As seen on Inside Retail.
Consumer-centricity is quickly becoming the prevailing theme within the retail industry.
In a recent letter to Amazon shareholders, CEO Jeff Bezos mentions the word “customer” 19 times. And, despite posting a net income of US$2.37 billion last year, the letter mentions the word profit a grand total of none.
In his letter, Bezos also discusses the concept of Day 1 versus Day 2 retailing stating, “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1 [at Amazon].”
His approach to fending off Day 2: true customer obsession, resisting proxies, embracing external trends and high-velocity decision making.
In a world where consumers are now permanently in control, Amazon believes that obsessive customer focus married with trend agility is critical to its ongoing success. Such obsessive focus in the past created similar success stories, Walmart and Apple being great examples. The ability to use easily available capital, accessed as a publicly traded company, to run the business (or parts of it) at perpetual loss is another powerful weapon, which Bezos chose not to mention in his letter.
Recent headlines have reinforced the deadly effectiveness of Amazon’s business model. Reports tell of sharp job losses and a string of bankruptcies suffered by established retailers. In the past two months alone US retailers (lead by department stores) shed more than 60,000 jobs. The list of wounded retailers down under is equally as disturbing.
Amazon has recently confirmed that it will enter the Australian market soon. While the actual impact its arrival will have on the local market remains unclear, local retailers operating in a “Day 2 mode” should take urgent action to reanimate their businesses out of stasis. After all, the e-commerce gorilla isn’t the only international or domestic threat. Too often success breeds complacency. And, as the old saying goes, “only the paranoid survive”.
Overcoming stasis is a demanding and multi-faceted undertaking for any retail organisation. As stressed by Bezos, a key driver must be the pursuit of consumer-centricity as the core business model.
What Bezos doesn’t say and what is also critically important to established retailers is the need to amplify the benefit your customers gain from direct interaction with your business in stores, notably the human touch and instant gratification; two experiences online sellers can’t offer. However, in this article I want to focus on the competitive battle from the digital perspective.
Now, there’s a lot of hype and frenzy around what consumer-centricity really means, with many retailers relying on the traditional understanding that it’s just a general business intent.
But, in today’s tech-enabled world, this is just the surface of what customer-centricity means for a retail enterprise. There are several marketing, operational and technological fundamentals that need to be put in place to morph into a truly consumer-centric retailer. Let’s explore them.
Retailers must be able to seamlessly sell over the counter, online, and across channels (also from within social platforms), with smooth omnichannel transaction options such as click & collect and endless aisle.
Such a consistent customer experience across channels requires a single, 360-degree view of all data related to customer engagement, including product information, customer details, pending, abandoned and past orders, stock availability, gift cards, prices, promotions and loyalty entitlements. The once advocated “single view of the customer” is no longer enough – retailers need a single, real-time, consolidated view of all product, transactional and customer-related information.
Today’s consumers expect to be able to transact with you in a myriad of different ways and still feel as if they are dealing with the same organisation. Creating a frictionless, instant experience across all channels is now retailing 101.
Any border, any time
Mutli-channel retailing has opened the doors to easy cross-border purchases. Using the internet, consumers can now pretty much buy anything they want from anywhere in the world. Visa versa, even small retailers can now sell their goods on a global scale.
Many successful brick and mortar retailers have used ecommerce to spearhead their international expansion – to help test and establish their brand and operational foundation – before opening physical stores.
Just like cross-channel retailing, crossing borders effectively requires the same consolidated view of all data, with the added complexity to transact in multiple currencies, languages, and tax jurisdictions. Managing international deliveries is another important factor.
Global and omnichannel retailing also demands 24/7 customer service. Your customers want to shop within their time zone, at any time, browse any time, and chat any time.
Whether it’s state or global border lines that your deliveries must cross, a uniform brand and seamless customer experience are key.
All About Me
“I just bought a dress, but you sent me a sale EDM for the same dress 3 days later. Why? Am I being spoken to by a computer?”
A disingenuous customer relationship like the above example would damage your retail brand. Yet, such clumsy marketing remains common, mainly because of fragmented and isolated customer and transactional data.
Today’s consumers are highly informed and highly skeptical. They demand a genuine relationship with you, otherwise they can easily find better service elsewhere. If you use computers to talk to your customers, make sure their algorithms have the necessary level of intellect.
The answer here rests not only in having tons of accurate data, but also in how you use it.
You’ll notice that all the pillars of real consumer-centricity outlined above rely on technology, optimised for modern retailing. Retailers can no longer afford divisive IT infrastructure, or expensive vanity projects. All IT effort and funds must be directed towards value-add, customer-centric capabilities. Given the costs of implementing new technologies, spending the absolute minimum required to get the optimum result is no longer a virtue – it’s a necessity.
Your software must seamlessly connect all parts of the business to provide a single, real-time view of the entire operation. Without this level of harmony, it will be impossible to make better business decisions, make your customers feel like a market of one, streamline your omnichannel fulfilment logistics, and operate across borders.