Off the Shelf: The Retail & CPG Blog

Went shopping for a pair of jeans today. Got the usual question from the store clerk when checking out - What's your telephone number?

Is that question relevant any more? A recent analysis at a retailer led us to the statistic that for every customer that walks into the store and gets converted to a online customer; on an average the retailer would earn around $150 more over the next 1 year.

Think about it. A $10 coupon or discount that I offer to that customer to have him register online with the retailer would have had a 15x ROI. The challenge though is in converting that customer who is at the store to a online customer. What's the right question to ask that can get him or her to convert?

Ok, so going back to the question - What's your telephone number? What should that be replaced with?

What is your email id? - Good try; but I personally am email overloaded. Most emails from retailers don't make it past the first mass delete when I open my email account.

What's your facebook id? Hmm; not sure about this one. On one hand; why the hell should I give my facebook id to a retailer? Or maybe I am a big fan and wouldn't mind signing up to the retailers fan club on facebook. What do you guys think?

 

Posted by Sudhir Holla at 1:32 AM | Permalink | Comments (1) | TrackBacks (0)

By Rrituraj Sharma and Mahesh Bukkapatna

During one hectic day’s afternoon coffee break, I and Mahesh were reminiscing our childhood days of watching movies in the theatre. We were discussing on how, apart from the main movie, another exciting attraction for us were the 10 minutes of ad-films of some of the then popular brands projected on the big screen. This was in the eighties. This was when organized retail was yet to become a force to reckon with.

CPG companies have always made concerted efforts on creating brands out of the products that they have produced and promoted. However, with the advent, growth and maturity of the retail industry, private labels have come to take a significant share of the consumer’s wallet. This has made the CPG companies to introspect and revisit their market strategies in order to continue with a robust bottom line and top line growth despite falling margins because of higher production cost, advertising expenditure, intense competition and increasing distribution channel expectations.

Prevalence & Growth of Private Labels

Private labels have evolved from the retail industry and have managed to garner sufficient consumer attention over period of time. It started off with providing consumers cheaper option, but now private labels play much wider role in retail strategy. Private labels are leveraged to drive consumer traffic, improved margins and store differentiation.

The prevalence of private label changes with market. The highest being Western Europe followed by North America. Great Britain is regarded as flagship market of private labels with leading retailers coming out with innovative strategies to increase their category share. Current decade has seen spectacular growth of private labels in US with a CAGR of 6.3% while national brands have grown at less than half of that rate.  US market’s private labels achieved a sales of 73 billion dollars in year ending March 2008. The average penetration of private labels is about 15% across categories with higher penetration in fresh products. For e.g. penetration in dairy category is at around 38%. The dollar share of private labels is relatively higher in food categories compared to non-food products. Milk is having the highest share of private labels with 61% followed by Fresh eggs. A McKinsey report suggests that by the year 2016, private label can go up to 24% of the dollar share from current share of around 16%.

In US market, companies like Target Corp., Costco Wholesale group and Wal-Mart Stores Inc. have focused on private labels as one of their important categories. European retailers also realized in the early 90s the impact of private labels on their business. Leading retailers in the Europe like Tesco Plc have already set precedence of significant growth in their market share through private labels. In the Indian context, leading retailers like Future group and Reliance have laid a lot of emphasis in promoting their privately owned brands.

Private labels are here to stay. The retailers can create a brand out of them. Apart from differentiating them from competitors, private labels also provide the consumer with more choices and hence evolving the retail outlet into a destination store. A recent survey showed that 80% of consumers have positive attitude towards private labels. That clearly establishes upside potential of private labels.

Though private labels started as cheap product options, over a period of time retailers have changed their private label strategies.

Retailer strategies

Differentiation – Retailers are moving out of umbrella or cross category branding to distinct brands to serve different target segments. Thus clearly differentiating value proposition of each of their brands. For e.g. Kroger is having three tiers in branding. Kroger Value, Kroger & Private Selection. Private Selection is a premium brand while Kroger Value is a lower tier brand targeting mainly at cost conscious segments. Tesco Finest Line is another example of a premier brand.

