Smart workIncreasing Sales, Improving Efficiency,Working Smarter in Retail.The new science of selling, from supply chain to point of sale and beyond
2 Increasing Sales, Improving Efficiency, Working Smarter in Retail.Working smarter in retail:Aligning the way people shopwith the way they liveIt used to be so simple. In the old days, a vendor rented a shop, hung a sign and waited for customers topatronize the store. Of course, in these quainter days of retail, local operations and simple supply chainsresulted in high prices and little choice. But at least it was simple.Today’s retail environment is decidedly more complicated. The Fortunately, the same technology that is reshaping the way weInternet has changed the way people live and work. As a result, live is also revolutionizing retailing, from store shelves thatevery retailer has been thrown into a global fight for survival. know when they’re empty to smart mirrors that recommendCompetitors can come from the other side of the world, steal- accessories and update a customer’s social networks. It’s all parting marketplace share overnight. Products are sourced through of what’s possible when retail environments take advantage ofsupply chains of astounding complexity. Margins are sliced ever instrumented, interconnected and intelligent systems.thinner. And customers have more options, less loyalty and anendless source of information at their fingertips. No matter Leading retailers are already implementing merchandising andhow hard some retailers wish for them, the simple, old days of supply chains that can adapt and respond dynamically. Theyretail are never coming back. are maximizing the efficiency of their store operations. And they are doing all of this not because they can, but because theyRetailing has always been a competitive game. But the rules of have to stay competitive. Because today’s consumer is less patientthat game are changing faster than ever. It is no longer enough and more fickle than ever. Today’s consumer is more connectedto offer quality goods and services. Today, retailers must also and aware. Simply put, today’s consumer is smarter. And smartermaintain the most efficient supply chain. They must manage consumers need smarter retail.their store operations with precision. And they must offer cus-tomers a shopping experience that matches the way people liveand work today. Anything less than that and it’s time to closeup shop.
Smart work 3Today’s retail Smarter retailEvery day, large numbers of retailers shut their doors forever, Imagine this: A new music video shows a popular artist wearing awith barely a ripple in the global economic waters. And most of particular brand of shoes. Rebecca, a 17-year-old high schoolthem are not driven out of business because they lack quality student, loves the shoes and uses her smart phone to go online toproducts or lose their passion for the business. They’re driven find them. While online, she is able to see that some friends in herout of business because they can’t keep up with their customers. vast social network gave the shoes good reviews. The site alsoTheir practices are outdated and inefficient. Their processes suggests accessories that match the shoes. She initiates an instantare too slow. They are driven out of business because they are chat with a customer service representative to make sure she willfocused on today, not tomorrow. receive her shipment in time for a big date that weekend.• Today, flawed supply chain integrations can drive inventory Meanwhile, Rob in the merchandising group at the shoe com- levels as much as 40 percent higher within a few months.1 pany receives an alert on his dashboard because Rebecca — and• Today, retailers execute less than 60 percent of their promo- thousands of other teenage girls like her — are ordering the tional initiatives the way they intended, leaving billions of same pair of shoes. Rob sets up a collaboration session with his dollars of sales on the table.2 team, which informs him that a new music video online has• Today, online shoppers often complain that content provided more than two million views, and the shoes are flagged as a on retail Web sites is insufficient to complete a purchase. viral trend.Numbers like these are unsustainable to any retailer that plans Instantly, suppliers are alerted and begin bidding on the contractsto stay in business. And yet many businesses continue to adver- for materials and shipping to meet the new demand. Merchan-tise products that are out of stock. Or miss ample opportunities dising rules are assembled and travel electronically with the newto up-sell and cross-sell. Or fail to engage the customer beyond shoes to the stores to help ensure proper placement and up-sellingthe store or Web site. These are the reasons that so many of opportunities. And online ad campaigns are queued to run in mar-today’s retailers are in danger of becoming yesterday’s news. ketplaces that have shown the most potential. This is happening today. This is working smarter in retail, where businesses can adapt and respond in real time to customer trends. Where inventories are maximized and supply chain costs are min- imized. And where collaboration goes well beyond the boundaries of the enterprise and seamlessly ties together suppliers, retail stores and customers.
