“Cheaper than an M&S prawn sandwich”

“Cheaper than an M&S prawn sandwich”

For every retail success story there is often one of unmitigated disaster. On the day when Sports Direct founder Mike Ashley motivates his workforce by telling the BBC that he commutes to work by helicopter, here are a few examples of some of the worst retail blunders.

 

  1. Never underestimate the power of social media

In the run up to Christmas peak trading 2014 Sainsbury’s launched a staff incentive scheme known as ‘the 50 pence challenge’ the idea being to get eversainos_3154270cy customer to spend 50p more on each shopping trip. The poster was for internal use only however in one store it was posted in the window. A photograph of the poster was tweeted and social media went wild with rival Lidl launching its own 50 pence challenge “Let’s encourage every one of our lovely customers to save as many 50ps as possible,” it said. Ouch.

 

Photo: Chris Dodd

  1. We all love a bargain

Promotions are a key part of any retailer’s marketing armoury however one such run by Hoover cost the company at least £20m and caused huge embarrassment to its brand. Under the offer, anyone purchasing a Hoover product costing more than £100 was eligible for two free return air tickets to Europe or the US. Any customers buying the cheapest qualifying product, priced at £119, could receive two tickets to New York. Well, this proved irresistible to many – the upshot being that an estimated 100,000 people applied for the flights. The marketing blunder cost three top Hoover executives their jobs. Suck it up guys.

  1. Stick to what you know

In 2008 US electricals giant Best Buy signalled its intent to penetrate the UK market with up to 200 big box stores across the country going head to head with the Currys / PC World brands. On the face of things, it looked compelling but just 18 months and only 11 store openings later it was making a hasty retreat. The timing couldn’t have been worse in the economic downturn in the UK and at the time big box out of town locations weren’t the thing to have. Best Buy simply couldn’t adapt to a different strategy, Currys PC World continues to flourish whilst Best Buy is but a distant memory. A lesson for a certain Australian DIY chain perhaps?

  1. Keep it under lock and key

Maintaining the integrity and security of personal data is one of the biggest issues for retailers right now and one of the biggest concerns affecting consumer confidence. Not surprising when you look at some of history’s cyber disasters. The largest and most infamous? That award has to go to Target, the US retail giant. In the days prior to Thanksgiving 2013, someone installed malware in Target’s security and payments system designed to steal every credit card used at the company’s 1,797 U.S. stores. At the critical moment—when the Christmas gifts had been scanned and bagged and the cashier asked for a swipe—the malware would step in, capture the shopper’s credit card number, and store it on a Target server commandeered by the hackers. The result? Over 90 lawsuits, 46% drop in operating profit and Target Executives forced to testify to Congress.

 

  1. “Doing a Ratner”

Any list such as this cannot be complete without the blunder to end all blunders. Whilst I’m sure most have heard it before, it is still worth repeating as a lesson to every retailer.

Gerald Ratner, founder and CEO of Ratners jewellers wiped £500 million from the value of his business with one speech to the IoD in 1991. During it he said: “We also do cut-glass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for £4.95. People say, ‘How can you sell this for such a low price?’ I say, because it’s total crap.”

ratner

And whilst he had his own brand on the floor, he gave it a kicking just for good measure, adding that his stores’ earrings were “cheaper than an M&S prawn sandwich but probably wouldn’t last as long”.

Good night Gerald.

 

 

Andrew Busby is a retail sales consultant and founder of The Retail Advisory Board

 

Fat and Lazy

 

Meet my two best friends ‘Personalisation’ & ‘Customer Experience’

Much is written about personalisation and customer experience – the two are natural bedfellows -and if we believe much of what we read, we would be forgiven for thinking that both are highly sophisticated and mature. That both are the product of much development and investment, consequently delivering that most elusive of factors – customer ‘stickability’ or as some would have it – loyalty.