Sourcing – Better sourcing strategies of retailers have resulted in expansion of product range as well as achievement of price competitiveness. Retailers are successful in identifying and roping in low cost manufacturers to produce their brands. State of the art supply chain infrastructure also helped them in keeping logistics cost at low level.

Innovation – Understanding consumer behavior is no more a sole domain of manufacturers. Retailers started studying consumer’s purchase behavior to come out with suitable products that meet any existing gaps. Retailers are focusing even on niche segments like organic and wellness products. In US private labels have a share of 17% in organic product sales.

Promotions – Some of the private Labels score much better in in-store merchandising, promotions and features in many categories. Retailers are aggressive in promoting their brands to maintain mind share of consumers. For e.g. Entire range of Wild Harvest brand products of Supervalue is merchandised together to create powerful brand banner effect in store.

In our next post on this topic, we will discuss more on the strategy options for CPG companies and whether they should compete or collaborate with the retailers for greater sustenance in the long run.

Click here to go to the second post on this topic :

http://www.infosysblogs.com/retail-cpg/2009/11/private_labels_challenge_for_c_1.html#more

Posted by Rrituraj Sharma at 12:18 AM | Permalink | Comments (0) | TrackBacks (0)

The power of the web has always enthralled me. It truly has changed our lives in so many multiple ways. My consulting assignments on retail and ecommerce have taken me through various personas that have been created and reached out to by most of the web companies. But at times I have wondered how much of an effect would the web world have on a differently abled person. Has ecommerce companies of the world thought of a differently-abled persona? A population size to the tune of almost 10% (650 million) of the world’s total population and a great potential for revenue generation? Has the power of the web changed their world too?

During an impending client visit at Bangalore, I was in discussion with Dr. Jai Ganesh and Dr. Ajay Kolhatkar (from Infosys) on the potential demos that we can organize. And by pure co-incidence, I came across the in-house developed web accessibility tool called iProwe. And all the answers that I was looking  for seemed to be addressed by this one tool.
 
According to the United Nations Global Audit for Web Accessibility, almost 97% of the world wide web do not meet the prescribed accessibility requirements for differently abled users. This means a person who is visually challenged and cannot read images, the hearing impaired who cannot listen to audio, users with colour blindness, users with motor disabily thus impairing their use of a mouse or keyboard, users with cognitive disabilities and elderly people who cannot read small fonts cannot access the websites that you and me frequent every day. As a result, this potential revenue pool has never been tapped.
 
A web accessibility tool like iProwe help companies make their websites friendlier for the differently abled. And this can have multiple ramifications. But even before we go into the commercials of making websites accessible, let us understand why even a ecommerce company would think of implementing this when their sales revenue on a QoQ and a YoY have always been showing growth (Maybe not during a downturn though). Most developed nations have legislations and regulations in place which necessitates websites to be accessible for the differently abled. To quote a few, in the US, Section 508 of the Rehabilitation Act Amendments, 1998 allows federal employees with disabilities to file complaints if they are not accommodated. The British Standards Institution (BSI) Publicly Available Specification (PAS) 78 is applicable for all organizations and is intended for use by those commissioning or maintaining public facing websites and web based services. The World Wide Web Consortium (W3C) has laid down clear guidelines specifying accessibility of websites. This along with many other nations like Australia, Canada, Germany, France, Netherlands and other in the European Union have set guidelines for enabling the web for the differently abled.

Now coming to the economics which will be of interest for every web company. Apart from being a newer segment which would mean higher revenue, more so in a downturn when you wish your sales figures would keep moving northwards, an accessible website can significantly reduce the marketing cost of reaching out to the differently abled – to the tune of 12-35%. In addition to that, accessible web pages take upto 75% lesser time to load. It also shows a significant increase in the natural search engine traffic.

The patent pending iProwe automatically analyses the accessibility issues of websites and recommends remedial measures. It combines multi level scanning allowing the tool to scan multiple level of websites against a set of intelligent rules and recommendations derived from several accessibility guidelines and accessibility design best practices and generates ready to use reports in convenient forms. The tool’s intelligent crawling engine has an advanced algorithm based on a variety of disability profiles and meets the WCAG 1.0  and WCAG 2.0  accessibility standards. The tool also uses a rich repository of design best practices for website accessibility taken from across industries like retail, financial services, insurance which gives it the edge over its nearest competitors in the market.

