Key Trends & Challenges Impacting Private Label Retail

Retailers who sell private label products as part of their assortment-mix today have a reason to fear Amazon’s entry into private label assortments or collections. It has increased the threat of further online competition. EKN’s 2016 Private Label Sourcing survey (in partnership with CBX) of 50 North American retailers has revealed that compared to 2014 or prior, retailers are giving higher importance to private label brands for their top line and bottom line net earnings. Taking into account the threat from the likes of Amazon and an already high forecast growth within eCommerce and mobile channels till 2018 (14.5% & 29.4% CAGR, respectively¹), omnichannel operations is the top trend shaping the state of private label brands especially in the area of strategic private label sourcing and product development. Private label is no longer a store phenomenon and moving forward retailers fully expect private label categories to grow in the physical-digital domain. The second biggest trend impacting private label brands, sourcing and development is new consumer demand. These new consumer demand patterns are as much about growing private label demand as it is about growth in main street retail, subscription retail and food retailing in formerly non-food stores (i.e. drug). Price sensitivity is definitely increasing as there is an increase in off-price stores emerging in luxury categories. Retailers are well aware that the price sensitive consumer cares a lot about private label or store brands. Within private label, sales reached $118.4 billion in 2015, an all-time record and an increase of +$2.2 billion over the previous year. In the past two years alone, annual sales are up by +5%, or +$5.4... read more

Toshiba’s Bigger and Better User Show in 2016

This year’s ‘Toshiba Connect’ was held in Las Vegas and dare I say what happens in Vegas stays in Vegas! In fact, it will be quite the opposite for Toshiba and its customers in 2016 as there are a slew of new strategies and capabilities that are waiting to make their mark in retail and other industries. Store and point-of-sale (POS) re-investments, customer personalization, digital consumer experiences, payments and evolution of omnichannel were the main strategy areas and collaborative themes led by Toshiba, retailers, media and analysts that spurred discussion and discourse during the conference. Toshiba executives Scott Maccabe, Bill Melo, Michael Griffiths and a few others laid out the key mission focusing on Enriched Shopping, Actionable Insights and Frictionless Checkout, as well as the strategy and solution roadmap for Toshiba Global Commerce Solutions in the aforementioned areas. Customer executives from Safeway, Kroger, Brookstone, PVH and other retailers provided a promising view of their retail growth and customer experience innovation taking place today. However, large U.S. retail executives also went on the record discussing their challenges in meeting the October 2015 EMV deadline. A number of retailers spoke at length about the lack of clarity around industry standards for seamless ‘chip & signature’ POS pin-pad migrations. Retailers have experienced various concerns related to customer experience issues, 30%-50% longer transaction time, deployment delays, system testing, continued data security concerns and store employee training complexities. EKN’s February 2015 POS Blueprint study showed that 7 out of 10 retailers were ill-equipped to roll out chip & signature-ready terminals by the October 2015. The Toshiba partner ecosystem also had a lot more depth... read more

Retail Enterprise Agility: A Necessary Step for Future of Retail

Within most softlines, grocery and hardlines retail segments, the need for enterprise agility and speed to market has often been talked about in terms of response time of store, headquarter or supply chain teams to align with current and emerging market and consumer trends. Agility in retail can translate into initiatives including but not limited to rolling out new channels/stores, new product introduction, marketing, content and technology innovation that improves customer experience or operational efficiencies. Retail enterprise agility is not just about quick decision-making and resource allocation but also enabling improved sales, cash-to-cash cycle time and product lead time attainment. It requires collaboration and common workflows at the product and customer-programs level between stores, digital teams, merchandise planning, sourcing, product development, marketing, IT, business intelligence and supply chain visibility and collaboration. While agility in the product value chain must conform to seamless movement of product from concept-shelf, creating deeper customer connectivity, engagement and personalization during the customer path-to-purchase journey, requires retailers to demonstrate consistent dedication, commitment and a steady flow of investments in ensuring customer-facing digital transformation. Digital thinking, data insights and customer science is inherent in such a transformation and no department or channel in retail can be devoid of essential building blocks such as access to real-time digital data, digital device-based insights & accessibility and workflows enabled on digital assets. The simplest example of the ROI waiting to be gained from such a transformation is in the ease of doing day-to-day business in a store. Retail store associates or managers should not have to pace back-and-forth between the back office and the customer front-end every time they... read more