In truth, whilst there’s no doubting that retailers increasingly understand that they must make a significant commitment to both, the reality is very different. When Liam Fox was referring to British business as being ‘fat and lazy’ he could so easily have been referring to personalisation and customer experience. Why? Current attempts at personalisation are both one dimensional and reactive, at best relying on calendar entries and smart mirrors to create an illusion of personalised engagement.

As an example, I recently received (through my letterbox no less) a card from a well known national florist, reminding me that it was my mother’s birthday soon and suggesting which flower arrangement I may wish to send. I thanked them for their interest, informing them that my mother had passed away 9 months previously.

Now, I hear you ask; how on earth are they expected to know that my mother had passed away? My response – don’t be lazy, true personalisation is knowing your customer and engaging in a relevant, contextual manner. Not simply relying on calendar prompts and firing off unsolicited mailshots. Show me that you can engage in a relevant manner and I will happily provide the information necessary to give you the context.

Simple tracking of social media can provide deep insights into many different aspects of our lives – how we are feeling, if we are on holiday, our interests, our priorities even what mood we are in. And what’s more, as consumers, many of us are willing to pay for what in reality we should expect as the new normal. According to Deloitte in a report published in 2015 titled “The Rise of Mass Personalisation”, 1 in 5 consumers who expressed an interest in personalised products or services are willing to pay a 20% premium.

So what does all this mean?  The implications for retailers who do not embrace the technology required to deliver a personalised experience for their customers are clear and serious. Never before have we, as consumers, been so demanding, so promiscuous – willing to drop a brand and move to the competition without hesitation. And what’s more, our expectations keep on growing exponentially. Only those retailers who understand this will survive, the outlook for the remainder is bleak.

 

Andrew Busby is Founder of The Retail Advisory Board

When Retailers Collapse

When Retail Brands Collapse

With the news that two iconic stalwarts of our High Street are to disappear, Andrew Busby takes a look at the emotional impact of retailers going out of business.

Last week received confirmation that was always on the cards; BHS, that iconic brand, will join Austin Reed and disappear from our High Streets.

Coming at the same time as the news of Austin Reed perhaps made the impact all the greater, both brands being an ever present landmark on the High Street for generations. Both sadly lost their way and with it their relevance to their customers. In the face of stiff competition from both the higher end designer labels and the bottom end discount fashion brands, squeezed in the centre without a raison d’etre, the outcome was perhaps inevitable. But rather than analyse the why (many column inches have already been filled on that subject) it is worth considering the emotional impact when a retail brand collapses. On the workforce unfortunately and regrettably but I am thinking here more of the impact on all of us, especially the consumer.

Despite its problems and challenges, many of us still recall Woolworths with some degree of affection and in particular their pick and mix. For those of us of a certain age, we can recall as children happily helping ourselves to the pick and mix on a Saturday morning whilst out shopping with our parents (naturally the author refrained from such activity). The brand became a part of our upbringing and our lives and from there an emotional attachment was born which lasted a lifetime. Maybe not always a happy relationship but nevertheless, one in which, I would contend, many of us enjoyed in ways in which we never would with brands from other sectors such as banking or technology or utilities.

And this is the thing; retail brands connect with us not just on a physical or pragmatic level but an emotional one in ways which brands from other sectors (with notable exceptions) would love to emulate.

When a retail brand collapses, in a way a part of us – our DNA if you like – goes with it. I would hesitate to suggest that we grieve when this occurs but it is something akin to this if only in our subconscious. Farfetched? Just consider for a moment your favourite brand and I would venture that it is very likely to be a retailer or close to; now think for a moment if they disappeared tomorrow. You get my point.

BHS and Austin Reed may be gone but, like Woolworths before, it will take a lot longer for them to be forgotten.

 

Andrew Busby is Retail Business Head at Zensar Technologies

 

The Essence of Digital

How e-commerce is transforming not only the way we shop but the way we run our lives

Type in a search for ‘e-commerce’ and the definition is fairly universal “e-commerce: commercial transactions conducted electronically on the Internet”. Seems pretty simple and straightforward, yet behind this there is a multitude of implications for retailers and consumers alike which are transforming not only the way that we shop but the very nature of the way we run our lives. The digital revolution is of course well and truly upon us, shaping our lives in ways in which we never dreamt possible (think augmented reality, virtual mirrors, Amazon dash buttons, even Uber) and the exciting part is that this is just the beginning.

