Friday 18th Aug 2017 - Logistics & Supply Chain

Understanding the consumer is key to omni-channel operations

Demographic change has played a big role in the development of e-commerce over the past few years, and in a keynote address at the Omni-Channel Conference, Mandy Critchley, director of brand partnerships at mySupermarket, highlighted the impact of demographics on the future market.

Mandy Critchley at the Omni-channel conference.

Mandy Critchley, director of brand partnerships, mySupermarket

There has been a trend in grocery for consumers to research online even if they mean to buy in store. She identified a key period between researching and buying – typically two days. And of those that go on to buy, some 35 per cent buy offline and 65 per cent online.

Critchley pointed out that 40 per cent of products are on promotion at any one time, and increasingly consumers understand that they need to keep on top of that.

And she pointed out that the knowledge gained from seeing what shoppers are doing online can be used to improve the understanding of buying patterns.

She gave the example of click stream analysis to see which day of the week shoppers are buying particular products. For example, research shows that spirits tend to be bought on Thursdays while coffee is bought on Mondays.

Critchley said that it is also important to look at what else is likely to be in a shopper’s basket, as this gives retailers insight into the shopper’s process.

Critchley also pointed out that unlike in-store shopping, online is not a linear process – there are many different ways to get to a category. Understanding how the shopper has got to the point of purchase is important.

Looking ahead, she said retailers needed to understand how the shopper has changed and find better ways to group products to attract shoppers.

She highlighted the importance of the omni-channel path – identifying how retailers can follow shoppers over path to purchase, and identify and target shoppers anywhere, on any device. By building segments of those shoppers – retailers can target with their messages over two days of buying process.


David Grant – Chairman

David Grant at the Omni-Channel Conference.

David Grant.

David Grant, professor of logistics at the University of Hull and distinguished senior fellow at Hanken School of Economics, Helsinki.

The conference, in London on 28th and 29th September, is chaired by David Grant, professor of logistics at the University of Hull and distinguished senior fellow at Hanken School of Economics, Helsinki.

Grant’s research encompasses logistics customer service, satisfaction and service quality; retail logistics; and reverse, closed-loop and sustainable logistics. His business experience includes retail, corporate banking, technical design and consulting.


Mapping the customer journey

Kelly McKnight, head of trends at Join the Dots, provided an insight into how to map the customer’s purchasing journey and how retailers can adapt their strategy.

UK shoppers buy more online per head than other developed countries, she said, and in part this is cultural: “We are quite hedonistic as a country,” she said, and went on to point out that time not money is the 21st century’s most precious commodity.

McKnight highlighted the importance of the concept of “hedonic expectation” and said people’s expectation of time are changing. There has been a redistribution of how we use time, and we are cramming more in.

At the same time, following the recession, people are now more willing to spend and engage more with brands. They are looking for brands to enhance their experiences.

She pointed to research that showed 89 per cent feel “ it’s important to have fun and enjoy life now while times are good”. “Omni-channel can help with best use of time,” said McKnight.

Looking ahead, she highlighted the theme of “Future Uncertainty”. We are out of recession but there is a lot of uncertainty across the world – including Brexit, the US presidential election, the migrant crisis, terrorism, as well as other uncertainties.

In response, she said, people want to control their immediate environment and block out the wider world. What people want is to escape, to immerse themselves in their own private world. People also want to slow down, live in the now, and revel in what they have got at the moment. This means that people want to do the mundane things faster so that they can enjoy other things at leisure.


Social Media

The use of social media was examined by Ian Irving, founder and creative strategy director of Kemosabe, who is recognised as one of the founding leaders of ‘Experiential’ marketing in the UK.

He pointed out that consumer behaviour is changing so fast that brand and agencies struggle to keep up. The gap between the live environment and the digital environment is becoming more and more blurred, he said, and suggested that we should be talking in terms of the “Phygital” – merging of physical and digital world. “If you don’t have a multi-platform sales strategy – you don’t have a sales strategy.”

You must assume nothing he said, arguing that traditional demographics is becoming out of date – what is needed is a shift towards the “Psychographic” – dividing market into segments by personality trails, values attitudes interests and lifestyles. He also said it is important to understand influences and passions, and that this is key to engagement and deeper relationships with consumers which should result in repeat business.


How M&S is improving the multi-channel process

Marks & Spencer’s strategy for building its multi-channel offering came under scrutiny at the Omni-Channel Conference on Thursday, in a presentation by Ricky Wilson, head of operations for M&S.co.uk.

Wilson has worked with the M&S web site since 1999, and explained out the retailer has been investing in both the front and back end systems.

It has opened up new doors with the introduction of the Sparks Card, which was launched last November. 40 per cent of sales are now made via the Sparks Card. The retailer also introduced its stock finder last year, an online outlet which enables customers to check if certain items are in stock in their local stores.

An investment in a 900,000 sq ft distribution centre at Castle Donington, Leicestershire, three years ago, has been a turning point for the retailer. 1.4million electronically tagged items are received from suppliers every week at the warehouse. The heavily automated facility includes an 82 ft high automated storage shed, a cross sorting conveyor belt, boxed picking, hanging picking. Some 1,200 people work at the site during peak times.

