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Tom Brouillette Thoughts at Large

1,031 posts


Retailers have a difficult challenge between meeting the continuously changing shopping and purchasing demands from customers and meeting the changing demands and capabilities from their extended supply chain and especially changing parcel delivery capabilities.  This is where a third party logistics provider can help to meet the delivery and store replenishment demands with a flexible network of distribution centers across the key geographic and population locations ready to meet the consumer demands for fast delivery without the requirement for the retailer to invest in real estate and labor to support these demands. The 3PL can provide these capabilities and most importantly flexibility tot meet the changing demands in a cost efficient and timely manner. 

 

A 3PL with a network of distribution centers can provide quickly provide shared capacity in locations that can allow the retailer to meet two day delivery demands across the country without upgrading service.  This in itself can be a compelling financial benefit to the retailers and then add to this ability to flex services such as customization and even store replenishment to the mix and it becomes compelling argument.  The flexibility alone provided by 3PL capabilities allows the retailers to quickly offer new services without a costly investment and at a cost effective charge because these retailers not only take advantage of the 3PL capabilities but they can also take advantage of the favorable transportation rates that the most 3PLs can obtain through volume shipping.  This is no small benefit in itself and then you add to the the cost of maintenance and support of software plus the costs of real estate and building maintenance and not to mention equipment maintenance and you will pretty quickly reach a compelling reason.

 

The reality of the landscape and capabilities now is that many of the midsize to large retailers have been focused on the consumer face and meeting the changing consumer demands in shopping and purchasing to maintain their place in the market and they have focused mainly on cost savings that can be generated by their internal supply chain.  During this same time 3PL providers have been focused on improving their efficiencies by investing in software and automation along with the distribution center network in many cases. These investments by the 3PL are necessary for the 3PL to maintain their place in the market and meet their customer demands. 

 

By this point you should also see the similarities between the retailer and the 3PL markets, they are both focused on meeting their changing customer demands and investing to meet these demands.  This is now a good place for the retailer to seriously explore a partnership with a 3PL to provide the supply chain services to meet their delivery needs and allow the retailer to focus on consumer demands.  The demands are changing quickly across the retail market in consumer shopping, purchasing and delivery so retailers would do well to focus on the activities and capabilities that differentiate them in the market and outsource the things, such as consumer delivery logistics, to a partner that specializes in those activities.  The point here is that both the retailer and the 3PL can partner to benefit from each other’s specialties.

 


At the same time that the retail marketplace is the midst of a transformation, the retail supply is also experiencing a transformation that is in part at least driven by the retail marketplace demands.  The consumer delivery demands and fluid store replenishment demands fall squarely on the supply chain. These changes are not going to diminish and will only increase and build on each other to continue the transformation.  As with the retail market, the supply chain transformation is built upon a series of continuous changes based on the demands of consumers and the supply chain made possible with new applications of technology. These factors are driving supply chain partners to use technology to deliver new services to simplify the end consumer delivery and in so doing are themselves driving increased traffic to the omni market retail marketplace.

 

Parcel carriers and retailers, especially Amazon, are focused on simplification of delivery services to the end consumer to improve the consumer experience in the online shopping and purchasing practices.  These new services such as advanced delivery notification and scheduling available from the parcel carriers allows consumers to better plan their delivery which increases satisfaction while reducing the chances of theft at the same time.  Amazon has revolutionized the online purchasing and delivery experience with their Prime membership. The Amazon Prime member benefits has revolutionized the online shopping and purchasing experience by allowing and encouraging consumers to purchase on demand based on the immediate need without incurring a delivery charge.  This allows consumers to for instance run out of Kleenex and simply click on Amazon to order and have their supply replenished. This encourages consumer shopping and purchasing as the desire arise and where the desire arises to shift the purchasing from the retailer hours, if you will, to the consumer hours when they realize the need.