So before we consider how e-commerce impacts us today, it is worth a reminder of where it has come from. Take a look at what the Apple website looked like in 1996:

Apple

Clearly, in the ensuing 20 years much has changed. Consider the online experience in those days; no tablet, no smartphone, no broadband. Instead a desktop and a dial-up (for those of us old enough to remember that annoying tone) with patchy connectivity and glacial download speed – and of course, most of us had a phone which made calls and sent texts – perhaps typically a Nokia 6000 series. And we thought it was cutting edge – although the battery did last for days and not hours! So, from humble beginnings e-commerce has come a long way; today it proliferates our lives in ways in which we never dreamt possible. And in this context the UK market is often the focus of attention from the rest of the world so what is the significance of the UK?

UK retailing has the highest proportion of online retail sales, primarily driven by 3 factors: 1) smartphone penetration 2) wifi / broadband coverage and 3) geography – making home delivery accessible. Today online accounts for 13.4% of total UK retail spending (as opposed to 12.4% in the same period in 2015*). The Centre for Retail Research paints rather an apocalyptic scenario for the UK High Street where the share of online sales will account for 21.5% of all retail spend by 2018 resulting in:

  • Total store numbers falling by 22%, from 281,930 today to 220,000 in 2018.
  • Job losses could be around 316,000 compared to today
  • There will be a further 164 major or medium-sized companies going into administration, involving the loss of 22,600 stores and 140,000 employees. Many of these companies will survive but at the cost of closing more than half their stores.

That all adds up to a period of dramatic change for UK retail where the flexibility, ease, convenience and options e-commerce provides, is completely reinventing the way in which we shop. According to the IMRG, sales via smartphone and tablets in the year to April 2016 grew by 29.4% meaning that virtually all growth in e-commerce sales is now coming from mobile. A sharp reminder to all those retailers who haven’t yet optimised their sites for mobile that in 2016, this represents our preferred method of shopping. According to some sources, retail sales via mobile devices will reach 50% share by 2020. This might be a little far-fetched however it serves to indicate where retailers should be paying attention and making their investments.

Somewhat perversely, it is those retailers who manage to combine both online and in-store in one seamless experience who will survive as opposed to simply focusing on online alone. And this is the key to succeeding in today’s brutally competitive retail marketplace: understanding how online and stores interact and that each are part of a whole as opposed to representing different channels. John Lewis were one of the first to recognise this and invested heavily in supply chain in order to meet the consumer demand from online. In its 2016 annual report, whilst sales for John Lewis grew +4.4%, sales from online grew by 17%. A trend echoed across the industry.

The growth of e-commerce, particularly mobile, will continue unabated; where it finds its natural level as compared to in-store sales is difficult to predict, if only because as channels become more and more blurred, many retailers are still grappling with how to account for online sales – to the store in the case of click and collect or to the online website. However, one thing is certain; those who manage to deliver one seamless, integrated, convenient, easy to use, engaged and above all inspiring experience will succeed. In today’s retail world, the term ‘digital’ is often used and has become very much a mantra for many, nowhere is it more relevant than e-commerce – the essence of digital.

*source: Office for National Statistics April 2016 Report

Andrew Busby is Retail Business Head at Zensar Technologies

Data Driven Decisions

Data driven decisions

The changing role of the retail CMO

In the past, life was relatively straightforward for an IT vendor – we spoke to the CIO, convinced him or her of the business value of our proposition, they would agree the investment spend with the CFO and we signed a contract. Done. Everyone knew their place.