4 Increasing Sales, Improving Efficiency, Working Smarter in Retail.Increasing salesCarrefour Group Figure 1: Carrefour’s in-store promotion program offers a consistentIn the intensely competitive hypermarket industry, where mar- and immediate customer experience across its stores.gins are thin and customer loyalty is fleeting, every promotioncounts. That’s why Carrefour, one of the world’s largest retailers,decided last year to take back control of its marketing promo- Customerstions and loyalty programs from a third party. Carrefour built afirst-of-a-kind, fully integrated in-store promotion programthat offered a consistent customer experience among its hyper-market, supermarket, discount and convenience stores. Thenew system enabled Carrefour to identify extremely targeted Point of salecustomer segments, determine which products these customersare buying and project which products they are likely to buy,all instantly, at the point of sale. Then, based on a set of prede-termined rules, Carrefour could offer the customer an optimalcombination of instant coupons, coupons for later use andpoints-based incentives from the loyalty program. The solutionhas led to greater revenue; deeper knowledge of customers; Coupons Points-basedstronger customer loyalty; and faster, more targeted promo- incentivestional campaigns. “Our new model for managing promotionalcampaigns gets us closer to our customers, gives us greatercontrol and vastly improves our overall effectiveness,” saysHervé Thoumyre, chief information officer, Carrefour Group.
Smart work 5Improving efficiencyMetro Group Figure 2: Metro Group’s use of item-level RFID transforms howSince 2002, the benefits of a radio frequency identification customers shop.(RFID)–enabled supply chain have been apparent to MetroGroup, one of the world’s largest retailers, with more than 2,100outlets in 32 countries throughout Europe. The company hasbeen tracking its products from suppliers to the back rooms ofits stores as part of its Metro Group Future Store Initiative,the largest RFID supply chain solution in all of Europe. But itwasn’t until the Metro Group extended the RFID solution to RFID tagthe shelves and dressing rooms of its stores that the solutionrevolutionized the customer experience. More than 30,000articles of men’s clothing are tagged and tracked throughoutone retail shop, allowing shelves to be restocked immediatelyif needed. And if a customer brings an article of clothing into 30,000 articles of men’sone of the store’s smart dressing rooms, the mirror can suggest Back rooms clothing Store shelvescomplementary products or direct the customer to the exactlocation of the same product in different sizes and colors. Thesolution enhances the customer experience and also increasesthe efficiency of store operations by reducing out-of-stock situa-tions, increasing revenues and providing instantaneous inven-tory counts. Complementary product
6 Increasing Sales, Improving Efficiency, Working Smarter in Retail.Smarter retailMoosejaw Mountaineering Figure 3: Moosejaw Mountaineering surrounds the customer withAs a retailer of outdoor gear, Moosejaw Mountaineering knows community both online and in the store.a thing or two about the way young people live, work and playtoday. That’s why Moosejaw has built an innovative, community- Online communitybased, multichannel shopping experience to cultivate loyaltyamong its customers. They call it social commerce, and it con-sists of thousands of customer reviews; texting of trackingnumbers and promotions to mobile phones; and the MoosejawMadness community, where customers post photos from their Blogslatest adventures, read the irreverent Daily Remark and immersethemselves in Moosejaw’s unique culture. But Moosejaw is alsoadding unique social commerce features, such as product-levelblogging and public-facing customer profiles with photos,videos, adventure stories and gear lists for upcoming trips.Customers can interact with Moosejaw staff and with othercustomers on the Moosejaw Web site and then connect thosethreads on their mobile phones. And when they come into the A.Moosejaw retail stores, they can even buy, ship and pay using Promotionthe exact same services they are familiar with online as well as B.be offered the same targeted promotions and cross-sells whilethey read reviews, blogs and recommendations. It’s an example Customer In-store employeesof how smart retailing is designing customer experiences to fitthe way people live today.
Smart work 7 Getting started Every day, retailers are taking steps to increase their efficiency, improve their customer experiences and develop smarter retail. Those that don’t are likely to be left behind. To find out if your organization is working smarter in retail, start by asking some critical questions:“Our new model for managing How many of your employees have access to the information they need promotional campaigns gets at the time and place they need it? us closer to our customers, With which suppliers, stores and gives us greater control and cus omers have you moved beyond t vastly improves our overall coop ration to true collaboration? e effectiveness.” Which of your operational processes are able to adapt and respond quickly —Hervé Thoumyre, chief information officer, Carrefour Group to changing marketplace demands? How much value are you getting out of the information stored across your organization? How well do you know each of your customers? When the answers to these questions show room for improve- ment, it may be time for you to call IBM. To learn more about smarter retail and help us build a smarter planet one shopper at a time, visit: ibm.com/smartwork