 

Technology plays an important role in these advances and the supply chain is still in the early stages of this transformation and still experimenting with the technology and data to identify and implement service improvements and cost reductions.  One example of a service improvement that also deliveries cost efficiencies is the automated drop point that Amazon and UPS have started. These drop points are automated lockers that allow the delivery to be dropped by the driver in the event you can’t sign for the delivery and then consumer can pick up the package, at their convenience, using the tracking number and a form of ID.  If there are any difficulties with the pickup the consumer can also use the pickup kiosk to speak to a phone rep who can address the issue and open the locker remotely.

 

The supply chain will see a dramatic changes through mobile, wireless, IoT and Blockchain technologies and combination of all these technologies through experimentation to improve services and efficiencies.  The supply chain and extended partners must increase collaboration and engagement across the supply chain in order to sense the direction and demands of both the consumer and the supply chain to understand and determine methods to meet the demands and reshape the supply chain.  This will be made up of a series of small changes that can be combined and put together in ways that may not be foreseen today. The trick though is the supply chain partners must focus on engagement and responding to the changing demands as they arise rather than waiting for the demand to overwhelm them.

 


The retail marketplace transformation was not the result of a ‘big bang’ type change event, it was the result of a series of continuous changes to the marketplace enacted and invoked by retailers, consumers and technology.  I think the greatest influence and impact came from technology and the ways that both retailers and consumers embraced the technology to reshape the marketplace to meet their needs. The transformation was the result of years of experimentation and trial and error and failure and most important people pushing the limits of capabilities and experimenting with new combinations.  If you had been sleeping for 15 years you would be amazed at the transformation and yet living through it every day you may take for granted the changes and transformation that took place during this time.

 

The point is that transformation is the result of the changes that drive the market forward and you must pay attention and engage in the small changes in order to maintain your place and success.  The challenge now is that technology has quickened the velocity of change and this makes it even more important for retailers to engage with the market and consumers to embrace the changes so they are not left behind.  This requires a strong continuous change process to allow the retailer to sense and respond to the changes. This is not to say that retailers must enact every change although they must evaluate the change to determine if and how it can impact their business and their relationships to the consumer. 

 

I believe the changes coming will be focused more on relationships and less on operational execution.  The execution and delivery tools are in place now that can support the needs and demands of the consumer. The challenge going forward is grouping and regrouping these tools to support the changing market demands and most importantly the changing consumer demands to meet their lifestyle.  Meeting the needs of the consumer is the key to success more than ever and this means a continuous stream of small changes and re-configurations that will come together to continuously transform the market. 

 

Retailers must focus on flexibility and configurability in order to keep up with the experiments of the consumers in shopping and purchasing.  Retailers must focus on developing and improving the omni channel framework that allows the consumer to blend channels depending on their needs at the time.  We have reached this transformation in the retail market where consumers are not concerned about the channel they use to shop or purchase the consumers are simply focused on convenience and efficiency.  It is important that retailers embrace a collaborative relationship with consumers in order to improve their ability to sense and respond to the consumers experiments. 

 

The difference between small change and transformation is simply the time frame from which you view the market.  All transformations are really a combination of small changes that have come together to change the market. The trick for retailers is to increase consumer collaboration and engagement so that they can maintain the pace of small changes rather than waiting until the transformation and they are forced into disruptive change.  Amazon certainly did not disrupt the retail market overnight it took a period of time of small changes coming together to ignite the transformation.

 


Change is the only thing that you can count on in the retail marketplace and in addition to this, the rate of change is quickening.  The velocity of change is what retailers are scrambling to address in the marketplace through development and acquisition activities over the last couple of years.  I see the changes in operational and transportation stabilizing now to a low roar and the change in shopping and purchasing increasing as the relationships with the consumers continue to change at a very high velocity.  I believe that it is a bit of a no-brainer to say that retailers and their entire extended chain of partners must not slow and continue to change through improved methods and practices to sense and respond to change in the marketplace.  These sense and respond capabilities will identify the winners and losers in the future market and will drive dramatic new capabilities in collaboration with consumers to meet the changing consumer demands. 