How to Re-Activate Current Loyalty Programs to Bring Alive Loyalty

In this age of well-informed, technology-savvy, connected consumer, is customer loyalty dead? An EKN survey (EKN 2014 Next Generation Shopper Experience: A Millennial Consumer Perspective) shows that the customers, especially the millennials, are willing to spend additionally upto 30% over the same period in case they get a great shopping experience. EKN’s analysis shows that the same customers sometimes defect their loyal brand in search of better prices and convenience. Retention had never been so difficult. So how exactly then a retailer claims to retain a loyal customer base when the customer’s behavior suggests otherwise. One needs to figure out the good that the existing retail loyalty programs are doing for the business except for providing a momentarily transaction-based attraction for customers. It is interesting to find that many retailers run these contests amongst their employees in store in return of incentives, to get the maximum no. of registrations for their loyalty program. Does the buck stop here? No, we believe, it is equally critical for retailers to ensure the subscribed customers make use of the program consistently and this can only happen when customers realize the associated far-reaching rewards than mere transactional benefits. This notion ties back to the concept of customer lifecycle value, one of those metrics which has seen most retailers struggling with. Measuring customer’s lifecycle value considers into account a more holistic view of the value derived from the customers over the period and thus challenges the retailers’ myopic view in executing a transactional loyalty program. The concern mentioned above is applicable to most retailers irrespective of their format, segment and size. Key issues that... read more

Unified Commerce: A System or Process Change?

EKN’s 2016 Digital and Omnichannel survey indicates that re-investments in eCommerce/mobile in shaping up retailers’ future strategies is of considerable importance as the expected CAGR in eCommerce and mobile commerce is expected to be 14.5% and 29.4% by 2018. At the same time, EKN’s 2015 POS Blueprint Study highlights the fact that for 7 in 10 retailers store POS transaction volume accounts for more than 70% of total retail volume. For sometime now, store transactions are no longer considered pure store purchases and over the last few years offline-online basket or shopping cart integration is widespread as customers want to merge pure store POS transactions and digital transactions into a singular store experience. Despite the need for integrated offline and digital transaction experience for customer convenience at check out, retailers are using separate systems or browser windows within the existing POS system. This creates higher waiting time and inefficiencies as associates, managers and eventually customers experience a rather odd and time-consuming toggle back-and-forth between the store POS user experience and online/eCommerce transaction interfaces. With the average age of a fully deployed POS system at 7 years (EKN’s 2015 POS Blueprint Study), unified commerce solutions can take over where legacy POS systems have created gaping opportunities in operational and customer service space. The cumbersome user experience, lack of ease of access to customer information and difficulty in creating unified shopping carts which combine online/catalog orders with in-store purchases, are only some of the challenges faced by over a third of retailers.  Seamless shopping behavior can be triggered via a unified commerce platform. Such platforms have the ability to combine omnichannel... read more

Soon to be Unveiled: A New Customer Service Model for Retail Stores

For a majority of retailers, more often than not, the words associated with retail store managers and associates point to a strong affinity towards words like ‘productivity’, ‘asset’ and/or ‘empowerment’. However, in reality, 1 in 2 retailers rate themselves at par or behind their competitors in terms of two critical store execution yardsticks – customer engagement/sales and product knowledge of store staff (source: EKN’s Next Gen Retail Employee Engagement & Empowerment study). The obvious question: Why are the top of mind values and beliefs associated with store staff and execution in the store so difficult to pair together for consistent results? Retailers are well aware of the fact that developing the right labor budgets, effective staffing models and relevant task lists can only go so far to solve customer experience problems in the store. At best, most retailers are able to provide a working model for the store staff that is barely enough to get by, yet cannot solve the continued customer-centricity, inventory and store-presentation related problems. The key to a successful store execution model lies in the three practical concepts of business execution outlined below. Let’s review each of these concepts one-by-one. Develop a blueprint for profitable store execution by disrupting current staffing, merchandising, location-messaging and execution models in the store with new customer service, store staff reward and recognition models. Retailers that operate different store formats including flagship, outlet, big-box and express stores need to ask a simple question to their financial and store operations teams: Based on the business forecasting models, do you believe that a majority of our stores will be in business in 5... read more

The Greatest Impact on Customer Experience is by Building a Key Operational Capability

Retailers must focus their business transformation efforts and limited IT budgets on strengthening operational capabilities which in turn would have a great impact on their customer experience strategy. Some of the must-dos include point-to-point fulfillment, inventory visibility and unified order management. The #1 omnichannel operational challenge that retailers have to overcome is to address the customer’s need for shipping-speed and velocity of orders. Same-day and next-day shipping is where most of the operational innovation will take place for these companies. This is especially true when it comes to the increased need for a robust order management and fulfillment infrastructure that enables ship from DC, supplier direct drop shipment, click and collect, smart locker shipment and ship from store. The relationships such as of a supplier, 3rd party fulfillment partners and on-demand fulfillment services partner are also going to be crucial for first-time right orders and on-time order delivery. Legacy enterprise resource planning (ERP), point-of-service (POS) and warehouse management systems (WMS) cause significant delays in upgrading unified distributed order management visibility, accuracy and execution. While retailers will have to continue to invest in upgrading their omnichannel supply chain for order visibility and agility such as integrated DCs, cross-dock, split order and other related processes, the role played by stores will become even more critical in months and years to come. EKN’s 3rd Annual Stores Benchmark report indicates that 8 in 10 retailers anticipate an increase in fulfillment of online orders from store. Additionally, 32% of retailers are going to offer same-day shipping in the next 12 months, totaling close to 75% by the end of 2016. Stores need to be spruced up... read more

