Tow
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RetailMany organisations are in the process of
launching a digital transformation plan.
This report highlights the benefits and
implications of new technologies allowing
retailers to better assess the competitive
advantage of a smart digital strategy.
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Understanding your customers
is the key to successIn today’s retail environment, modern
technology platforms provide brands
with deep customer insight. These
platforms provide powerful tools to deliver
a personalised and engaging relationship,
optimised for each specific customer.
The ability to improve your supply chain
and supporting back office are far easier
and quicker, in response to changing
consumer demands, allowing retailers
to focus on customer service and
ultimately to become truly data driven.
Want a sustainable head start over your
competition? Here is where it starts.
69%of consumers say that a retailer’s ability to provide personalised customer care positively influences their loyalty.Source: ‘What do Gen Z shoppers really want?’, NRF & IBM, 2018
79%of consumers feel that brands must actively demonstrate that ‘they understand and care about me’.Source: ‘Wantedness’, Wunderman, 2018
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Customer experience reigns
How can brands improve
their customer engagement
and provide the level of interaction
that clients now expect?
Meeting customer expectations, both online and in-store,
has become a powerful means for brands to improve their
revenue and build a strong future for their business.
The same goes for service. 69% of consumers say that
a retailer’s ability to provide personalised customer care
positively influences their loyalty(1).
Customers now expect a seamless shopping experience whether
they buy online or walk into their local shop. This includes:
Seeing and trying the products they checked out
online beforehand.
Being offered an omni-channel loyalty program, that will let them
build loyalty points and unlock exclusive offers and deals through
each of their purchases regardless of the sales channel.
Being identified as they push the door to a store and getting
the same personalised services that they get online.
Being directed to the items that they are most likely to be
interested in.
The key to meeting all these expectations is to take control
of the data – become a data driven retailer. An important first
step is to bring together the vast amount of data generated
in the online space and merge it with the various customer
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70%databases generated across all channels
(physical stores and outlets, value added
services, loyalty programs, etc.) to create
a single customer data platform.
The next step is to generate value through
intelligent data analysis to provide a seamless
and personalised customer experience.
This includes using machine learning and
artificial intelligence (AI) to extract trends
that will help determine customer preferences
and habits to tailor offers and services
to their individual profile. Today’s loyalty
programs are expected to offer benefits
that truly correspond to a given customer’s
personal preferences.
But assembling, retaining and using personal
customer data is becoming increasingly
regulated. The good news is that clients
are willing to assist as long as they get an
exceptional customer experience in return.
Zoom on Dixons Carphone
In the UK, Dixons Carphone is using a chatbot that can check the product catalogue and inventory status to help both clients and store assistants get instant information on a given item. Today, 70% of Dixons Carphone customers use their mobile in the shop to get further product information.
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How can data science
and AI generate high
value by reshaping
a brand’s operations and
supply chain processes? eeting today’s customer
expectations requires a digital
grade supply chain, from supplier management,
to intelligent procurement, to inventory, logistics
and fleet management systems.
A digitally enabled supply chain empowers
brands to offer a wider range of products.
In a recent survey, 68% of Gen Z consumers
said the choice of available products was
the most important factor when choosing
where to shop(1). Going digital in the warehouse
also helps improve efficiency. Companies
with fully integrated IT warehouses are
out producing non-integrators by 20%,
mostly due to improved data access(2).
Data analytics and artificial intelligence also
allow the analysis of inventory status in all
outlets, also taking into account customer
data and externally sourced data (weather,
competitors’ promotions, etc.). Taking all
these parameters into account, the system
will issue recommendations to ensure every
outlet has the required amount of stock
of every product at any given time. Intelligent
fleet management evaluates stock levels
in every store and determines if a given
outlet should be supplied from a regional
Operations drive
M
EXCELLENCE
NUMBERS
70%of US consumers say they’ve spent more money with companies that deliver great service. Source: 2017 Customer Service Barometer, American Express
58%of consumers expect inventory status to be visible online while shopping.Source: Gartner L2 Digital IQ Index, 2018
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warehouse or from a nearby store for a given product, taking into account sales
levels in both shops, scheduled deliveries and even traffic conditions. Inventory
rotation is another aspect where retail science makes a difference. For slow
selling products, AI helps determine the exact amount of discount that will get
products out the door while minimising impacts on margins, taking into account
the result of past promotions in a given area or competitors’ current promotions.
Since 2019, France’s Carrefour is using AI to collect and analyse data from stores,
warehouses and e-commerce sites to better anticipate demand and optimise
orders sent to suppliers. Carrefour’s goal is to limit both stock shortages
and overstocking in both shops and warehouses.
Every step of the way, digital technologies allow retailers to free up employees,
that can be redeployed to higher value tasks, closer to the customer. This is also
an effective way of improving employee satisfaction, by offering them improved
career prospects. Indeed, companies with highly engaged employees outperform
their competitors by no less than 147%(3).
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Ret
ail
In the coming years, Millennials will rule
retail. These customers demand best-in-
class, differentiated, one-on-one and even
entertaining and recreational shopping
experiences. Increasingly they will expect
brands to close the gap between high street
stores and online shopping with more and
more of their purchases being initiated through
one mode and carried out through another.
Increasingly, the concept of a standalone
store will disappear, making way for the
emerging concept of the everywhere store,
blending a series of services, provided either
online or in the actual high street outlets.
