundaries than ever before as retailers seek to reduce costs further. This means supply chains are getting longer and more difficult to manage.
To avoid a repetition of the horse meat scandal, retailers need to have accurate and actionable data across the entire supply chain. This is in addition to ensuring that sufficient testing has been done of products before they are shipped, especially in the food industry. Following the intensity of this year's scandal and the resulting fall-out, this is something retailers will be taking a lot more seriously going forward.
4. Social shopping
Social media's power to influence customers purchase decisions has taken the retail world by storm. A key example is the 'Kate effect'. When the Duchess of Cambridge wears an outfit, it is posted over social media networks and instantly sells out online. Retailers who effectively monitor their online channels can give themselves a big head start and maximise their sales.
The next development is likely to be retailers using social channels to take customer orders. Few larger retailers have capitalised on the opportunity of selling directly to social channel audiences. Engagement has typically been driven by photographs or discounted vouchers as opposed to direct orders. However, this is an area likely to change this year as retailers become eager to differentiate themselves from competitors. Savvy retailers that succeed in this difficult market are the ones that see social media as another retail channel.
5. Hyper targeting to change buyer behaviour
The proliferation of mobile devices has allowed shoppers to interact with brands through multiple channels. In the past, tracking shoppers' activities over different channels has presented a huge challenge. However with data analytics, retailers are armed with invaluable insights to track shoppers' buying patterns and preferences in real-time.
Data collected on online visit frequency, transactional spend amount, time period spent in store and preferred delivery method can be advantageous to retailers so they can provide customers with a personalised service and to reward them for their loyalty. A report from Price WaterHouse Coopers states that retail organisations that are prepared to invest in the right analytics tools can improve earnings by as much as 20 per cent.