That may be a bold statement to try to back up as we look out at a landscape in which the likes of Toys R’ Us are collapsing, but it’s the opening premise emerging from a new study by Deloitte Digital and Salesforce, which argues that there is in fact a “retail renaissance” going on.
The report - Consumer Experience in the Retail Renaissance - notes that spend has outperformed U.S. GDP and has risen every year since 2009. Consumers are still voting with their wallets with 44% of consumers spending more in 2017 than they did in 2016.
None of that is to say that the nature of the retail sector is not one characterised by disruption and the study outlines four varieties here:
- Consumer disruption - characterised by tech-driven expectations for ever-greater speed and convenience.
- Technological disruption - the rise of e-commerce and the pressures on bricks-and-mortar to find a changed role.
- Competitive disruption - it’s not just about competing with other retailers in your neighborhood. You’re up against global marketplace providers.
- Economic disruption - a bifurcation of consumer behavior based on income and expense pressures. High-end premium-priced and low-end value-priced retail thrives; the mid-range has suffered. (This chimes with diginomica’s thread around the role of luxury brands in an e-commerce world, as well as the pressures that the likes of JC Penney have been under.)
What all this means is that retailers need to be highly-focused on creating their value propositions to appeal. Good enough won’t be good enough. Nearly 60% of brand leaders surveyed* said that their “unique value proposition” is based around product quality.
That may be an admirable sentiment, but it’s potentially an ‘old world’ one in age of e-commerce and online marketplaces where service and convenience are differentiators. Alarmingly only 14% of brand leaders cited service as a value proposition and even fewer. 6%, picked out convenience.
This has to change, says the study:
As they work toward success in the retail renaissance, brands must think beyond product as a differentiator and become more granular in how they identify and satisfy customer wants and needs. To stand out from the pack that offers mediocre experiences, brands must offer frictionless engagement across marketing, commerce, and service touch points, from the showroom floor to the call center to how they operate their supply chain and fulfil orders. Consumer experience involves the entire value chain — including the battleground of the last mile.
With that in mind, it’s encouraging to see where investment priorities lie for improvements to the customer experience. Engagement and discovery tops the list, followed by awareness and acquisition. Fulfilment and returns come bottom of the to do list.
But in an e-commerce age, there’s one priority that can’t be underestimated and that’s the role of data in understanding and engaging with the customer, both digital and physical, as well as impacting on corporate culture within retailers:
Data empowers teams, individuals, and company culture. Yet for some business-to-consumer brands, especially branded manufacturers, lack of data access is a barrier to success: 65% of branded manufacturers can access none to a moderate amount of consumer data via indirect channels (i.e., marketplaces or wholesale channels).
Indirect data sources are increasingly key to building complete shopper profiles and informing a holistic customer journey, and the number of data intermediaries is only growing. To compete in this new world, where competition is fragmented among thousands of options that consumers can find at the tap of a phone, brands should focus on accessing first-, second-, and third-party data — the more granular the better to find relevant opportunities for action.
The study notes that what it characterises as Elite Performers - ie firms with a revenue increase of at least 10% in the past fiscal year - focus on data at a rate of nearly 2x compared to underperformers - firms with flat or decreasing revenues in the past fiscal year.
The top three data deficiencies among underperformers are in the areas of:
- Governance - 68% don’t have clearly defined roles and governance for managing consumer data.
- Agility - 63% don’t respond to consumer demands and insights in an agile manner.
- Security - 54% don’t have rigorous compliance and security to monitor and protect consumer data.
Another challenge is pulling together the necessary underlying technology platforms. According to Deloitte’s research, surveyed retailers maintain an an average of 39 disparate front-end systems to manage consumer engagement, including point-of-sale mobile, call center, e-commerce, email marketing, social, and content management:
As brands have embraced digital and expanded shopping options, they’ve amassed an excess of technology platforms and systems to support specific c capabilities by specific c channel. Every team seems to be working from a different toolkit, depending where they sit in the company and whether the company operates domestically or globally — despite every employee serving the same consumer. No wonder the experience seems so disjointed from the consumer’s perspective.
While the focus to date has been on creating a Unified Commerce experience, the goal moving forward should be on Unified Engagement, argues the study, and encouragingly enough finds in its research results that this is a message that is getting through.
Nearly a third (32%) of respondents are creating a Unified Engagement Platform strategy, 23% are executing this strategy, and 11% reckon they are realizing benefits from this. Only 1% say it’s not a priority. In total, two thirds of survey respondents currently have an active and funded Unified Engagement initiative at some stage of development or implementation.
*Deloitte Digital polled 561 retail executives from around the world. The largest poll sample was from the U.S. (36%), followed by the UK/Ireland, Nordics, Japan, Germany, France, Canada, Australia/New Zealand and the Benelux. CEOs made up the biggest polling constituency (32%), followed by e-commerce/retail/omni-channel responsible executives (24%). Other polled roles included marketing, customer experience, customer care, IT, analytics/data intelligence and strategy.
This is a report that chimes with much of what we’ve been writing about at diginomica for the past couple of years. The so-called retail apocalypse that the likes of Bloomberg was writing about last year is a simplistic interpretation of the situation in the sector.
For too long retailers have had Amazon-panic hardwired into the strategic priorities instead of playing to their strengths and adapting to the new digital world. The Deloitte/Salesforce report concludes with a simple three phased approach to becoming an Elite Performer:
- Phase 1 - embed data into organizational principles in order to transform data architecture and applications to be truly consumer-focused.
- Phase 2 - turn data into intelligence and have a plan to put collected data to use.
- Phase 3 - adopt a Unified Engagement Platform and consolidate/simplify systems that manage consumer interactions across service, commerce and marketing.
Sounds simple? Of course it isn’t. But there again we should all be far beyond the days of thinking that digital transformation was all about having a flashy website, shouldn’t we?