This has indeed been an amazing revelation. I am sure in my next ecommerce engagement, I can confidently suggest the client an additional persona which will open up an entirely newer segment of target consumers for them.

The choice is clear. The benefits are clearer. Web companies can wait for legislations to be enforced or proactively owns social responsibility and open up their doors for the differently abled.

Notable links :
(i) Infosys iProwe : http://www.infosys.com/iprowe/default.asp
(ii) Section 508 of Rehabilitation Act :  
      http://www.section508.gov/index.cfm?FuseAction=Content&ID=14
(iii) British Standards Institution PAS :
      http://www.bsigroup.com/en/About-BSI/News-Room/BSI-News-Content/Sectors/ICT-- Telecommunications/News-Content5/

 

 

Posted by Rrituraj Sharma at 9:45 AM | Permalink | Comments (6) | TrackBacks (0)

I came across a compact sample of typical EDW reports utilized to track and support Retail decision making, when trawling across Teradata’s website (https://www.teradata.com/t/assets/0/206/280/fbff8440-b4c5-4211-a03a-c933460f35e0.pdf). It raises the question for many organisations as to whether the time spent deploying custom developed reporting and processes for their EDW could not be better served by moving to a purpose built solution such as provided by the leading EDW vendors

In times past a company would ‘lock in’ key learning and intellectual property through the development of complex custom designs in back end Retail analytics. Focusing on maximising Customer data allowed a Retailer to:
·         Use market basket data to help guide promotional activity and planning.
·         Manage vendors based on their importance to the business.
·         Modify localized assortments by store to satisfy profitable customers.
·         Review product sales and inventory channel.
·         Monitor and proactively manage vendor performance.
Having developed such monitoring and reporting capabilities an organization was faced with the challenge of maintaining the designs and reports to keep the necessary levels of granularity and relevance, as well as reflecting any functional or performance improvements on the base platform. Such a custom design would, however, impose restrictions on smooth platform transition and may have missed any new developments from the supplier e.g. Purpose built retail process designs and reports. While these ‘native’ equivalents may have lacked the detail and insight of a Retailer’s own reporting, developments in the market have allowed experience with multiple customers to be incorporated by platform vendors (in a space such as EDW) into their core products. This has enriched the level of ‘out of the box’ reporting so that similar reports are now considered standard functionality. A sample of such reports used for Decision analysis, for example as deployed by Teradata EDW, are as follows:
·         Merchandise Unit Performance (for a Product, All Locations)
·         Flash Sales Report (a Location by Product Groups)
·         Price Point Analysis (by Product Groups for all Locations)
·         Lost Sales (Potential Sales) Analysis (by Products for all Locations, for a
·         product group)
·         Stock and Sales (by Products and by Locations)
·         Sales and Profitability (by locations and by products)
·         Trend Reporting (a Product Group by Weeks)
·         Fast, Slow Sellers (by Items)
·         Markdown Analysis (by Product Groups)
·         Cluster Performance (by two Item Traits)
·         Average per Store (by Products/Product Groups)
·         Price Point (by Location, by Week, Crosstab)
·         Vendor Sales and Stock (by Vendors, graph)
·         Vendor Comparison Performance, Profitability (by Vendors)
·         Rate of Sales
·         Pre, During, Post Promo Sales and Margin (by Products/Product Groups)
·         Product Affinity (by Affinity Products)
·         Price Point Sensitivity Market Basket Analysis (by Price Points)
·         Sales, Expense, and Labour (by Locations)
·         Top 100 Customers (by Customers)
·         Potential Lost Customers (by Customers)
·         Cross Channel Performance (by Channels)
·         Average Market Basket (MKB)
·         Statistics (by Product/Product Group)
I thought this would be a nice ‘sanity check’ for an organization to firstly, compare and assess any ‘holes’ in current report coverage but secondly, to open a debate within the organization as to whether it is tracking the correct reporting metrics. As often happens, a tracked metric mandates a behaviour which allows it to be met. So while these metrics could be considered to be based upon a ‘system’ perspective, they do provide a benchmark for the ‘minimum set’ an organization might expect. And, referring back to the custom development path mentioned earlier, possibly an initial argument for investigating a change of solution towards exactly such an ‘off the shelf’ solution (if a significant amount of overlap is seen between current ‘custom’ reporting and these ‘standard’ product reports).
And while we are talking comparative studies, here is a look at some work SAP did on a “Future Retail Centre” (http://www.sdn.sap.com/irj/scn/index?rid=/library/uuid/f08ba07d-fe2b-2c10-5c89-b66f3e0c6dd3&overridelayout=true#4) . SAP Research built this “Future Retail Centre” in Regensdorf, Switzerland together with academic, technology and industry partners to showcase research developments and retail thought-leadership. This demonstrated a consumer-oriented walk-through together with a logistics environment and looking at tools for a typical retail headquarters.
The consumer scenario reflected unique shopping styles and followed a hurried “quick shopper” with a mobile phone shopping list. Using this device the shopper was guided via a map through the store and a two-touch mobile payment or scan utilised   to facilitate the buying process. A more leisurely “weekend shopper” could gain access to product information through a personalized shopping cart and the immediate, RFID-based tallying of products chosen. An optic weight scale and point-of-interest advertising triggered by the customized shopping cart completed the customer-centric shopping experience (shown on the relevant ‘shelves’.
In the logistics scenario, a warehouse was set up with a labelling machine which applied RFID tags to the cases which are then used in processes such as picking of mixed pallets, packing and goods issue / goods receipt, all enhanced and optimized thanks to RFID. A new addition to the Future Retail Centre showed pallet movements with a forklift truck which had been enhanced to automatically read its position through RFID chips in the floor and thus reduce errors in scanning locations.Retail headquarters concerned with analysis and optimization of pricing could utilize a “Price Zone Optimization” algorithm which uses historic point of sales information to guide a retailer through setting up a new pricing strategy.
In the management of vending machines, capturing real-time inventory is the basis for accurate accounting as well as replenishment optimization. The Smart Vending application sent data of each transaction as it happens to the ERP system.
 In addition, the Future Retail Centre can utilize Second Life as both a visualization and collaboration tool for Retail Management, as well as exploring its potential as an alternative shopping ‘channel’. ‘Food for thought’ and worth considering whether these really are ‘future’ concepts or whether they may be achievable in the medium term after all.

