Working Smarter in Retail, Increasing Sales, Improving Efficiency

Smart work Increasing 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 shop with the way they live It used to be so simple. In the old days, a vendor rented a shop, hung a sign and waited for customers to patronize the store. Of course, in these quainter days of retail, local operations and simple supply chains resulted 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 we Internet has changed the way people live and work. As a result, live is also revolutionizing retailing, from store shelves that every retailer has been thrown into a global fight for survival. know when they’re empty to smart mirrors that recommend Competitors can come from the other side of the world, steal- accessories and update a customer’s social networks. It’s all part ing marketplace share overnight. Products are sourced through of what’s possible when retail environments take advantage of supply chains of astounding complexity. Margins are sliced ever instrumented, interconnected and intelligent systems. thinner. And customers have more options, less loyalty and an endless source of information at their fingertips. No matter Leading retailers are already implementing merchandising and how hard some retailers wish for them, the simple, old days of supply chains that can adapt and respond dynamically. They retail 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 they Retailing has always been a competitive game. But the rules of have to stay competitive. Because today’s consumer is less patient that game are changing faster than ever. It is no longer enough and more fickle than ever. Today’s consumer is more connected to offer quality goods and services. Today, retailers must also and aware. Simply put, today’s consumer is smarter. And smarter maintain the most efficient supply chain. They must manage consumers need smarter retail. their store operations with precision. And they must offer customers a shopping experience that matches the way people live and work today. Anything less than that and it’s time to close up shop.

Smart work 3 Today’s retail Smarter retail Every day, large numbers of retailers shut their doors forever, Imagine this: A new music video shows a popular artist wearing a with barely a ripple in the global economic waters. And most of particular brand of shoes. Rebecca, a 17-year-old high school them are not driven out of business because they lack quality student, loves the shoes and uses her smart phone to go online to products or lose their passion for the business. They’re driven find them. While online, she is able to see that some friends in her out of business because they can’t keep up with their customers. vast social network gave the shoes good reviews. The site also Their practices are outdated and inefficient. Their processes suggests accessories that match the shoes. She initiates an instant are too slow. They are driven out of business because they are chat with a customer service representative to make sure she will focused 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 contracts to 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 new to up-sell and cross-sell. Or fail to engage the customer beyond shoes to the stores to help ensure proper placement and up-selling the 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 sales Carrefour Group Figure 1: Carrefour’s in-store promotion program offers a consistent In the intensely competitive hypermarket industry, where mar- and immediate customer experience across its stores. gins are thin and customer loyalty is fleeting, every promotion counts. That’s why Carrefour, one of the world’s largest retailers, decided last year to take back control of its marketing promo- Customers tions and loyalty programs from a third party. Carrefour built a first-of-a-kind, fully integrated in-store promotion program that offered a consistent customer experience among its hypermarket, supermarket, discount and convenience stores. The new system enabled Carrefour to identify extremely targeted Point of sale customer segments, determine which products these customers are 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 optimal combination of instant coupons, coupons for later use and points-based incentives from the loyalty program. The solution has led to greater revenue; deeper knowledge of customers; Coupons Points-based stronger customer loyalty; and faster, more targeted promo- incentives tional campaigns. “Our new model for managing promotional campaigns gets us closer to our customers, gives us greater control and vastly improves our overall effectiveness,” says Hervé Thoumyre, chief information officer, Carrefour Group.

Smart work 5 Improving efficiency Metro Group Figure 2: Metro Group’s use of item-level RFID transforms how Since 2002, the benefits of a radio frequency identification customers shop. (RFID)–enabled supply chain have been apparent to Metro Group, one of the world’s largest retailers, with more than 2,100 outlets in 32 countries throughout Europe. The company has been tracking its products from suppliers to the back rooms of its stores as part of its Metro Group Future Store Initiative, the largest RFID supply chain solution in all of Europe. But it wasn’t until the Metro Group extended the RFID solution to RFID tag the shelves and dressing rooms of its stores that the solution revolutionized the customer experience. More than 30,000 articles of men’s clothing are tagged and tracked throughout one retail shop, allowing shelves to be restocked immediately if needed. And if a customer brings an article of clothing into 30,000 articles of men’s one of the store’s smart dressing rooms, the mirror can suggest Back rooms clothing Store shelves complementary products or direct the customer to the exact location of the same product in different sizes and colors. The solution enhances the customer experience and also increases the efficiency of store operations by reducing out-of-stock situa- tions, increasing revenues and providing instantaneous inventory counts. Complementary product

6 Increasing Sales, Improving Efficiency, Working Smarter in Retail. Smarter retail Moosejaw Mountaineering Figure 3: Moosejaw Mountaineering surrounds the customer with As 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 play today. That’s why Moosejaw has built an innovative, community- Online community based, multichannel shopping experience to cultivate loyalty among its customers. They call it social commerce, and it con- sists of thousands of customer reviews; texting of tracking numbers and promotions to mobile phones; and the Moosejaw Madness community, where customers post photos from their Blogs latest adventures, read the irreverent Daily Remark and immerse themselves in Moosejaw’s unique culture. But Moosejaw is also adding unique social commerce features, such as product-level blogging and public-facing customer profiles with photos, videos, adventure stories and gear lists for upcoming trips. Customers can interact with Moosejaw staff and with other customers on the Moosejaw Web site and then connect those threads on their mobile phones. And when they come into the A. Moosejaw retail stores, they can even buy, ship and pay using Promotion the exact same services they are familiar with online as well as B. be offered the same targeted promotions and cross-sells while they read reviews, blogs and recommendations. It’s an example Customer In-store employees of how smart retailing is designing customer experiences to fit the 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 customers have you moved beyond vastly improves our overall cooperation to true collaboration? 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

© Copyright IBM Corporation 2010 IBM Corporation Software Group Route 100 Somers, NY 10589 U.S.A. Produced in the United States of America February 2010 All Rights Reserved IBM, the IBM logo, and ibm.com are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Other company, product, and service names may be trademarks or service marks of others. References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates. 1 The Boston Consulting Group, Creating the Optimal Supply Chain, September 2006, http://www.bcg.com/documents/file14863.pdf 2 AMR Research, Bridging the Merchandising and Store Operations Divide, Robert Garf and Fenella Sirkisoon, December 27, 2007. Please Recycle WSB14044-USEN-00

Working Smarter in Retail, Increasing Sales, Improving Efficiency

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Working Smarter in Retail, Increasing Sales, Improving Efficiency Document Transcript