How Best to Achieve Employee Effectiveness in Retail

Even as 1 in 2 retailers cite unified commerce (commerce or retail sales and service management without sales channel boundaries) initiatives in the store as the leading technology investment area in 2016 as per the EKN’s ‘2015 Future of Store Report’. A similar section of retailers also indicates introducing better associate and store manager training and development as a key employee management improvement area in the stores (Source: 2015 Next Gen Retail Employee Engagement & Empowerment). This means that at least to a fair degree, the successful adoption and execution of unified commerce initiatives in the stores depends upon the training effectiveness of associate and store manager. Knowledgeable associates and managers not only impart store related knowledge, expertise and experience to the customers but also assist new and part-time associates with new processes, digital tools and several shopping devices every day. While figuring out a typical ‘customer path-to-purchase journey’ for comprehending customer sales and service lifecycles across channels, companies need to similarly incorporate nuances of ‘store employee task journeys‘ just as much. Employee effectiveness is as much a function of continued store training as much as it’s about knowing specific needs associated with in-store omnichannel and digital processes, tasks and customer lifestyle needs. With the increasing business pressures associated with technology transformation and overall cost of optimization, with 7 out of 10 retailers saying so, introducing step-by-step training and development program equipped with digital and advanced web-based training tools in the stores remains a big challenge. As long as such an investment is seen as a hard cost and not an investment or a business imperative, retailers and vendors... read more

Predicting Buyer Journeys and Inventory: Retail Future in a Nutshell

According to EKN’s 2015 ‘Future of Retail IT’ survey, predictive analytics ranks as the #1 enterprise technology for 9 out of 10 retailers with ‘a high likelihood of adoption’ indicated by 7 in 10 companies. This need for predictive insights has increased in the stores and within retail’s most traditional blocking and tackling issue: inventory management. EKN’s 2015 Customer Context Power report revealed that 1 in 2 retailers are unable to predict their store customer traffic patterns leading to lopsided execution in the stores. Moreover, on average retailers are unable to attain higher that 60% forecast accuracy on their demand forecasts for inventory management.  This means that a sizeable volume of inventory is not based on customer science, reliable forecasts or likely demand scenarios related prospective shopping patterns or sales trends leading to lack of sell-through and higher markdowns. . These problems exist not only due to lack of reliable and timely customer insights but also due to legacy enterprise resource planning (ERP), business intelligence, demand forecasting and inventory management systems. On the one hand, predictive data and intelligence about likely customer traffic helps enable optimized labor planning, floor plans, associate focus and rich customer experience readiness at a local store-level. It also helps retailers know what customers want, when they want it and which type of merchandise, channel messaging or content can help. With this, it is possible to determine if companies that invest in predictive data modeling use both structured (e.g. t-log POS or promotions data) and unstructured data sources (e.g. social sentiment data, Wi-Fi, Beacon etc.). On the other hand, advanced and predictive analytics-enabled omnichannel inventory planning... read more

Retail’s New Digital Transformation Strategies

Undoubtedly, digital transformation means different things to different retailers. However, a common link for all retailers is embedded in a strong and robust digital movement that leans on transformational and consumer innovation-rich retail programs and approaches. It is abundantly clear that much of retail industry’s growth is fraught with challenges associated with unforeseen market uncertainties, legacy systems, lack of skilled resources, delayed or insufficient insights and tight budgets. However, retailers can create integrated and personalized digital content and commerce inside and outside the four walls by marrying together pragmatic retailer-consumer digital buying journey workflows and related business user and consumer-facing change management best practices. This is a required building block for enabling a seamless and up-to-date digital commerce experience. It can be argued that a highly sophisticated digital transformation approach, related asset or solution is not as important in the store, DC or supply chain as is the operational pragmatism, business connectivity and day-to-day adoption or usage associated with such a transformation, asset or solution. For instance, it is clear that 7 in 10 retailers use an eCommerce platform that requires some form of re-investment to be aligned with evolving consumer/market trends. Additionally, at least half of retailers plan to develop a unified commerce platform in the store so challenges associated with an ageing store POS environment can be overcome. However, a dedicated strategy to manage and grow relevant content, digital assets and overall user experience in an integrated and user-relevant manner is the missing link that negatively impacts flow of business, traffic and retail experience every day. At a time when the average consumer is using more than... read more