The future of retail

apple store

Retail is one of the most exciting sectors with continual change and disruption. Whether it’s e-commerce, m-commerce, drone delivery or virtual payments the sector is transforming at a dramatic pace. Below are some of the big trends which will continue to impact in the latter half of 2014 and beyond.

1. Personalised pricing – the days of the price match are coming to an end. The retailers’ ability to price match has become so common that shoppers are rarely moved by the latest advert proclaiming another price-matched fizzy drink or loaf of bread. Prices will become more dynamic and based on the shopper’s own unique profile, spending habits and patterns. Supermarkets will move to exploit their big data by using profile information to present shoppers with relevant and contextual pricing.

2. Home printing – forget waiting for home delivery. Home 3D printing will revolutionise how we buy and use products in the future. Small items will be bought online with the finished products being printed in our home within minutes ready for use. It might seem like sci-fi now but 3D printing will revolutionise the way we engage with products. Retailers will be able to reduce their complex supply chains and remove the burden of end-of-season surplus stock. Printing will enable products to be created only when needed, helping to boost sustainability in the process.

3. Rapid delivery – think drones, think valet shopping. Amazon and DHL have already demonstrated their ambition for using drones for small item delivery. The benefits are enormous, especially for areas where delivery can be expensive and cumbersome. Both Google and Ebay are testing the appetite for hyper local delivery whereby stores and customers are connected, with deliveries taking place in under one hour after ordering. Watch the video below to learn more.

ebay courier

Google Now

4. Dynamic delivery – customers will soon be able to change their delivery in real-time without incurring penalties and negative implications. The likes of Volvo are investigating how deliveries could be matched to the location of your car. ‘Roaming’ delivery would mean that those working 9-5 could have items delivered to their place of work without it having an impact on the company post room. It would also enable flexible delivery times with shoppers not having to rely on leaving packages with neighbours or simply having them left out in the rain.

5. Ambient and anticipatory commerce – recently in the news with Amazon’s talk of shipping products before an order is placed. This trend will revolutionise retail. Businesses that can monitor customer behaviour in real time will be better placed at shipping products to locations where customers are close to placing an order. One of the biggest opportunities for retailers is the ‘lifetime guarantee.’ Brands such as Nike will be able to ship new trainers based on the number of miles you’ve done and the likely state of your trainers given your exercise regime. Customers will sign up for a lifetime subscription where in-trainer chips communicate with Nike to inform of wear and tear. New trainers will be shipped only when needed. With the arrival of the ‘internet of everything’ this trend will impact a whole host of products and services from the tyres we drive on to the food we eat.

Nike shoe

6. Subscription – we’re moving from a world of one off payments to an environment where subscription will dominate. In order to improve customer lifetime value retailers will work hard to build a subscription proposition which gives customers new product offerings within a subscription model. This trend will move beyond just access to content to provide customers with new garments on a monthly basis or a regular delivery of groceries.

7. Contextual shopping – if you’re interested in sports, have recently completed a triathlon and find yourself walking past a Decathlon outlet don’t be surprised to receive an offer message direct to your mobile device. With the rollout of iBeacon the future of contextual retail gets ever more exciting. Retailers will be able to reach out to value customers who are more susceptible to offers and have a higher propensity to complete a sale. Contextual retail will put relevance and location at the heart of retailing.

8. Pop-up and experience stores – the death of the high street is exaggerated. Whilst many retailers will close and abandon their outlets many will simply rationalise and put their efforts into creating ‘destination’ and ‘experience’ stores. The likes of Apple have shown that having a number of large stores in key cities can help compliment online environments by providing customers with the potential to play with products and services. The need for a nationwide, evenly spread store footprint is no longer necessary.

Intel store

Bike store

9. Joint strategic partnerships – customers don’t buy in a silo. Buying new trainers for a new exercise regime will also be synced in the customer’s mind with purchasing healthier foods. Complimentary retailing will see brands coming together to offer joint propositions and offers. Retailers will decide in some instances to share floor space to bring these concepts together. It won’t be long before you’re getting your BMI tests done at the same time and place as buying your stir fry vegetables and Nike plus trainers.

10. A mature sharing economy – whether it’s Airbnb or a Liftshare, retailers will start to concentrate bigger efforts to enter the sharing economy. Clothing retailers will work to complement their traditional sales with sharing models where customers can rent clothes or other products for a short space of time. In western economies the need to ‘own’ will be supplanted with the need to ‘try, not buy.’

airbnb

11. The end of sales – this might not happen given the emotional attachment to and excitement around sale shopping, but with big data there is the opportunity to avoid the need for end-of-season sales. Traditionally retailers are left with a bulk of unsold goods which need to be sold at cost or have their value written off. The purchasing of ‘hits that miss’ will be replaced with purchasing that takes into account various factors and means retailers only buy what they know they can sell.