Posted by Billy Byatt at 11:22 AM | Permalink | Comments (0) | TrackBacks (0)

This is a continuation to my previous blog on the significance of BI in Food Distribution industry http://www.infosysblogs.com/retail-cpg/2009/09/how_significant_is_business_in.html#more

 

Food distribution industry is a highly fragmented industry. Most companies in this industry serve a large number of customers and a good section of their customers will be mom and pop business houses. According to a latest survey, the total size of this industry in North America is roughly around $225 billion and the share of the big organizations contribute to less than half of it. With so many competitors in this highly commoditized market, how do companies differentiate from their competition? Competition may carry the same items, making it difficult to gain any inroads against them. How do the companies build loyalty and maximize customer profitability?

 

Are customers important?
A wise man once said that customer is God. How true is that! Satisfied customers are very critical in this business as a dissatisfied customer can easily switch his loyalty to a competitor. Every company has to answer the following questions:
-       What are the key KPIs related to customer satisfaction that one has to measure and monitor?
-       Do we have a system that captures all important data pertaining to customers?
-       Is the data available in a timely fashion for the management to take appropriate decisions to increase customer satisfaction?
-       Are our SLAs aggressive enough to beat the competition?
Without the help of BI, the above questions are difficult, if not impossible, to answer accurately and promptly. BI can capture the right data from the system of record and present it in a timely and organized fashion to the appropriate people to make fact based decisions and increase customer satisfaction
 

Loyalty and Profitability
Customers not only need to be satisfied, but efforts also need to be taken to increase loyalty, retention and wallet share. Without this focus, expensive customer acquisition programs or spending valuable marketing dollars to retain unprofitable customers will be a waste. Loyal customers are a huge asset to a business – they buy more products, create good word-of-mouth, and reduce customer acquisition costs. Market Basket Analytics is a great tool to measure, monitor and report customer buying preferences.
 