 

 

But as we know, things look very different today; because in addition to the CIO, there is the Chief Digital Officer, the Chief Customer Officer and of course – the Chief Marketing Officer. Each and every one of them has a stake but in the case of the CMO this is an ever expanding, ever more critical role. The omnipresent nature of the internet and the access it affords to consumers means that marketers are now pivotal to the success of the business. And in this context, business = brand. More than ever before it is all about how the brand is perceived (think Tesco vs Aldi / Lidl) as, in this world of the super connected, digital consumer, everything is just a click away. And information and insight about brands and products is constantly at our fingertips.

The consumer journey now involves extensive research, product assessment, consumer reviews, peer recommendations etc etc and in all this the key to unlocking the insight which is so desperately required is: data. Lots of it, mountains of it – and we know this as Big Data. And Big Data and Analytics = Consumer Insight and competitive advantage for our CMO. With this and the ability to turn all this data into actionable insight comes the unlocking of the Holy Grail: Personalisation.

Personalisation has been on the agenda for many years now, however, when we look back in years to come, in this context we will view 2016 as we now view VHS and cassette players of the 1980’s; antiquated, immature and downright clunky. Remember, there are millions of current internet users (and spenders) who have never known a world without digital commerce.

So, to return to our CMO for a moment and to understand how and why they hold the key for many IT vendors in this digital age. According to a recent McKinsey report, “Consumers knowledgeable about and comfortable with online research and sales will make many companies change their business models”. And in this context, as the CMO’s role broadens, so does their sphere of control and influence and, of course, their budget.

In November last year, Gartner reported that 2015 saw marketing budgets increase 10 percent to 11 percent of revenue, and two-thirds of marketers expected their budgets to grow in 2016. Areas of focus being social marketing, analytics, customer experience and digital commerce.

So it is increasingly to the CMO that CEO’s are now turning in order to drive the business forward. The CIO’s role becoming one more of a guardian of the data and the internal supplier to the CMO in as much as providing the means by which they can steer the organisation in the face of the torrent of consumer engagement and knowledge. According to the same Gartner report; “Digital marketing was one of the highest ranked areas of marketing technology investment for 2015 and a full 20 percent of marketers said digital commerce was the highest priority on their list.”

What can we conclude from all this?

In today’s data driven digital retail world, it is imperative that IT vendors understand two things:

  1. Digital – be it commerce, mobile, social etc
  2. The language and agenda of the CMO

In the new normal digital world, just as a retailer must interact with their customers in a way which is engaging, contextual and above all relevant; so too must IT vendors engage with retail businesses in a similar fashion and this means stepping outside the traditional comfort zone of the CIO’s domain. And above all it means having the ability to be able to work with a retailer to unlock the potential of all that data.

 

Andrew Busby is Retail Business Head at Zensar Technologies

£3bn by 2020

£3bn by 2020

The impact on retail of the National Living Wage

The National Living Wage in the UK came into effect today, Friday 1st April. Much has been said and written about the impact this will have on industries who traditionally employ large numbers of low paid workers. So what is it and what impact is it likely to have on retail?

The National Living Wage or NLW is a new national minimum wage of £7.20 per hour for everyone aged 25 and over. The rate is 50p higher than the previous minimum wage of £6.70 – although that lower rate will still apply for those aged 21 to 25. And between 1st April 2016 and 2020 the rate is set to increase to £9 per hour.

Retail and hospitality account for approximately half the number of workers on the lowest pay, meaning that as of 1st April some 300,000 retail workers received a pay increase. Some estimates put the total cost to retail in the region of £3bn per annum by 2020.

So what can we expect as a result of all this?

Price rises are the first and foremost obvious area however as we know retail is extremely competitive and the reality might be that retailers will only be able to mitigate the impact marginally through price. Added value services such as home delivery and click & collect will be targets for charging where before this may have only existed for certain basket sizes.

The real threat however will be to jobs and stores where the impact of the increase in costs will force retailers to rethink their staffing levels and store estates. This you may think is nothing new however, coupled with the emergence of smartshoppers (mobile, digital, smartphone savvy consumers) retail is set to continue its rapidly ever changing landscape. NLW will only help to accelerate this. So what of new technology and how will retailers use this to help offset this increase in costs?

