Keeping the customer interested, keeping the offer relevant and keeping the bottom line growing are ongoing challenges that retailers face. Standing still is, quite simply, not an option.
In the last week alone we are reading news of a checkout-less store trial in Sainsburys, a one hour delivery trial from M&S, and hearing about Microsoft store open on Oxford Street. Each initiative is driven by objectives specific to that retailer, with measures in place to determine its success. One thing we can guarantee is that in isolation each of those initiatives will be loss making.
Retail Trials vs the Big Picture
On the other hand, each new initiative forms part of the whole, and that is what matters for the bottom line. A shiny new store can encourage customers to visit and then make a purchase on line; a high-tech AR mirror in the changing room can help the customer reach a purchase decision quicker; a one hour delivery slot for a meal deal can encourage the customer to buy more in store (although we feel it is more likely the other way round, but we’ll see).
Online grocery delivery is absolutely the right channel for the customer who is increasingly time poor and convenience driven. Yet the industry has yet to find a way to make this profitable. Subsequently grocery margins have fallen. Does the grocer then engineer the delivery process to make it work commercially? Yes of course they scrutinise the operation to make it as low cost as possible while maintaining customer service levels. But they also examine the rest of their operation using productivity modelling for example, to help offset any loss. In short, the whole business model must keep evolving.
Getting the customer through the store door is one way of off-setting a loss from online delivery. Store layout, fixtures and ranging all play a role and one that we are very familiar with from working with clients in many sectors within retail. From shelf level availability to store environment and visual merchandising, each plays a role in growing sales. Some make headlines and create a PR perfect store while other initiatives quietly contribute to basket size.
Innovate to Differentiate
When we have worked with retailers on their proposition initiatives, we are intrinsically conscious of commercial objectives but always seek to leverage the strengths of the organisation to deliver a differentiated offer. Differentiation is not often a priority however. More often we find the motivator is the unfounded belief in needing to catch up with the competition, rather than being driven to give the customer something they need or want that they can’t get elsewhere.
We are excited to see more retail trials happening, and realistic in what we expect the results to be. It is easy to be quick to point out the shortfalls of trials but instead we continue to work with retailers to move their businesses forward, and work with them to build their futures.