By capturing customers’ purchasing preferences and habits, companies should be able to analyze this data to match customer needs and take a more proactive, consultative approach with customers. Though all customers are important, extra attention should be given to the top 20% of customers who generate 80% of revenue. These customers need to be well taken care of the top people in the organization.
 

Does it mean that the remaining 80% of customers are not important? Do they need to be taken care? Of course, yes. Companies must find ways to improve their loyalty or profitability. They can run a promotion for unprofitable customers who only buy low margin products to entice them to buy higher margin product lines – Up Sell. Profitability data can greatly improve sales and marketing plans by helping to run targeted campaigns and identify potential targets for particular promotions.
 

Closing the distribution gap
How does BI help in distribution? Analytics helps to locate gaps and trends in a company’s distribution chain. For instance, if a company sells ground beef to a chain restaurant, analytics will help the organization by providing information like which branches are not buying much ground beef or which ones had previously bought ground beef but are no longer doing so. Or one can even look at the entire data set and view ground beef sales for an entire region compared with other regions. This can help determine where the gaps are – for instance which product lines particular sales reps are not focusing on; or areas where perhaps your competition is making inroads.

 

Posted by Prasanna Ramaswamy at 3:25 PM | Permalink | Comments (0) | TrackBacks (0)

The debate whether to innovate or cut costs is a popular during tough times and it has become far more spirited given the global scope of the recent downturn. There will always be forward-thinking market leaders who look at every business challenge as an opportunity. There are others who may succumb to the vortex of uncertainty around them and manage business with the goal of survival.

What managers often overlook is that innovation doesn’t only apply to the product or service being structured or sold. It needs to be embedded in every aspect of our thinking, way of working and management. Over the last few months, in my conversations with CFOs, CIOs and COOs across North America, I have come to realize that there are two clear categories of corporate leaders and managers. The market leaders in particular are equally interested and committed to applying the innovation principle to how they engage with customers, partners and suppliers. These are not easy discussions by any stretch of imagination but people are compelled to have them now more than at any other time. The CFO at one of the leading consumer manufacturing companies recently validated this point.

"We’d like to do more business with you this year but our budgets have been cut by 20 percent," said the CFO. I am not asking to renegotiate the terms of our contract, I am challenging you to come up with new ways we may work together that allow each of us to achieve our objectives. I sincerely believe we can generate fantastic results through innovating together. I am dead serious.

A medium size consumer products company wanted to invest in a new platform to understand the effectiveness of their trade and marketing investments. In the end, they decided to subscribe to a shared platform hosted by us that would help them avoid the upfront capital expenses. Other customers of Infosys would also subscribe to this service and so it would be a win-win for everybody. Another large global manufacturing giant is taking up a new ERP rollout program but embedding cost-cutting measures such as centralization and shared services as integral aspects of the rollout again. These steps are generating cash for this company which it can reinvest into the ERP rollout. Atleast 5 other large Fortune 1000 companies in the last 3 months have challenged all their partners including Infosys to come up with new innovations that we can jointly co-invest in to develop new break-through business-technology ideas for the future. They feel now is the time to share investments, try new ideas and come up with the next big breakthrough.

Corporate America has a history. Apples IPOD, Kraft’s Miracle Whip, Microsoft itself were all founded or discovered during recessionary times. But more importantly ideas on new innovative ways of managing transactions, budgets and initiatives (small things that will never make headlines) are also discovered and tried the most during these times. This level of broader grounded innovation needs to be applied by all corporations irrespective of size and market position

In your respective corporations, outside of the big idea generation, do you see these kind of day-to-day incremental innovation happening in how you engage clients, partners and suppliers?

Posted by Sandeep Dadlani at 11:34 AM | Permalink | Comments (0) | TrackBacks (0)

In my recent business travels I have started noticing more and more airlines offering wireless internet services aboard their flights.  Wi-Fi is being offered to all passengers, not just the business class fliers, essentially opening up a whole new world of e-commerce.

