Friday, March 27, 2015

What Will Be Next Retailer's Largest Market?

Western retailers including companies such as Walmart, Carrefour, Auchan, Casino (yes 3 French companies that thrive abroad, cocorico), Tesco or Costco are looming on new markets to develop in order to maintain high growth rates. 

A lot of them have bet on China, and they bet right. Indeed, China will soon become the largest retail market in the world. China has allowed international retailers to grow fast while their domestic market was remaining steady. And despite the last years issues, like higher legislation and slower growth, China is still a great market for the years ahead. 

There are still a lot of room for opening new stores, launching new categories and innovations. 

But now, what will be the next markets? Indeed, India has a great potential but has been struggling with its politics, which cooled off most of retailers. Philippines, which is also one of the most populated country, has also been a question, mostly due to its corruption. This is the reason why Carrefour took off not so long ago. 

But the next real playground to those retailers will be the digital one. For sure, retailers will invest hard online, and this is a matter of time when Carrefour, Walmart or Tesco will make a significant move online. And this will be an interesting story to follow.

Thursday, March 26, 2015

Retailing: Working With The Customer Lifetime Value

The Customer Lifetime Value is a key component of the whole customer relationship management concept. The main idea is that a customer value increase with the time it stays a customer. The longer the relationship go, the more sales and benefits you get.

It is difficult though to have clear data explaining the facts. Here I found, a great chart in an article about loyalty program in retailing. It shows how the profit per customers evolve through the time. It shows well the benefit to think about the customer life cycle. 

You can clearly see that the profits increase with the time dramatically. Therefore, you should pay attention to how you deal with your customers depending on if he is a prospect, a regular, or a loyal customer.

Source: Harvard Business School Working Knowledge

Tuesday, March 24, 2015

Book Review: The Paradox of Choice by Barry Schwartz

It has been a while I have started to read this book, but never really finished it. I ended last week the reading of the book. The concept of the book is to explain all the different component of choice making, and also to see how our new world, where we have more and more choice, is actually making it more difficult to choose.

Indeed, the more the options you have, the harder the decision will be, and higher the percentage of chances of regrets you may get from not selecting the other solutions. 

As I have said several times on this blog, my classes in Oswego about Customer behavior, and the shopper's decision making process where key in my will to work in the marketing and customer relationship management part. Therefore I found in this book a lot of components of what I learned at that time.

It is difficult to give you in a single blog post all the interesting insights of the book, but in overall, it is quite fast to read, and well documented with a lot of examples. What is also great about the book, it is that they give you the good process in decision making you should implement in order to make the right decisions.

In our nowadays society where information is everywhere, and the options so numerous, decision making is one of the master key to succeed in life. Therefore, you should have a look at the book, that explains clearly what to take into consideration and when.

Here is a great video showing you some of the enlightment I found in the book, held at a Ted event.

Monday, March 23, 2015

Supply Chain As One Of The Key For Brick&Mortar Online Strategy

As I have said, 2015 will be the year of a great online confrontation between pure players like Amazon and brick&mortar competitors, like Carrefour or Walmart. If Amazon master the online playground, and large marketshares which will be difficult to earn, brick&mortar owns a large store network to organize click&collect. 

Nevertheless, one of the key factor of success of Amazon is its inventory management. It masters the information of product availability in order to provide higher customer service. I read an interesting article about supply chain on this topic

What the article highlight is that the fact for a retailer to have a complete visibility of its inventory both online and offline, at all time, is a key to its online success. It is easier said than done though: The compatibility and the merger between both the online supply chain and the off line one is far from being achived.
39% of retailers say they have a synchronization of both channels. 44% of the retailers which responded to the study say they can't synchronize both, and 42% of them don't have a complete vision of its customers between both channels.

One of the key to brick&mortar strategy to go online is this information system synchronization and more flexibility in its supply chain. 

Friday, March 20, 2015

CRM in Retail: Target and Whole Food Market Testing New Loyalty Reward Programs

Loyalty progam has been existing for quite a while in the retail business. Some companies, especially Tesco, have thriven to use customer data to propose customized coupons and discounts, in order to reach customer loyalty.

