Philips Develop A In Store Geolocalisation Technology For Carrefour

Philips has released recently a test of a new technology to geolocate customers in store. In Carrefour Euralille, a new system based on the lights of the store allow customers to locate themselves on their smart phone. You will see below a video showing how the system works. Now I clearly understand the reason why a company like Philips try to push this cutting edge technology in the retail world. I also understand why Carrefour is experimenting new technologies to improve shopping experience and thus the CRM.

But I am quite doubting about the real usage of the technology. Obviously, I believe in Ibeacons and I think the technology has more potential in terms of large usage. But also, I would like to question the use of those technologies in terms of store efficiency. A technology should not be developped because we need technology, but technology should rather complete a need. And so far, I don't see clearly how and why customers would use such a localisation system in store, even if it is very accurate. Nevertheless, I appreciate the fact that an industry leader like Carrefour is able to test and innovate in order to improve customer and shopping experience.

Category Management & Lean Retailing: When Cutting Product Range Is Good

Another post dedicated to the option sometimes taken by retailers to cut down product ranges. I have posted recently about the very same topic. Obviously, the past 20 years, the FMCG product ranges have grown largely, making categories more and more complex to deal with. Nevertheless, I must admit that the more products you own in your product range, the more you sell.

Still, owning too many products could hurt your business. As I have said in the past, it hurts profitability as your operational costs rise each time you add a new product (shelving time, warehouse space, pricing and administrative duties...). But I read recently this great article about Tesco's decision not so long ago to shorten their product ranges.

Here are the two main reasons highlighted:

• It allows the retailer to cut down the prices, and hence be more competitive. As I have said, product range raise the cost, and could either hurt your profitability but also your pricing. Obviously, it would be tough to go to extreme cut downs like discount specialist Ikea or Costco, but for a hypermart chains, having a lean strategy could help competing.
• It allows to cut down out of stocks. Out of stocks are one of the main reasons of unhappiness in store. By having complex and large ranges, you increase the potential sold out items. Therefore, by limiting the ranges, it is easier to keep your store full and attractive.

I would like to add new ones:

• It can ease the shopping experience and the merchandizing plan, to give a better lecture of the offer.
• It could boost the average sales/months per products, and therefore improve the scoring of certain categories with low rotations.

Now the main issues to face while doing such a move:

• Costco, Ikea, Aldi or other discount stores thrive on low prices with low ranges, but a hypermart or a supermart are meant to provide choice. It is one of their competitive advantage. It is wise to study well where and how to cut off without hurting some key category of services with low sales but a high importance in terms of service to customers.
• What to do with the extra space? If you have to multiply the facing of products just to fill in the blanks, it would hurt inventory for no reasons. Maybe such a move also should be thought on how you could advertize better, or improve the shopping experience by using the extra space (new technologies, corners with sales people...)
  
  

Working better a smaller product range is obviously a risky strategy, but if set up properly for the right reason, it could be very efficient. 

CVS Abandonning Categories To Mark Strategic Changes

The year has already started, but I wanted to share with you some insights I  found on Retail Dive on the retailers you should look at in 2015.

One of the trend I would really like to look at is CVS Health move to abandon the distribution of tabacco in its stores. The retailer used to count on $2  billion thanks to this category. But they have decided to stop it in an effort to change the position of its store, and to set its chain as the leader of health retailing.

Indeed, it is difficult to claim you are working on health products if you sell cigarettes. But what I like about this move is the retailer is eager to quit one profitable category in order to have a comprehensive shopping experience and have a clear position in the market. Retail marketing is a difficult trade, and it will be interesting to see the results both in terms of store concept and in sales.

Here is a video of CVS CEO discussing about the topic. I like the way he emphasizes the long term benefits for CVS businesses of this move.

Does #Tesco 's Struggles Question The Application Of big Data In The #Retail Business?

Interesting article of the Harvard Business Review, trying to explain the reasons of Tesco's recent struggle in its domestic market. Tesco has been for years considered as one of the best global retailer, and a trailblazer in customer relationship management. But Tesco has lost market shares the past few years, letting hard discounters Aldi and Lidl grow in the UK market, whereas Tesco has based its success on its ability to value its customer experience and the analytics of customer data. Once the modell of a lot of other retailers, Tesco now brings a lot of questionning and the ability of big data to leverage revenue growth. Indeed, Tesco owns both the data (they know pretty much all what could be known of their customers) and have the experience to use it, but it has little impact now. What is even more schocking is that as hard discounters are benefiting of the weakness of Tesco, is that UK customers seem now to prefer a lean shopping experience to the fancy loyalty program Tesco has build up. To me Tesco's issues are simply revealing that before mastering marketing tools, one company should focus on execution. Also, analyzing data to maximizing profit without understanding customer needs is useless. It will be interesting to see how Tesco manages to get back on track to see if they rather lower their investment on their loyalty card program, or if they actually find new innovative way to create extra customer value out of it.