Currently airlines such as Jet Blue, Airtran, Delta, Virgin, and American have partnered up with services like Go Go to offer passengers a free pass during their flight to experiment with the online in-flight experience.  Jet Blue even went as far as to invite you tubers and bloggers to a sample flight to write about their experiences and share amongst their audiences.

Aside from the convenience and efficiency it offers when traveling on a regular basis (which as a consultant I greatly appreciate), it also has the potential to drastically change the way we do business.  Airlines have struggled with their duty free sales on planes, and their paper catalogs offering knick knacks in their Sky Mall are not maximizing on their potential to reach consumers.  Having a consumer’s undivided attention on an airplane for an extended period of time could provide some very exciting opportunities.  Here are some ideas…

SKY MALL

For example, the concept of an interactive sky mall online could be quite appealing.  Passengers would be more inclined to browse through products, and might even apply product rating, and consumer comments to the products providing merchants with feedback on the products. 

It would be great for example, for passengers to have a virtual mall of the duty free of the airport they will be landing in.  This way they could browse, search, purchase online in the air, and have the purchases delivered to them while they land, or if they are in transit.  Airports tend to be extremely vast and passengers don’t always have the time and energy to go through all the stores, but by having the chance to see what is available and making their purchase decision online it can increase the sales opportunities at airports and on airplanes.

ENTERTAINMENT

Through internet access, airlines can offer a much wider range of entertainment services to their passengers, through a library of movies and shows that are not always available in flight.  Passengers on 16 hour – 24 hour flights could catch up on shows they are missing back home, or watch their Netflix movie off of their queue keeping themselves more entertained. 

ADVERTISING

Mobile media companies such as JiWire have already started launching the world’s first ad-supported Wi-Fi network for commercial airlines.  Row 44’s Skytown Center will incorporate a virtual shopping mall approach by calling upon 100 advertisers lined up to reach a very captive audience.   JiWire is focused on an ad-supported model, where they would provide the equipment, which then helps airlines manage the costs of having to offer free Wi-Fi now simply as a cost of doing business for travelers expecting it.

The audience is apparently eager for such a service. According to the Wi-Fi Alliance, 76% of business travelers surveyed said they were likely to choose an airline based on Wi-Fi availability, while 70% would prefer Wi-Fi service over meal service on flights.

Now if only they could figure out how to let us keep our cell phones and ipods on during take offs and landings!   Oh and battery outlets will also become a necessity to enable passengers to be plugged in and online during long international flights.

 

Posted by Behnaz Ghahramani at 8:43 AM | Permalink | Comments (0) | TrackBacks (0)

Since the birth of virtual reality, developers have strived towards developing virtual environments, and with manufacturers developing more powerful computers at more affordable prices this dream doesn’t seem so far away.

Playstation Home is an example of such a virtual environment; it seems that sitting in your home playing online on your Playstation is not enough. Instead, you have to be a virtual person sitting in your virtual home, playing a game online…virtually.

Recently, the approach to virtual reality has taken a spin and is instead focussed on bringing the real and the virtual together. Enter augmented reality (AR).

What is augmented reality? eMagin.com says:
‘[Augmented reality] refers to a display in which simulated imagery, graphics, or symbology is superimposed on a view of the surrounding environment’

Put simply, augmented reality displays overlays over the top of real scenery captured through the camera of a phone, PDA, or computer. This has already been seen in several places, including the ‘Metro Paris Subway’ app for the iPhone, and the ‘Wikitude AR travel’ app for the G1.

Metro Paris Subway is an app currently available on the iPhone and takes full advantage of augmented reality. A user can look through the camera and see the scenery on the screen. As the user pans the camera around they can see overlays of nearby shops and their distances from the user’s position. More information can be found about this app here: http://www.metroparisiphone.com

The Wikitude AR travel app is currently available on smartphones using the Google Android platform. This app displays information on the surroundings such as places of interest as the user moves the camera around the scenery. More information can be found here: http://www.wikitude.org/world_browser
So what are the benefits of augmented reality?

With AR a customer no longer has to go into a store or visit online to see details about a retailer. Using their phone the user can simply view the information about that store on their screen, a bit like a visual interactive version of the Internet.

