This one is a bit academic. I wrote this white paper a while ago and have finally gotten down to posting it here.
Multichannel retail is exploding, with practically all Tier 1
retailers reporting a significant growth rate in digital channels,
primarily web-based, compared to traditional channels. However, a
majority of retailers lack an in-depth understanding of customer
cross-channel shopping activity, leading to suboptimal per-customer
revenue. The effect of retailers endeavoring to be present across
multiple channels and making sure that they come across as a single
entity to the consumer across channels is the essence of cross
channel retailing. While this is good news for the consumers,
retailers face multiple challenges in rendering this ‘seamless
experience’ promise, one of them being the planning of assortment
and managing inventories for these multiple channels. While ensuring
the breath and depth of the assortment in such a way that it is
enticing to today’s spoilt-for-choice customers is a challenge,
ensuring that this is done at reduced costs to maintain competitive
edge is another challenge.
Till date retailers are still grappling with how to understand
customer behavior in a cross channel environment. Use of business
intelligence technology can turn this around and significantly add to
profitability.
Cross Channel Retail
Cross-channel retail is often mixed up with multi-channel retail.
However cross-channel is far more evolved than just being present in
multiple channels. The idea behind cross-channel retail is that a
consumer needs to have a consistent experience with a retailer across
the multiple channels that the retailer is present in. That means
having the same marketing message, pricing, and customer service
everywhere — in store, print, mobile, email, online, catalog or
call center. Cross channel also means that the consumer can continue
his association with the retailer in one channel from where he left
off in another channel, seamlessly.
Impact of Cross Channel Retail
- Cross-channel shopping behavior is causing retailers to invest in technologies, particularly business intelligence (BI) technologies to differentiate in today’s competitive environment.
- This better understanding of the customer forms the basis for catering to different customer segments through the effective use of retail technologies.
- Inability to understand the importance of zealously managing assortments across multiple retail channels is creating a level of customer service risk for retailers.
- The need for customer-centric merchandising is pushing retailers to explore customer segmentation across channels.
- With the advent of cross channel retailers are forced to move from being product-centric to customer centricity.
The gap between retailers’ understanding of consumers and
consumers’ behavior in the market pace is markedly different.
Consumers understand and are aggressively using cross-channel
shopping avenues. Unfortunately, retailers who have presence in
multiple channels are significantly left behind in delivering what
customers need, and face the possibility of greater market share
erosion as pure play competitors, such as Amazon, expand assortments
into newer and newer categories. This is the reason why retailers,
such as Best Buy, have been unable to ride the changing wave and
succumb to becoming showrooms for Amazon.
Cross Channel Assortments
Now let us look at assortment planning and merchandising for todays
cross channel shoppers. The challenge of delivering the right product
to the right location at the right price was present even when there
were singular channels. Now with the advent of multiple channels and
the customer crossing over and continuously using these multiple
channels, assortment planners and merchandisers need to start viewing
the enterprise more holistically.
Customers today want a streamlined and consistent experience across
channels and a wide selection of merchandise to choose from in every
channel they shop with. While planners and merchandisers should still
plan for and merchandise for each of these channels differently
keeping in line with the aesthetics and defining attributes of the
channel, they must still look at integrating assortment planning at
an enterprise level, since the expectations of the customer in each
channel is the same.
Again retailers who have empowered themselves with BI profit here,
since they know their customers’ demands and shopping patterns and
how to maximize their shopping experience. Overall an integrated
planning approach that flows down from the corporate level keeping in
mind the financial goals of the organization, but at the same time
not losing track of the pulse of the customer is key in a
cross-channel environment. At the end of the day a core assortment
needs to be planned at enterprise level, in line with customer demand
in every channel. It is only the rendering or fulfillment pattern
that would differ across channels.
Challenges
Here are some of the typical challenges faced by merchandisers and
planners in a cross-channel environment.
- Choosing of a core assortment in every channel and expanding further categories in accordance to each channel’s demands
- Different kinds of fulfillment options in the various channels
- streamlining the assortment planning process to reduce markdowns and improve the appeal of the products
- consolidating multi-channel inventory to reduce costs
- enhancing the accuracy of allocation
- redistribution of inventory across channels to improve availability
Solution
- At the same time, the extended assortment should be evaluated for varying types of fulfillment options. Carrying up-sell items in a store with limited shelf space may not be possible or make sense from an inventory risk factor. But offering this same merchandise on a retailer's website or through a POS and drop shipping the item direct to the consumer creates a richer shopping experience for consumers, and minimizes risk and inventory carrying costs for retailers.
- inventory planning systems that provide retailers with the tools to logically pool inventory across channels
- accurate allocation and redistribution of the inventory based on real-time analysis of trends
- The integration of planning and execution capabilities in a single system gives retailers the ability to plan their assortments, forecast their demand and distribute orders in a single cohesive process
- technology allows retailers to have a consolidated view of inventory levels and demand across channels
- provides far more effective planning, resulting in cost reductions associated with holding pooled inventory, improved margins due to better planning of assortments, reduced excess stock and enhanced sales potential through accurate allocation and redistribution of inventory
Key considerations for creating online assortments
- streamlining the assortment planning process to reduce markdowns and improve the appeal of the products
Manage inventory across channels
- consolidating multi-channel inventory to reduce costs
- enhancing the accuracy of allocation
- redistribution of inventory across channels to improve availability
Today’s
more intelligent customer often doesn’t require the levels of
advice from store staff as they have done in the past. Instead, they
often enter a store knowing exactly what item they want, and the
price they’re willing to buy it at. With this in mind, the key
thing they are asking the store associate to do is fulfil an order.
This means the associate needs better tools to help them have total
visibility into the supply chain, understand stock levels and know
when an item is likely to be in stock
These
solutions can help in a variety of ways, giving staff information
about when they are likely to receive inventory, adjust inventory
requirements and better fulfil orders,” says Fenwick. “Not only
this, but it gives them access to the same information that consumers
are accessing when they’re shopping online, giving them the
opportunity to direct a customer to their website while they’re in
the store, and improving the possibility of brand loyalty across
channels
References:
References:
No comments:
Post a Comment