12. Dynamic store layouts – already well-established in clothing retailers such as H&M and Gap this trend will expand with local communities seeing their high street outlets change by hour and day, not just season. National retailers will move from a ‘one size fits all’ model to a more flexible approach where layouts take into account local needs and requirements. For some stores they may even offer dual- or multiple-usage. A clothing store during the day might become a late night music store during the evening and night. Bike stores that sell high end road bikes will host cycling community events to broaden customer engagement.

These are just some of the trends emerging in retail. With so many more it’s often easy to feel overwhelmed with the pace of change. For retailers who are looking to the future the rewards will be significant. Whilst many blame the recession for the demise of the high street, the shift to online shopping had a bigger and more significant impact. Successful retailers anticipated this shift and evolved accordingly. Hopefully some of these trends will help retailers looking to future proof their businesses.

Incentives have no place in Voice of the Customer surveys

Car win survey

Whether it’s tracking social media sentiment or surveying customers, the majority of businesses have some form of Voice of the Customer activity in place.

The worrying thing is that many of these businesses are using incentives to encourage customer participation and response. Businesses are offering anything from the latest iPad to the chance to win a car in the hope of generating healthy response rates.

The problem with incentives is bias. Customers offered incentives tend to provide more positive responses to questions in the hope that they can secure the incentive dangled in front of them. There is another way.

Concentrate on your survey design by following our top tips below. Taking these tips on board will help you increase response rates without jeopardising the integrity of your survey results.

1. Check your sampling – make sure you’re sending your survey out to a broad pool of customers. The bigger the sample the more confidence you can have in expecting robust response rates.

2. Survey invite – keep it short and friendly. Make it clear to the invitee why you’re asking for their feedback. Give them an indication of how the data will be used and how long the survey will take. Providing them with a timeframe will help reduce the abandonment rate.

3. Survey questions – make sure you’re asking the right questions and keep the number of questions low. Whilst it’s tempting to want to know everything about the customer remember that the more questions you ask, the longer the survey and the higher the likelihood of abandonment. Remember to avoid asking questions to which you already know the answer.

4. Forget your assumptions – not all customers need an incentive to answer your questions. By pitching your survey correctly you’ll be surprised at how many customers readily reply.

For your next survey project make clear that incentives have no part to play.

Retail store rationalisation. A beginner’s guide.

UK supermarkets

The UK supermarket ‘floor wars’ of late 2009 seem very far away. During the property crash UK supermarkets scrambled to secure as much property as they could manage in an attempt to grow their estate and control potential competitor activity. This behaviour now looks rather foolish given the continuing drive for online shopping and home delivery. Tesco alone has had to write off £804m of property whilst admitting that it will not develop over 100 of the sites it is currently sitting on.

The challenge for supermarkets is how to transition from a ‘bricks’ to a ‘clicks’ business. The danger for the supermarkets is that their large out-of-town stores now look considerably dated. For younger generations the appeal of trudging around supermarkets just isn’t there. Trends currently indicate that online shopping with some form of home delivery or store pick up looks set to continue, as does the appetite for hyper local convenience. As supermarkets invest in e-commerce and innovative delivery solutions they’re left with the task of re-calibrating their bricks and mortar footprint to build a leaner and more sustainable business.

But where to start?

Store rationalisation is a challenging task for any business. Decisions need to be made carefully about which stores to keep, which to close and which to change in line with any new strategy. Below are our top tips on how best to manage this complex transition.

1. Re-examine the long term strategy. Trend analysis, future forecasting and sensible extrapolation should be able to tell you how the customer landscape will evolve and change over the next five to seven years. Identify the impact changes will have on both the business and customer.

2. Define strategic goals, objectives and milestones. Identify the strategic goals of the business with a particular focus on how this affects the store experience and impacts on the estate footprint. New objectives might include the creation of destination stores such as those currently piloted by Tesco. Here you bring local services and sub-brands under a single roof.

3. Assess estate performance. Sit down with your store planning teams and assess stores based on historical, present and forecasted performance data. This data might include average customer spend, total turnover, footfall and other metrics. Draft an early prioritisation using value and performance as the only parameters.