 

The difficulty in this retail marketplace and the reason for the velocity of change is the experimentation by consumers to test their demands against the retailer capabilities.  In other words, these changes are the result of experiments by consumers to support their needs in better ways. Its something like furniture in a room; I’m comfortable with the way the configuration supports my living needs but ‘what if’ I moved the couch to another place and the easy chair to another place, do I like it better that way?  Technology as made this practice available for consumers in their shopping and purchasing practices; if I’m in the store and I see and item I like but the store doesn’t have my size, can I order online and deliver to my house, or does another store have it, for instance. The combinations are like a Rubik's cube in possibilities and there are so many customers shopping there is a good chance that you will need to support multiple combinations for each option.

 

This is where consumer collaboration and relationship development practices become more important.  It is important that retailers develop the relationship with their customers through collaboration so that these customers will first experiment with you before jumping to another retailers to purchase.  You cannot stop, or block, consumers from expanding their shopping to other retailers because of the availability of technology and improved networks and apps to support the shopping. You can though encourage shoppers to first search your opportunities to address their questions and meet their desires.  In the past, this is where the sales clerk played an important role and now the retailers must fill that gap of the personalized relationship with the consumer through strong collaboration and virtual interaction with the consumer.

 

The way to encourage shoppers to return first in their search is to provide them with a reason to return.  This reason to return is generated in a variety of ways, including but not limited to collaborative engagement with the individual consumers, embrace of changing technologies to support improved features, and change itself to ensure that the interaction and the face of the retailer to the consumer is vibrant and continuously changing, whether virtual or physical this change will give reason for consumers to explore.  All of these things really come as a package deal for retailers because if you settle or slow your support on any one of these the consumer will sense the change in the support for change and while that is not a reason for them to not return, it is a reason for them to return less frequently. In addition, this is truly an omni channel change model that must be supported across all channels.

 


The next key area of focus for retailers must be the customer experience.  Retailers must realize that with all the available outlets in the marketplace they must provide a differentiating factor and this factor must be the customer experience.  The consumer experience must include the physical experience along with the virtual experience. There are so many choices now in the marketplace that consumers really do not need to shop at any one particular outlet and with the drive for lowest price almost universal, retailers must now look to enhancing the consumer experience to attract more customers and encourage customers to return.  Outside of special holidays such as Christmas or back to school, most consumer shopping is opportunistic based on either an immediate need or an impulse based on some factor that peaked the consumer’s interest so retailers must enhance the experience with the understanding that it could be the reason for the consumer to return.

 

The challenge is what is factor, or factors, enhance the consumer experience?  This is where the retailer can utilize their collaborative network with the consumer for direct interaction and relationship building with the consumer.  The way to enhance the consumer relationship is to develop and grow the relationship with the consumer. Remember that shopping, even virtual shopping, should be viewed as a social experience and an opportunity for the retailer to develop and strengthen their relationship with the consumer.  This starts with collaboration and the methods to virtually interact with consumers and then using the information developed from this interaction to shape and focus the shopping experience to meet the customer needs. 

 

This is where the online marketplace really brings value to the retailer when combined with customer rewards programs and memberships the retailer can track and trace the customer activities and purchases to customize the shopping experience based on past purchases or just past searches.  You see this type of activities now with many retailers and the practice is growing and expanding to support the desires of the consumers. These types of experience enhancements can be focused to individuals now to make individualize the experience.

 

Just as consumers are experimenting with shopping and purchasing practices crossing virtual and physical outlets, retailers must also experiment with interaction and capabilities across the virtual and physical outlets using collaborative techniques along with the information they collect from consumer online activities to react and adjust to revise and enhance the experience.  Consumers search for the personal interaction in their shopping and will return if retailers provide this personalized interaction. This personalized interaction started rather crudely with email blasts to notify consumers of sales and now have improved to combine mobile technology and push notifications to be able to personalize the communications to individual tastes and also needs. 