Here are just some examples of how a retailer can use AR to their advantage:

1. A retailer can use the overlays to promote seasonal offers or use it for merchandising opportunities – these
could be displayed when the store is viewed through the camera

2. Customers can see opening times for a store or office just by viewing the building through the camera

3. Retailers could setup overlay information on products to display cross sell/up sell opportunities when the
customer views the product through the camera

4. Customer can see the website URL and phone number for the store or office

Of course there are challenges with augmented reality (AR). Its operation is entirely based on the fact that consumers have phones capable of running AR apps, and assumes that consumers will be happy to walk around scanning their environment with their phones. However with the Smartphone market booming AR could be more widespread than at first anticipated.

Gartner:

‘Smartphone sales in Europe, Middle East, and Africa (EMEA) totaled 11.7 million units in the first quarter of 2008, a 38.7 percent increase from the first quarter of 2008
In North America, smartphone sales totaled 7.3 million units in the first quarter of 2008, a 106.2 percent increase from the same period last year.’

The question now remains: Which retailer will be the first to dive into this new technology? I’d be interested to hear about other experiences you have had with AR and any new applications for it.

Posted by Jonathan Nobbs at 8:38 AM | Permalink | Comments (0) | TrackBacks (0)

The last decade has witnessed increasing usage of technology in planning functions (as opposed to transaction functions alone) across most retail organizations. Point of sale (PoS) data combined with statistical analysis is extensively used to drive supply chain, merchandizing, category, store and other planning activities in retail. The benefit of the trend has been to drive ‘data-based’ decision making as opposed to ‘gut / instinct’ based. It has also helped centralize a lot of decision making at corporate thereby reducing the reliance on store personnel’s ability

 

For sure the above has given initial benefits to retailers – but incremental value may be difficult to come. In most instances integrity of PoS data presents a challenge to begin with. It is fraught with several inaccuracies and lacks intelligences on numerous events that impact sales at the store. In complex planning functions (e.g. assortment, space planning etc) the experts use heuristics learnt over several years of experience that are difficult to codify in decision systems

 

To overcome the challenges highlighted above, Enterprise 2.0 may present an opportunity. Tools like wikis and blogs can provide a very simple (and accessible) platform to share and collaborate on information / knowledge across stores and corporate. This is the kind of the information that cannot be read from data captured across the retail environment. Some ideas to consider:
Stores Story Bank: Store personnel can be encouraged to blog on their experiences at the store. Over a period of time these blogs will become rich source of information and learnings about what is happening at the store. Unstructured Data Analysis (UDA) techniques can be used to easily to extract insights which can help decision making at the corporate.
Category Wikis:  Wikis present an opportunity to capture the experiential knowledge of category management personnel. These wikis can be used for multiple purposes e.g. best practice sharing, inducting new personnel. Support organizations like IT can refer to these for proactively building solutions to support the category organization.

 

The above are just a couple ideas from the vast potential of Enterprise 2.0 presents. Given the pace of Enterprise 2.0 adoption across organizations, its time for retailers to re-assess their current IT investments. Should money continue to be invested in building newer capabilities on data-driven systems OR should we channelize funds in building web 2.0 capabilities which can help capture the collective experience of the organization? Can Enterprise 2.0 be used to combine structured data (e.g. PoS) with unstructured knowledge (Blogs, Wikis) for better decision making? Will this help factor grass root level information from the stores in all decision making? If bogging, wikis and other online social networking means are becoming our way of life at home then why not the same at work?

Posted by Shveta Arora at 8:23 PM | Permalink | Comments (0) | TrackBacks (0)

I have a 7 year old and a 4 year old; who like most of the children their age love their television time. Seems like you can almost predict the age of a child by the TV shows that they like. You can also figure out the age of the kids by the tunes their parents can hum!!

The TV show "graduation" path seems to go from Baby Einstein to Elmo to Barney to Dora/ Diego to Caillou......will map the rest of it as my kids grow.

Seems to me that Retailers can pick up a few tips from these shows on customer segmentation and lifestyle driven merchandising.