4. Assess estate opportunities. Work with stakeholders to assess the potential opportunities for each store based on the new strategy under development. Say trends point to the desire for hyper local convenience, which stores survive and which would not? Evaluate localised populations and demographics. Areas with a high density of families could provide the opportunity for creating destination stores. Consider how each store could benefit from reducing shelf space to incorporate new services such as gyms, crèches or pharmacies. Re-prioritise stores again by merging both the performance scoring and opportunity scoring.

5. Assess digital overlaps. Work with digital teams to understand online penetration and propensity to use e-commerce by post code. Identify those areas where e-commerce use is significantly above the average for your business. Assess whether this means you could reduce your assets in those areas without a loss in performance.

6. Programme set-up. Split the store estate into two categories. Those that will be closed and those that will be adapted in line with the new strategy. Build a clear programme to deliver the changes. The adaptation workstream will involve significant complexity, especially if you take into consideration the variety of local needs and potential opportunities. Remember to handle communications and employee engagement carefully. Both employees and local communities will want to be consulted on any changes which might have a significant impact on their jobs or local built environment.

These top tips are only the start. Transforming a retail business to meet ever changing customer needs is a hard task to master. Successful retailers will be rewarded with improved performance, agility and a removal of costly assets which fail to deliver business value.

Top tips for a programme manager

shutterstock_145570318

Running a complex and demanding transformation programme can be a daunting experience. Before you even start you need to consider the politics, barriers and challenges you will face. However, it’s also important to remember the positive side. The ability to work with new and very different people. The chance to learn new things and develop your range of skills. Follow our top tips below and you’ll be off to a great start as a Programme Manager.

Practice agility. Take an agile approach to work. Whilst your strategy might not change you will need to ‘pivot’ from time to time. You’ll need to adapt to changing situations and circumstances. It  might be stakeholder change, fluid budgets or changing priorities. If you don’t stay agile and adapt the programme will run into trouble.

Have your contact book with you everywhere you go. Stakeholder mapping isn’t a one-off set activity. Have your mental or written map with you everywhere you go. Remember names and have photos to hand. Doing this will help you link people quickly, understand needs, political alliances and beneficial connection opportunities.

Keep your promises, as best you can. If you say you’ll circulate minutes in one hour make sure you do. In many cases making such a promises is risky and inadvisable, but if you do stick to it. Not meeting that promise will start to sow doubt into those involved in the programme. People will start to have the feeling of slippage.

Watch your language. Hopefully you don’t swear in your workplace but be sure to monitor the way you speak to people. Remember when speaking to an international audience that a fast, limited breathing approach will only lose people’s attention. Also avoid colloquial words and sayings that only you and your friends down the pub would understand.

Be accepting of criticism. Grow a thick skin and be prepared for taking criticism on board. Always react positively and ask regularly for feedback. It’s all part of the learning curve. Get used to leaving  room thinking ‘I should have known that’ or ‘I should have seen that coming.’ It will prepare you well for the future.

Stay ahead of your programme team. Spend time looking to the horizon and scenario planning. Anticipate activities that others are not yet planning or even thinking about. Chase up actions and ensure you’re not left saying ‘I’m not sure about the progress on that.’

Being a worrier is okay. Some of the best programme managers adopt the behaviour ‘plan for the worst, hope for the best.’

Be a detail person. Make sure your grammar and spelling makes sense. Ensure agendas have the right date and time. Double check everything that leaves your programme office. First impressions count.

Be sensitive to politics but not shy to act. Take into account political opinions, alliances and factions. Not everyone will be a programme supporter. Appreciate other people’s views but be prepared to close issues democratically and with sensitivity once you need to.

Be technical. Know how to use WebEx, set up a conference call, use an interactive wall. Don’t be the programme manager looking for a phone number to facilities once a meeting has already started.

Challenge assumptions. Your team is full of experts but don’t be afraid to play devils advocate. You need to be able to explain decisions made if the person who made them is not around. Ensure your programme has as few ‘assumptions’ as possible.

Be transparent. Don’t be scared to surface difficult issues. Get people together in a room to negotiate and debate. Don’t let others dictate how decisions are ‘collaboratively’ made.

And finally. Remember your primary job is as a facilitator. You might be an expert but so are others. Listen, connect and facilitate collaborative decisions.

Introducing the Zero Moment of Truth.

ZMOT

Google have invented a new term to describe a way of thinking about customer journeys that moves away from our traditional approach. They have introduced ZMOT, otherwise known as the ‘zero moment of truth.’

The ZMOT is, essentially, the point in time when the customer is researching and evaluating their product or service choices. During this ‘moment’ the customer is actively seeking out information which can help them assess, question and validate any decision they are planning to make. For a typical purchase this might include visiting forums, reading comments on social media, viewing blog posts and selecting positive and negative reviews for comparison. In some instances it may also include a customer going to a store to test and play with a product or service.

