Abir Thakurta
Senior Director, Professional Services
nuBridges
Coming back from the RES 2009 Summit, I began reflecting on the past few days of the summit where I had the great fortune to spend some quality time with the who’s who of the retail world – from VPs of IT to CIOs and CEOs for some of the world’s most famous retail brands.
The summit gave me an opportunity to understand the retail business during these tough economic times. It is clear that the economic downturn has taken its toll on retail. Strategies to mitigate the downturn were on the forefront of every retail leader’s mind. Most of the strategies were focused on expense reduction, increasing customer intimacy and maintaining sales within their customer base.
- Specific actions being taken by retailers to counter the economic downturn (expense reduction):
- Benefit reductions (many retailers are reducing their 401K matches).
- Internal review of licenses and technologies that are being used or sitting on the shelves.
- Direct deals with manufacturers to reduce inventory and improve delivery schedules.
- Most of the retailers are heavily negotiating and re-negotiating their real estate deals. Many are closing stores, opening new ones or simply relocating. Given the nature of today’s real estate market in the US, most of the retailers see this as an opportunity to reduce expenses.
- Green initiatives are being used as a mechanism for general spending reductions, especially reduction in outside spend.
- Short-term IT initiatives are being reprioritized but larger, long-term strategic IT initiatives will continue.
- Multi-channel retailing, consumer-centric revamping of store operations, and new store technologies like kiosks, online social networking (like Facebook) and shopping through mobile devices.
- A convergence of store systems, corporate systems and consumer-facing systems is imminent and sharing of information within these systems will become important.
- Improving cross-channel synergies in a multi-channel environment with the ability of measuring the value of the non-main channel.
- Consumers are more educated now and conduct research before purchasing.
- Discretionary spending is reduced so consumers are saving their money and waiting for sales and promotional events before making purchases.
- Focus on the future retail shopper was a big highlight: how to market to Gen Y shoppers who are not tech savvy, yet are very tech-dependent.
- Most retailers still believe that quality experience in the store and assortment of merchandize trump pricing for loyal shoppers.
- Most retailers are focused on understanding consumer lifestyles and not individual buying habits.
- Moving to private labeling is an important strategic initiative for retailers in this economy. It improves brand loyalty, increases customer intimacy and reduces merchandizing costs. For example, Costco has increased private label products from 20% to 25% and Walmart from 12.5% to 20%.
- Expanding CRM/BI initiatives to use intelligence from the store and make it available to merchants who strategize consumer needs for their outlets.
- Incorporating brand differentiators but building brand relevance to capture the mind of the captive consumer base.
- Using social media and social networking like blogs to tap into consumer mindshare and inculcate viral marketing.
- Improving data mining within the enterprise and identify Internet buzzes (good or bad categories) to tap into consumer behavior.
- Consolidating and merging of POS and eCommerce systems.
- Defining and creating the store of the future to retain consumer loyalty and enhance the buying experience (kiosks, RFIDs, mobile-selling devices).
- Focusing on retail workforce management (WFM). WFM processes and solutions are going to be in demand over the next couple of years as retailers have identified it as an area to focus on for expense reduction. WFM involves techniques like resource schedule optimization, labor budgeting, and time and attendance solutions.
- Viewing data security as an important agenda to mitigate risks associated with brand protection. Many retailers were thinking of focusing on enterprise end-to-end data security in the next couple of years.
It was indeed a very enlightening experience to wine, dine, golf, break bread and share thoughts with a group of likeminded individuals who did not view me as another vendor trying to pitch a product to them. Yes, they are very clear – they are not looking for vendors anymore – they want partners who are willing to share their pain and work with them with ‘enough skin in the game.’
Another notable cause was retailers joining hands to champion a charitable initiative called the ‘retail orphan initiative’ for supporting global initiatives for child protection. I found the initiative a noteworthy cause. For more details you can visit Retailroi.org
Until the next time,
Abir
P. S. Get out there and shop….that’s what your retailers want…!!!