But in-store fulfilment has also been a big development for the business. Wilson gave the example of a shopper who would normally purchase from store, but who wants to know if a clothing item is available in their size in their local store. It’s in stock, so they’ve decided to buy the item. With the Sparks Card system Marks & Spencer is able to track the item – find out exactly what the customer looked at, whether the customer bought the item that day, or over the next few weeks.

The Shop Your Way Click-and-Collect service is a fundamental way customers shop with us now, said Wilson. And Marks & Spencer are exploring different ways of improving and transforming this side of the business.

“We’re redesigning collection tools, we’ve got rid of computers and changed these to hand held devices,” said Wilson.

The handheld devices take up little to no space, and enable employees to multi-task while finding click-and-collect orders.

“It’s now quicker to actually go and find the order,” said Wilson. “We used to do it by surname – gave it a really odd set up.” Now the company asks for the last three digits of the booking number. “The speed of service is far improved,” said Wilson.

One particularly innovative new development is the implementation of fitting rooms near where they pick up their items. This means customers can try on their items straight away, and pop the item straight into the returns box if it doesn’t fit.

“We get that item back into stock quicker,” said Wilson.


Four uses of data

Data is changing quite dramatically, Andrew Mann, vice president of insight and CRM at Asda Walmart told delegates at the Omni-Channel Conference. “Data and how it flows around organisations and becoming more open is going to be a challenge we are all going to have to think about.”

Mann has only been at Asda for a month – but has worked at a range of big supermarket retailers over the last 15years, including The Co-operative and Tesco. His focus is on use data to improve an organisation’s omni-channel operation.

He identified four key uses of data:

  1. Transformational understanding of the business – better for customers and simpler for colleagues, as well as making things cheaper.
  2. Delivering the most relevant, inspirational messaging – in a segmented and targeted way. Right time and person is critical.
  3. Creation of new services.
  4. Creation of stronger communities – more and more organisations are starting to build communities.

But he emphasised the fact that data is not the be all and end all. He said that a company needs to start by understanding commercial goals – is it sales? Profitability? And answer the question – how are you going to provide solutions for customers? As well as aligning technology, and identifying the role of data in this alignment.

He used a number of examples of companies that have used data in innovative way, including Disneyland using multi-use RFID badges which track customers and enable them to open hotel room doors, work out where they are going or need to be, UPS tracking their drivers, lorries and packages, and Sainsbury’s ability to measure and adjust the temperature of every chiller or freezer.

He also spoke about Starbucks, which he said was one of the businesses with the most successful in using data, and had a sophisticated segmentation scheme – resulting in a phone app that enables customers to buy a coffee before they reach a store, and have it waiting for them when they get there. British Gas and City mapper were also cited as companies use data in innovative ways.


Solving the problem of returns

Returns was a particularly popular theme on the second day of the Omni-Channel Conference. Kicking off the returns conversation was Alistair Sercombe, who has been head of returns at Debenhams for just a year. He previously worked for Argos for 14 years, the last four in returns.

“Is returns prevention manageable?” asked Sercombe. “Absolutely”. He wasn’t shy in revealing that returns handling at the retailer wasn’t up to scratch before. Since bringing in Clear Returns, a software company, and spending time analysing its healthy online database, it has improved.

Prior to the investigation into why customers were returning products, Debenhams thought the problem may have been to do with the sizing and/or images of clothes/products on its website.

But it found that there was a segmentation in the customers that are returning items, the company realised it was far more complex than this.

Sercombe highlighted a number of different customer groups:

* Keepers – customers who don’t like to return.

* High risk returners – consumers that have a very clear expectation of what they want so won’t buy with a retailer again if it goes wrong.

* Bad returners – consumers that buy lots while sending most of the products back. Sercombe said that there is a lot of work that needs to be done around finding out why

* Good returners – average customer that would return some items, but mainly kept them.

Sercombe looked as ways minimise returns including tailored marketing campaigns which would involve being more selective, stopping the over promotion to “bad returners”, trying to align customers with products they will buy and keep, improving the customer experience by proactively contacting high risk customers, and triggering automated responses, specific scripts and messages.

Gary Winter, business development director at UTL, pointed out that returns are growing and customer behaviour is changing.

He thinks that the distinction of omni-channel platforms is blurring, and that people often don’t see the difference between store based, click and collect and online shopping.

“The cost is growing hugely – if don’t have an effective strategy it will start eating into your bottom line,” said Winter. “It’s about moving it along while protecting the brand.”

He said that a key way to deal with returns, like Sercombe, is using data. But he focussed on the importance of forecasting returns via data. Finding out the probable rates to prepare.

UTL looks at geographical trends, asking the question: do we see a certain propensity in this area? And, said Winter, this can effect where you put your warehouses and logistics.

Monitoring consumer buying patterns and the creation of operational plans has proven to work at UTL, said Winter. He also said that better information and instructions pre-sale, as well as appropriate selling, can be a good way to prevent the return from happening

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