 

These capabilities grow with the amount of data collected and especially as analysis tools and methods improve.  The requirement, though, is continuity. Retailers will find that as they take these steps that they will continuously be pushed into the next level of personalization, as long as they are open to new information and especially experimentation.  Retailers can use the tools to return to the individual personalized consumer experience and consumers will, in turn, return because of this engagement. The engagement must be fresh though and continuously renewing in order to maintain the customer interest. 

 

tbrouill

Retail Relational Data

Posted by tbrouill May 28, 2018


There is a massive amount of data available to retailers from their eCommerce site also their social media interactions and the key challenge for retailers is to put this information to use to help them to build and maintain a virtual relationship with consumers.  Retailer must first recognize the importance of this data and then develop the tools to first collect the information and then to analyze this data. The data available will allow retailers to understand the paths that retailers take through their shopping and purchasing and this information will allow the retailers to enhance their brick and mortar channel along with the online environment and the information will allow the retailer to identify, understand and track consumer trends in both products and also in practices to search and purchase products.

 

In the brick and mortar channel there is not nearly the volumes or types of data available to help the retailer to track and understand shopping and purchasing practices and these activities were performed by sales clerks.  Unfortunately, large retailers eliminated all but the most essential floor employees and for the most part the remaining employees only have the time to focus on restocking product and ringing up sales. In my opinion this is a major issue for retailers that impacted sales across the brick and mortar channel. In addition to the reduction and refocus of store staff these large legacy retailers the culture of the retailer and the leadership focused on controlling the shopping and purchasing which caused a rift between consumers and these retailers and in many cases driving consumers to the online focused retailers.

 

This leave retailers behind the curve from a consumer relationship perspective and struggling to understand and keep up.  You see this struggle with retailers acquiring operational capabilities over the last few years. Now in my shopping I’m beginning to see a more collaborative relationship building growing with retailers.  These changes are manifested through consumer research groups from the retailer and expansion and simplification of loyalty programs. As an example, it is no longer enough retailers to focus on the email blast to engage the consumer, now they must add to this additional consumer research surveys on advertising, products and placement within the store and the online site. 

 

Retailers can now use these expanded consumer notifications and engagement to enhance and inform the information gathered from the consumer online shopping and purchasing patterns to refine and focus on enhancing the consumer experience.  The consumer experience is the key to relationship building and this requires a focus on collecting and analyzing data available from many different sources to guide the retailer. Another major benefit to the analysis of the data and the enhanced collaboration it encourages with consumers is the regular return of consumers to the web site.  All of these activities should be used to encourage the consumer to return on a regular and frequent basis and not just on the sale. The sale is important, obviously, but the relational data, as I call it, encourages the consumers to continue to return and the more consumers return the more sales will result.

 


Consumer relationships in retail now are more important than previously because there are more choices and options in shopping and purchasing than ever before.  Retailers today have great tools and large amounts of data available to help them develop a virtual relationship with consumers and they must focus on a strategy that utilizes the data available to help them to fully engage the consumer to develop the relationship that will encourage the consumer to return.  This is a most serious requirement for the large legacy retailers that started in the brick and mortar world because these retailers were never previously required to develop the virtual relationship and could depend to the sales clerk to develop the relationship. The data now is available to develop a virtual relationship and retailers must focus on the identification, collection and use of this data to build a strong virtual relationship that will bring the consumer back over and over again.

 

The challenge for these retailers is first to collect the data and second to determine how to utilize the data to develop the consumer relationship and third, and perhaps most important, develop the process to continuously review the relationships to determine how and what additional data can be utilized to improve the relationships.  These are all difficult challenges that require focus and strategy to enact and the first step is not only the most important but the most difficult as well. This first step though requires that these retailers recognize and embrace the reality that consumers have used technology to take control of their shopping and purchasing practices and this means that retailers must accept the new fact that they are no longer in control of the relationship and must collaborate with consumers to develop and grow the relationship. 

