Ahead of the upcoming Retail Customer Excellence Awards, our sister site Inside Retail spoke with one of the event’s sponsors, Fluent Retail, about how retailers can implement smart technology to improve customer experience, and still make a profit.
Inside Retail: What are the three biggest issues faced by omnichannel retailers?
Fluent Retail and ParcelPoint CEO & Co-Founder Mehdi Fassaie: Customer expectation versus profitability: customers today expect so much more from retailers, for example fast or free shipping, broader inventory range, but want it at the cheapest cost. So the question is how to balance customer expectations vs gross margin?
The second is inventory visibility – with inventory split across distribution centres, stores, concessions, third party logistics and more, it is very difficult to know exactly what is in stock and where, and have that available for sale via all channels.
Finally, supply chain complexity – stores are being asked to take on tasks which have traditionally been performed in the DC, which has the potential to increase operational complexity.
IR: How integral is it for retailers to have transparent stock information across the complete supply chain?
MF: A single view of inventory is the ability to have a single consistent view of all inventory across your organisation. It needs to encompass and integrate all sources of inventory across your organisation including distribution centres, suppliers, stores and concessions.
Let’s say a particular SKU for a blue shirt is very popular online and in your Sydney stores, but hardly ever purchased in Melbourne. Your marketing team runs a promotion and there’s a run on the website, with all stock in the DC sold. A customer visits your site, only to see an out-of-stock notification and buys the item from your competitor. A few weeks later, the Melbourne stores are getting ready for the next season, and need to clear the blue shirts to make space for white ones. So they do an in-store sale, mark down the excess stock and sell them at a discount.
What if you could have done that differently? If you had a single view of inventory across all your channels, the excess online orders could have been routed to your Melbourne store for them to ship to the customer at full price. The customer is happy, your store inventory margin is preserved and stock turnover is maximised.
IR: How can implementing smart technology result in profit increases?
MF: Your systems need to work together to ensure your stock levels are accurate and are updated in a timely manner, and can be easily viewed via your e-commerce site. The speed of turnover in retail sales means a single view of inventory can never be 100 per cent accurate, but there are ways of mitigating this while delivering a great customer experience, eg. setting safety stock levels, managing the volume of store orders and excluding sale items. Automating these decisions removes operational overhead and increases the chance that you’ll never miss a sale.
Offering services like click & collect means customers have the ability to shop online at their own convenience, and then pick up their order at a local store. The customer gets certainty that the item is available and knows it will be ready and waiting for them.
Make it easier for customers to return items. This may sound counter-intuitive, but our research has found that 88 per cent of customers who had a negative returns experience were unlikely to shop again at that retailer. Returns are a fact of life for retail, but giving customers the option to return an online order at their local store vs forcing them to post it back to you makes the process easier and much more positive.
IR: Do Australian retailers embrace omnichannel innovation or follow the lead from overseas counterparts?
It’s a combination. Some Australian retailers such as Woolworths have led the pack when it comes to omnichannel innovation: cases in point are Woolworth’s grocery lockers and Big W’s “Simply Collect” program.
At the same time many look to Europe, especially the UK, to identify retail trends and learn from their experiences before implementing here. This is not a bad approach as it allows you to side-step and avoid mistakes.
Ultimately, though retailers should always keep in mind that Australian consumers and related ecosystem are unique and they should always tailor their solutions to the local market.
More information on The Retailer Customer Excellence Awards can be found at www.retailerawards.com.au
Single tickets can be purchased for $200. A table of ten is available for $1500 (save 25 per cent).