Both of the companies have points based loyalty programs. The particularity of points based is that it bases its value on points rather than cash. The good thing about such programs is that it allows to go beyond the cashback concepts, and propose some rewards that may be for example for Whole Food Markets some cooking classes. The bad thing is that it is harder for customers to see the generosity rate of the program, and hence the benefits of it.

Nevertheless, as both retailers are trying to add added value beyond the discount concept, it may be a good strategy. 

Both obviously set their strategy online, and using mobile devices. 

Now, it is difficult for fast moving goods retailers to have a strong customer experience via a loyalty reward programs. Indeed, the loyalty programs allow to have massive customer data, but it is difficult to have a clear added value to the relationship when you have discount products bought every week.

We will see what kind of results both retailers will have from these initiatives.

Thursday, March 19, 2015

Walmart and Its Relationship With Suppliers

Walmart is by far the largest retailer in the world. It has based its supremacy first by dominating small US markets where large retailers at the time did not want to invest, but then developped main assets such as a strong supply chain management thanks to information system, a highly effectif approach of category management and cost killing, and then a strong power of negociation.

I read a very detailed and interesting post of the Fast Company about the relationship Walmart has with its supplier. Obviously, it pictures an oger willing to eat of its supplier. I don't really want to take side in this article as I am part of the trade, but obviously, you can see why it really matters to have great relationship between a retailer and its suppliers. The reason why I share with you this article is that it is difficult to find information on how Walmart proceed in terms of negociation, and it may be by far the most documented article I found.

It highlights there are positive aspects about having Walmart as a client:
- The raise of sales, and market shares
- The ability to reach by far the largest number of people on the planet
- The ability to be leaner and more efficient as a supplier, by killing costs wherever they are

And some side effects:
- Lowering the % of margin and earning market shares at Walmart also implies less margin at its competitors
- It may have a social impact as some suppliers have hard time keeping on the pace.

Wednesday, March 18, 2015

How The Fnac Succeeded by Embracing Multi Channel Retailing

Radio Classique had a very interesting radio show on February the 28th about the Fnac and how the retailer succeeded to transform itself to thrive in the new high tech world. 

Indeed, the Fnac had to face the very same challenges both electronics and cultural goods retailer had to face. The challenges that made companies like Barnes & Nobles or Radio Shack hit the grown lately.

Indeed, the concept of Fnac is to spread culture both by medium (show tickets, but also TV, radio, PCs, cameras...) and by art itself (CDs, books, DVDs, Video Games, etc...). When both of those categories where hitted hard by Ecommerce, a lot of people were questionning how the retailer could compete with its new environment. 

Indeed, it seemed difficult to compete with Emerchants, who were able to have large product range, aggressive pricing, and foremost could deliver customers home.

After 4 consecutive years of declining sales, the Fnac delivered a 41 millions € profit. 

How Did The Fnac Managed To Overcome Those Challenges?

As the narrator says, the fnac has set up a strategy and was able to implement it successfully, which is easier said than done. It succeeded in blending its brick & mortar retail network and its Ecommerce website to secure a smooth customer experience. And it was difficult. I remember when I used to work at the Fnac back in 2005, the after sales service used not to deal with goods bought online, as it was an activity which did not come from the store (it seems ackward, but trust me, still nowadays, a lot of store networks react like that). Both the Ecommerce and the brick & mortar departments were at war.

The store people are now incentived on the online results, which helped people to understand the interest to have a strong online presence. Hence, retailers should understand and embrace the transformation of commerce, and not try to hide it by giving to retail network goals that are inachievable as they don't take into consideration the rise of online purchasing.

As Georges Plassat of Carrefour says, brick &  mortar retailers have an edge on Ecommerce companies: they own a store netwok.

One of the other key factor of success is its brand equity, which relies on a high shopping experience, with a strong loyalty reward programs, which people appreciate.

The Fnac should be considered as a modell worldwide of an electronic goods retailer which thrive during the e-commerce era.