 

The focus going forward for retailers developing the consumer relationship must be on data and effective use of that data.  There are huge amounts of data available for collection through the eCommerce channels that allow the retailer a greater and more accurate perspective of consumer shopping and purchasing decisions and practices.  While effective analysis of these practices requires huge amounts of data for collection and analysis the hardware required to support these activities is commonplace now and reasonably priced. In other words, cost can no longer be used as a deterrent to engaging.  Retailers must engage without delay in order to build the base of information.

 

In the past these large retailers were able to utilize sales clerks to develop the relationship with the consumer and these sales clerks used data collected during the personal interactions and good sales clerks were able to quickly develop strong relationships with their customers.  In the new omni market retail environment retailers must utilize data collected through the online environment and then develop and implement both the analytics to analyze these large amounts of data and then develop the methods and practices to implement continuous improvement methods and procedures to continuously review data and practices to support changing consumer practices.

 


Technology starting with the high speed Internet and continuing with mobile and wireless technology improvements have been continuously changing the relationships between retailer and consumer.  This started with the consumer wresting control of their shopping and purchasing to support their lifestyles and continues with continuous experimentation and changing practices and demands from consumers.  The changes started with the Internet and eCommerce and have continued to progress with wireless and mobile technology along with millennials that bring with them a comfort with technology and a tendency to experiment with technology capabilities to support their lifestyle demands.  This is spreading to change the relationship between consumer and retailer to take into account the need to develop a virtual relationship. 

 

This virtual relationship is the next frontier in the retail omni market and may be one of the most important developments in retail since the Internet.  Consumers have been striving to develop relationships with retailers really since the Internet changed the marketplace starting with the embrace of Facebook to reach out and connect first to friends and family and next with retailers.  Unfortunately for the large established retailers they were compelled to focus on cost competition to remain competitive in the marketplace and this seems to have precluded focus on developing the virtual relationships. In fact this focus on cost has resulted in the reduction of clerks in brick and mortar stores in order to cut costs to support the product price wars with online and multi channel retailers. 

 

Retailers have been struggling to keep up with the changes in operational processes to support consumer shopping and purchasing in the changing marketplace.  This focus on the functional rather than the relationship has, in turn, caused these retailers to now struggle with developing and maintaining relationships in the new marketplace.  This seems to be a hold over from the practice of attempting to control the relationship with consumers. The challenge for the larger legacy retailers is accepting the change in control and then developing the capabilities to build the virtual relationships with consumers.

 

Amazon, for example, has practiced a two prong approach in retail and developing relationships with the consumer.  Amazon has realized early on the need to develop the relationship with the consumer early on because they did not have the physical presence and therefore a physical relationship with the consumer.  This required that Amazon develop the tools to develop a virtual relationship with consumers while they were encouraging consumers to purchase through a lowest price strategy. This strategy to develop the virtual relationship while encouraging consumers to return has continued and unfortunately for the legacy retailers, they only focused on the lowest prices and operational side of shopping and purchasing so they are not struggling to maintain their place in the market.

 

The large retailers are lucky, though, because it seems that the operational changes have slowed at a time when the relationship changes and requirements have increased in importance.  This gives these retailers an opportunity to develop the tools and capabilities to develop and maintain a virtual relationship. Retailers must understand and accept though that this is a continuous program that must be maintained and improved over the long run.

 


Collaboration and engagement are two key factors in the retail omni market that are required to extend and improve the relationships with not only consumers but all partners across the extended supply chain.  Large legacy retailers must increase collaboration with encourage consumers to engage with the retailers through a virtual market to extend the physical relationship with their customers. All retailers must increase collaboration and engage with the extended supply chain partners in order to increase their ability to sense and respond to changes in the consumer demands and market offerings.  A significant key to success in the retail omni market is the collaboration and engagement methods and practices to allow the retailers to develop and strengthen relationships across the marketplace.