An example of this complementarity
is using augmented reality on the mobile
to guide customers through a physical
store directly to the items they checked
out and marked on the brand’s web site
or mobile app beforehand. At the same time,
augmented reality may attract their attention
to other products or accessories matching
their identified preferences, or even to
discounts they earned through their loyalty
points. Directing customers to the closest
shop carrying inventory for the selection
of items they wish to try on is also a valuable
proposition. But the complementarity
between real life shops and eCommerce also
goes the other way, with the correct sizes
tried out in the shop being saved
to the user’s account for a later purchase
through the brand’s online ecosystem.
All this needs to be seamless and enjoyable,
as consumers are less and less indulgent
with dodgy service. Directing customers
to the closest shop carrying inventory for
the selection of items they wish to try on
is also a valuable proposition. But the
complementarity between real life shops
and eCommerce also goes the other way,
with the correct sizes tried out in the shop
being saved to the user’s account for a later
purchase through the brand’s
online ecosystem.
The everywhere store also responds
to Millennials’ appetite for visual and
experimental shopping. France’s Sephora
developed a store concept where customers
may try out a wide selection of perfumes
and makeup items that can be ordered
online right away and delivered to the
person’s home. It is an effective way to
widen the product offering without having
to maintain the corresponding inventory
in the local store. A ‘selfie mirror’ also allows
customers to send their friends a photo
taken with a new lipstick to get their
opinion before committing to a purchase.
The everywhere store is on the rise
How can retailers meet the expectations of digital native customers, who see
the line separating conventional and online shopping gradually blurring?
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WithTim Rowe
Retail Industry Director,
Hitachi Solutions Europe
Expert Vision
What is the main challenge facing the retail industry?Leadership. A recent study, The DNA of Future Retail Leadership, cited 36% feel
retailer leadership is not moving fast enough to keep up with consumer demands,
only 27% has the required digital expertise and 56% are not diverse enough to
reflect their customer base. Not exactly a ringing endorsement, especially when
you consider retailers with top performing management teams are growing
five-times faster than the competition. I often hear about changing customer
demographics, the rise of the Millennials and Generation Z, but as with any
business, change is constant and management teams need to be re-structured to
inject speed and innovation and place the consumer at the heart of all decisions.
Which companies are taking a head start today?For now, the most successful are the e-commerce players that took an early start
in digitalisation. A good example is Amazon, with the development of Amazon Go
stores, where customers may walk in, pick up the items they want and walk out
without the burden of waiting in line for checkout. The system uses their mobile
Tim’s experience gained at PwC, Microsoft and now Hitachi Solutions makes
him an expert in delivering modern and cost-effective technology solutions for
the retail sector. He shares his views on making digital transformation a success
in the retail space.
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phone to detect who they are and directly bill their account. So far, traditional
retailers are still lagging in offering similar services. Some regions, however,
are catching up fast. A number of Chinese grocery chains have aggressively
invested in digital technologies, to the point that over 150 stores in China are now
offering a similar value proposition, versus just over 15 Amazon Go stores in the US
over the same time period.
What is the impact of digital transformation on the supply chain?Digital technologies enable new ways of meeting today’s customer expectations,
by building flexibility and accountability into their supply chain. It also allows brands
to offer the transparency and traceability that Gen Z customers, in particular,
are demanding. As an example, blockchain technologies provide an open source
ledger that can give customers reliable information on how a product was made,
from which core ingredients, using which farming techniques, etc. It also gives
a guarantee that responsible transport was used, child labour was avoided, and so on.
Which prime advice would you give a retail company ready to move forward?Retailers need to define their operating model. It is now clear, successful
operating models coalesce around four themes: Platform, Brand, Value and Service.
In choosing an operating model, retailers will need to carefully consider their target
customers, where they create real value and their own strengths and weaknesses.
Once defined, the retailer can then embark on a continuous programme of innovation
across all facets of the business including full digital transformation. This will
impact on almost every function of the business and must be led from the
management team. It is important to recognise that such a deep transformation
takes time and needs to be broken down into steps and driven at a pace that
fits the organisation. It is therefore essential to select a consulting partner with
a full understanding of the project scope and your industry, who will be able
to support the company through the entire digital transformation lifecycle.
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Can you really turn a global retail franchise around, implementing new technologies,
principles and business models for tomorrow, as well as engaging all employees and
store associates across 63 countries throughout the Americas, EMEA and Asia?
Dr. Martens strongly believes so. In 2018, the Group started a 3-year digital
transformation programme worth several million euros, with the ambition to underpin
and support Dr. Martens’ ambitious growth plans. The new architecture will replace
a plethora of legacy IT systems and processes and will create efficiencies across
the board, increasing supply chain efficiency and offering added visibility over
the business.
The project
“This programme will use IT as an enabler – resulting in change to our current systems,
processes and procedures. It aims to help us become more efficient as a business,
operate globally and enrich the role of our people by replacing a number of manual
and cumbersome tasks with tools that better support our global growth.”
Jon Mortimore, CFO Airwair International
Why Hitachi Solutions?
“We chose Hitachi Solutions as our business transformation partner not only
because of their expertise in the technology, but also for their expertise in retail;
their global presence and, crucially, their ability to assist with the business process
and people element of the change programme through their Transformation
and Adoption consulting team.”
Jon Mortimore, CFO Airwair International
Success Story
When a global brand engages in a major digitisation programme