Consumers can expect more self-service and self-scanning technology to be used as retailers try to reduce staff hours. According to the Centre for Retail Research, a lot of new technology will also be applied to warehouse operations. However, this is also a very good time to be in the business of workforce management. As the full impact begins to bite, retailers will start to take a different approach to their workforce from being the largest (almost) fixed cost to one where they are seen as an asset. Productivity will again be the byword and across store estates, in parallel with the role of the store morphing in response to the rise of (typically) mobile online shopping, staffing levels will come under scrutiny whereby having the right staff, with the right skills, at the right time & in the right place will be of paramount importance.

How much of this change would happen regardless of the introduction of the NLW is open to debate but what is clear is that the NLW will at the very least accelerate it, if not have a strong influence on priorities over the coming years.

 

 

Andrew Busby is Retail Business Head at Zensar Technologies

UK Retail

UK Retail

UK Retail is the most vibrant, dynamic, exciting, competitive retail environment globally; in this blog, Zensar Retail Business Head, Andrew Busby, examines what are the trends & driving forces behind this and what this means for the industry.

UK Retail leads the world. That might seem a bold statement on the surface but look just a little closer to realise why this holds true. The combination of many factors and influences all coming together in a heady cornucopia of consumerism has given rise to something I refer to as Absolute Retail. Consider for a moment the iconic shopping malls, High Streets and stores which are found across the UK and you begin to understand the significance of UK Retail.

In 2011 the number of smartphone users in the UK was 21.6m, by 2015 this figure has nearly doubled and by 2017 is likely to hit nearly 44m(1). In 2013 the UK population surpassed 64m for the first time of which the 15-64 age bracket accounted for 42m(2). Compare this to the US market whose total population is 321m of which the 15-64 age bracket account for 66%(3) and the number of smartphone users 184m(4).

From a UK perspective this is significant for retailers when we consider that 73% of UK consumers predict that they will spend more on mobile this year and that 15% now use mobile as their primary shopping device(5). But smartphone penetration is only a part of the picture of why UK Retail is such a dynamic fast paced and rapidly changing environment. Omnichannel / multichannel, whichever we prefer to refer to it, the lines between the online and offline world are converging at a rapid rate to the extent that the terms are becoming redundant. It is one shopping experience except that the journey may begin and end in different places, on different media according to the consumer preference at any given time. Either way, the UK is highly advanced when compared to the US market in its use of online and mobile with nearly double the number of UK consumers buying groceries via mobile than in the US.

Geography has a large influence in this picture, resulting in significant growth in click & collect; OC&C forecasts that in 2015, growth in the volume of units ordered online but collected in store will overtake that for home delivery for the first time, increasing by 53m parcels, year on year, compared with a rise of 38m parcels for home delivery. This trend is also giving rise to innovation in the supply chain, especially fulfillment; for example, Asda aims to have 1,000 remote click and collect locations by 2018, which would include drive-throughs or lockers(6).

Personalised, relevant shopping with ease is now the key to retail success and embracing the use of mobile at every step of the journey. This has led to increasing levels of innovation, removing obstacles and barriers in the shopping journey all aimed at making the shopping experience more enjoyable and pleasurable designed to entice the customer to keep coming back again and again.

And in this way, the UK leads through innovation, whether it be mobile, in store experience or personalisation. This is set to continue as expectations demand ever more relevancy in all interactions with retail brands. And Zensar is at the heart of this working with leading UK retailers to engage their customer engagement and customer experience. By working with those leading retailers Zensar has developed an intimate understanding of what UK retailers need in a partner; and not only that but the pace of change and dynamic nature of the industry means that partners need to be both agile and flexible in their relationships with retailers. Ready and able to deliver innovative solutions wherever and whenever they are required.

Sources:
1 Statista
2 Office for National Statistics
3 United States Census Bureau
4 comScore
5 Centre for Retail Research
6 FT.com