It's amazing how well defined the customer segmentation is. Anisha my daughter used to love Elmo. However when she graduated to Barney; she never looked back. Elmo is a faint memory for her now...and is for "babies".

I had written an article on this sometime back; most retailers still drive their merchandising and assortment strategy using product groupings of some kind. A few of the retailers that I work with however have evolved to a model where the entire design, merchandising and assortment strategy is around the primary dimension of a well defined customer profile.

Each profile has a name and some defined traits that the entire creative and planning group recognizes; leading to a very well orchestrated merchandising and marketing process with the end goal of satisfying that customer.

...and boy are those customers loyal!!

My son Aditya wants to grow up to be spider-man; wears spiderman underpants and wants a spider-man costume for Halloween!! I am ready for him to graduate....

Posted by Sudhir Holla at 2:40 PM | Permalink | Comments (1) | TrackBacks (0)

This blog post is inspired in part by Rahul's blog on "Can the grocery store provide an Amazon experience?". Set me thinking; seems like there are quite a few concepts that can be leveraged from the online world to provide consumers with a better shopping experience and in some cases make some money for the retailer as well.

This post is about the possibility of using a "Google Adwords" kind of concept to target consumers at a retail store at the "moment of truth"

Google makes money on Adwords by bringing together consumers online with product or service companies at the "moment of truth"; when he or she is searching for a product or service online. Why can't we employ a similar concept at the retail store?

What does a retailer need to do something like that?

• A consumer with a mobile phone; which can also be configured to act as the store loyalty card
• Technology to identify that a "loyal" consumer has walked into the store; preferably technology that can identify which aisle the consumer is in.
• Personalization Analytics that can be be used to send the consumer coupons/ offers that can potentially swing the consumer over from "store surfing" to actually buying the product he is surfing for
• An arrangement with the CPG company that atleast partially pays for the ability to display ads and offers to the consumer

The enabling technology for all the above already exists. So why can't the Google Adwords concept be used in a brick and mortar world?

 

Posted by Sudhir Holla at 3:47 PM | Permalink | Comments (1) | TrackBacks (0)

There has been a lot written about the necessity for better Business Intelligence (BI), the how, what and why to build a Data Warehouse and the impact it can have on driving a data driven organization as opposed to a gut based decision making organization. However, one of the challenges in some of the best executed BI programs is how to increase the usage of the BI solution. The solution is built on a solid foundation of understanding the business, bringing in the relevant data sources, building the right hierarchies etc. BUT it fails to penetrate far and wide in the organization.
 
My thought is that while building the BI solution, a lot is focused on what the end KPI's will be how to get them into the BI solution. This I call the science of BI. This is really useful when the objective is to be able to bring the organization to be driven by KPI's. It is useful to track sales, financial & other KPI's. It also enables the user to have the power of having these KPI's at their finger tips. But the final interpretation of the data is done by the business user. For example, a dashboard that tracks the sales in an organization is a very good tool that allows the user to look at the sales, shows them whether it is increasing or decreasing, maybe drill down to the level of details on KPI's to determine why it is increasing or decreasing. But this guided analysis always doesn't yield results.

• The Sales Manager might think - 'Maybe the sales are increasing because of increased promotional activity by us'
• The Brand manager build a hypothesis - 'Maybe the sales are increasing because the launch of the new product (which was bad) by the competitor has turned their loyalists away'
• The General Manager looks at the macro picture - 'Maybe the economic stimulus flowing into the stores in this city is pushing up the sale'

The end user who knows the art of interpreting the data will develop a hypothesis and then use the data to either prove it right or wrong. If right, it makes its way into the explanation of numbers, if wrong – another hypothesis needs to be developed. The questions remain – Is the BI Solution easy enough to allow the end user to answer the hypothesis that they have developed? Is it solution wide enough to provide the answers for a majority of the hypothesis that come up ? The availability of data yields to further need for data so the BI solution is always ever expanding. To cater to the needs of end user, we need to better understand how they think. The science of BI needs to understand the art of building the hypothesis.

 

Posted by Kapil Khanduja at 2:15 AM | Permalink | Comments (2) | TrackBacks (0)