 

Collaboration requires sharing control across the marketplace and this practice will require significant cultural changes for the large legacy retailers. These changes started years ago with the addition of Facebook to solidify the social networking platform and it has continued to grow over the years with the improvements in technology and mobile network technologies.  In the early years of the retail omni market revolution the large legacy retailers fought the changes from consumers to open the market, the showroom concept is the best example of this where retailers fought consumers who went to the store to view and touch the product and then purchased online. These large, multi-channel retailers realize now that they must loosen their controlling nature to provide consumers the flexibility to support their lifestyle.

 

One of the key focuses of retailers has been on price comparisons to meet or beat the lowest price offered for products.  This has also forced the large retailers to reduce operational costs, including headcount formerly focused on customer service.  While some customers will always only focus on the price, there are many customers that place a great value on the relationship and softer values that come with building a relationship between consumer and retailer.  Amazon is a great example of a retailer that has developed a two prong approach; low cost and consumer relationship development, that has changed the retail marketplace and provides a great model for the large multi-channel retailers.  Google has also entered the arena of virtual customer relationships in a big way with their reviews and recommendations capabilities that encourages your feedback when you shop or dine using your phone location capabilities to identify your travels. 

 

These are just a couple of examples of the changes in virtual consumer relationships and these capabilities are growing and building upon current capabilities and practices swiftly.  Retailers cannot afford to wait to develop their abilities to engage and collaborate with their customers to develop the relationships. The lesson that retailers must embrace is changes are easier when they are incremental so it is critical to develop the ability to quickly and efficiently sense and respond to these changes.  This is where collaboration and egagement across the entire supply chain from supplier to consumer comes into play to support the efficiency in sensing changes and responding.

 


The extended supply chain supporting the retail omni market is a critical success factor for retailers providing retailers the data and early warning to help retailers sense and respond to the market changes.  The caveat to this statement is that these retailers and the extended supply chain supporting the retailers must have the tools and procedures in place to collect and understand the information that can be provided by the extended supply chain.  These methods require an increased collaboration and engagement across the entire extended supply chain in addition to a change in the retailer (especially large legacy retailer) culture to encourage increased collaboration in order to engage the extended supply chain.  Each of the partners in the extended supply chain must understand and embrace the fact that the retail omni market requires a dramatic increase in the collaboration and engagement across the entire extended supply chain in order to meet the demands.

 

It takes a fully engaged and collaborative extended supply chain in order to meet the changing demands and, most importantly, the velocity of experimentation and change in the marketplace by consumers.  A tag line that is appropriate in this case is that retailers and their extended supply chain must support change as the speed of life. This means that retailers can no longer spend extended amounts of time on analysis in reaction to marketplace, and consumer demands, retailers must respond with a heightened sense of immediacy in order to maintain the pace of meeting changing demands.  It requires a great deal of information in order to identify and react to changes and the extended supply chain can supply a valuable level of detail regarding the market demands from other perspectives that will allow retailers to better understand and react to the demands. 

 

A critical tool in these efforts to increase collaboration and engagement across the extended supply chain is the control tower practice, or method, to manage and direct information.  In the past this may have been viewed as an internal tool used by the retailer to collect data and support analysis of the data. This functionality of the tool remains the same and the universe of data should be extended across the entire extended supply chain in order to provide the means and the data to effectively and efficiently analyze the data input collected across the supply chain.  Data is the fuel to the collaboration and engagement engine that will be used by the retailer and the extended supply chain to support retail omni market.

 

Retailers, again especially the large legacy retailers, must overcome their cultural nature to try to control the marketplace and this change can be supported through increased collaboration and engagement across the supply chain.  This increased collaboration can provide the information and early warning of changes in consumer purchasing and shopping practices through the integration of shipping and delivery information available from transportation partners, for instance.  Consumer reactions and demands can be unpredictable in this marketplace, especially because of the velocity of technology change available to the consumer. This means that retailers and their extended supply chain must be dramatically more responsive to changing demands and this increased responsiveness can only be supported by increased collaboration and engagement across the extended supply chain.