The coinage from Google, whilst certainly interesting, isn’t exactly new thinking. For those of us working in customer experience the theme of dynamic and non-linear journeys has been around for some time. The traditional thinking that customers behave in a sequential manner when making purchase decisions never really rang true. The challenge for businesses is to ensure they are designed in a way that can engage with customers across multiple channels in a dynamic and fluid way. The majority of customer journeys will involve elements of behavioural zig-zag and cross-channel meandering. Using data trails and digital ‘breadcrumbs,’ businesses can work to anticipate customer behaviour and respond more rapidly by surfacing relevant content that is based on contextual cues and profiling.

Google’s work is another welcome addition to the evolving approach to customer journeys.

The importance of ‘shadow identity’

British Passport with Microchip

Understanding a customer’s shadow identify is the key to winning more business and improving the relationship you have with them.

There are two distinct types of identity, especially when it comes to today’s digital world. The first is official identity. Examples of official identify include name, age, address and other basic facts that we share with businesses. Official identify can change. For instance, if we get married and change our name or move house. The changes can be easily recorded and are often done so by the information owner themselves.

The second type of identity is ‘shadow.’ This relates to our behaviours, motivations, interests, perceptions and movements. It could be location information, likes, preferences, hobbies, interests, activities or friends. This information is extremely valuable to businesses but harder to get hold of. The information will change more frequently and requires continuous updating.

The benefits of being able to harvest and use this type of identity are profound. It will allow businesses to reach out to customers in more relevant ways and in real-time. It will allow for contextual experiences and personalised offers based on location and profiling.

The challenge for businesses is to increase their knowledge of a customer’s shadow identity. Rewarding customers for more granular and personal information is only the starting point. Businesses need to provide customers with confidence that their information and data will be used within privacy parameters set down by the customer. The value of digital identify according to Boston Consulting Group could be worth as much as €1 trillion in Europe alone by 2020. The benefits of tapping into the world of ‘shadow identity’ are obvious and the rewards will be significant for those that are successful.

Futurology isn’t fruitless

Airbus future flight

Planning for the future is something all successful businesses do. For some this planning looks 12 to 24 months ahead whilst others look 5-10 years into the future. Futurology is often derided as an expensive exercise in predicting business and societal trends that are potentially exciting but never come to fruition.

As the world around us develops ever faster the case for futurology work couldn’t be stronger. Those businesses that adopt futurology will be better placed to exploit opportunities and adapt to change. They will be better equipped to make business decisions that differentiate them from competitors and deliver against their customers’ ever changing needs.

The likes of BT have developed futurology teams to help them assess trends and emerging patterns. These teams can help to identify, validate and analyse trend information to facilitate better decision making at both a strategic and operational level.

So where does futurology come from?

Well, whilst you might be thinking about Nostradamus, some lesser known names have been responsible for helping shape the topic from a slightly more recent age. Two key futurologists spring to mind. One is a technologist, the other a 19th century novelist. The technologist was the famous Paul Baran. Known as a world leading expert in data transmission. He famously wrote the essay ‘The Future Computer Utility,’ in which he predicted both the internet and the various uses we have for it today. One of his most famous quotes from the essay includes: ‘our home computer console will be used to send and receive messages – like telegrams.’

The second hero of futurology is Edward Bellamy. His novel ‘Looking Backwards’ was published to critical and cult acclaim in 1888. The novel centres on a young American who, having fallen into a coma, awakes 113 years in the future to witness a changed world. This new world contains, amongst other things we enjoy today, credit cards. The novel sparked significant interest in utopian and dystopian thinking as well as futurology.

So what does it mean for business?

Whilst the two heroes of futurology are no longer with us their inspiration, whether through technological thinking or creative license, calls us to imagine a changed world. The lesson for business is that we don’t even need to think that hard. Futurology isn’t necessarily about imagining Martian or floating cities. It’s about thinking about the here and now and extrapolating how trends might evolve to alter our world. The output from any futurology can be used to improve business decision making and to prepare for the fast-approaching future. You might want to better understand how payment systems might change or whether by 2020 cash will have been replaced by virtual currency. These are the types of scenarios all business will eventually have plan for.

Before 2007 no one had envisaged the iPhone but by examining its adoption and trajectory we can start to plan and anticipate future developments. Not all our predictions will come true but, to use another example, reading about drone technology today we can at least start to think of some applications and developments not too far from now.

A final thought. Futurology empowers agile businesses. Don’t get left behind.