Retail Transformation to stay relevant!

Recent data shows the retail sector operates with slim margins, so running cost-effective operations is vital. Operations need to be agile to cater to rapid changes to demands and also be able to forecast catering to Realtime activities needing collaborative planning and forecasting/replenishment.  

Market trend moving towards, health food, Green, Natural products and also moving away from the brick/mortar model to a Hybrid Model. To provide customers more choice of buying the products, anytime later after the visit and also online, thus providing excellent customer convenience and OMNI Channel experience.  

The Retailer has also has moved to micro-segmentation customers with customer information collected from user Session and also using other data. Big data for understanding Customer preferences and proactive suggestions for products, data-driven decision making has been at the core of the Digital Transformation, Including new lean Business Model to cater to the long tail products (low volume sold items are not effective with traditional models). Channel development: Online Retail has a huge advantage of the low cost of broadcasting with its customers. Omnichannel experience for consistent experience of Brand value. Dis intermediation leads to huge saving upto 40 to 60% of profits.  

There is a constant need for good merchandising ideas that are creative yet practical in order to attract customers. The highest maturity model in Retail is of co-creation with the Merchandises and the target customer base. In which the Retailer acts as a hub of information for orchestrating value in the ecosystem. There is a constant need for balancing tradeoff based on the Customer segment / empirical info, these choices would be made based on the positioning / Branding of the retailer and their 4P position:

Product range vs Cost

Big Brand Names vs private labels

Service vs Price

Depth vs Number of categories.  

Companies have been working to leverage the best of both world - Brick & Mortar POS model and Online / E-Commerce retail model. Companies are leveraging best of both world & ideas for competitive advantage, Brick & Mortar Companies are :

1. Getting closer to the customer through Smart IoT store and intelligent Video analytics.
2. Customization of stores to neighborhood preferences Localization of the Stores..
3. Stores as fulfilment centers…reduce the last mile delivery burden
4. Cashier-less Stores
5. Reduce Inventory by Digital Fulfilment
6. Retail speed up instore online order fulfillment via tech
7. Instore automation drive data collection
8. Facial recognition to track shoppers
9. Vendor Managed Inventories: Matching supply to demand

 Digitally leveraging

1. Getting closer to customer's and using data to stay on top of trends
2. Upsell - Selling to the customer through recommendations
3. Move to be a Market place platform and leverage network effects.
4. Encourage creative, ideas and incubate in our a launchpad (high margins - innovative products)
5. Private Labels goods / Their own Brand's once your understanding of Customer is strong.
6. Long-tail products, with low margins, can be effectively managed on digital channels.
7. Wallet/loyalty program is cost-effective to implement

 Big data Analytics can highlight inefficiencies and streamlining Business Processes. AI can play a significant role in Consumer / Market Insight, Operations, Supply chain, Merchandising & Product Development.  

The current industry trend is to compete on Customer experiences and also use Big data for sustainable Competitive advantage, This includes Personalization for increase relatedness and engagement. Defending against the threat of E-commerce, by coming up with transformation to be competitive / get closer to customers. Bring in Organization Agility for Nimble organization with a Culture of Experimentations, with DevOps as part of the process.