 


Retailers must implement a method to systematically and continuously sense and respond to changes in the retail omni market whether from consumers or from the extended supply chain partners.  The difficulty is implementing the control tower methods that allow for the information to be collected and stored for analysis from many different functions and activities across the entire omni market, from the eCommerce channel, to the brick and mortar channel, to the social media interactions with consumers, to the developments and new capabilities available from the transportation partners.  This require not on methods and capabilities to collect and analyze data inputs from many different sources, it also requires implementation of methods to support collaboration with partners and consumers across all channels.

 

This sounds like a simple process and the goal is simple; collect and analyze information to understand and guide the interaction and support the demands of consumers and develop a relationship with consumers to encourage returns and purchases..  This simple goal though requires a robust method first to collect information, second to analyze and understand the information and third to encourage and support collaboration and engagement of across the entire extended supply chain from supplier to consumer.  This goal of the sense and respond control tower is the price of entry and most importantly success in the omni market retail environment. 

 

A strong relationship with consumers is required for success in the retail omni market and the large legacy retailers must build this control tower infrastructure to replace the personal relationships that have been developed with consumers through the network of sales clerks.  This relationship is paramount to the success of these retailers in the omni market age and this is where these legacy retailers must focus now that the operational functionality supporting the eCommerce channel have been implemented. The eCommerce channel and the experimentation of consumers with mobile and web technology has fundamentally changed the retail marketplace.  This change is driving the demands for increased collaboration across the supply chain and these demands for increased collaboration across the supply chain require a means to collect and analyze data and consumer interaction.

 

The good news in this story is that the technology is currently available through big data capabilities and retailers are more than likely using this technology to support other areas of their operations.  This requires a strategy to incorporate the data collected from all areas into a cohesive tool that supports current and future analysis of this information. This requires an expansion of the collection activities that will allow the retailer to incorporate the data into the store for analysis.  All of this analysis though will not generate success for the retailer in the retail omni market though, success in the retail omni market requires the retailer to develop a new method to help them to develop and strengthen relationships with consumers and this control tower functionality can provide the foundation and the means for these large retailers to develop these relationships.  The relationship with consumers provides the reason for consumers to return and returning consumers drives increases in sales. 

 

tbrouill

Omni Market Gazelles

Posted by tbrouill May 17, 2018


The gazelles (retailers able to shift directions quickly) in the the retail omni market have a distinct advantage over the large legacy retailers that have historically struggled with no only quickly changes but more importantly changing their culture to support quick changes in practices.  These large retailers have been stuck in a culture and a world of their own making that believes that changes require detailed planning and costly development cycles to implement change. This reality is changing though as a result of the retail omni marke that focuses on quick and incremental changes to adjust to the demands of consumers.  In order to succeed in the future retailers must recognize the difference between large business directional changes and the incremental changes required to support the retail omni market. This difference in viewpoint between the types of changes is will be the difference between success and failure in the retail omni market.

 

In the current state of the retail marketplace and the focus of consumers in this marketplace, the retailer must focus on the difference between business directional changes and incremental strategy and direction refinement.  This difference between business directional changes and direction refinement is also the difference between the gazelle and the large battleship in ability to shift direction. Retailers must first focus on identification of the type of change and then they can determine the best method and schedule to implement the change.  This requires a change in culture along with the shift in viewpoints for the retailers to enact the changes. This sense and respond method of continuous change in the retail omni market will allow the large retailer to react as a gazelle in the important consumer facing areas while still taking the time necessary to support the large business directional changes.

 

Over the recent years retailers have focused on business directional changes, as they should have, to support the omni channel retail operations.  This was required t in order for retailers to implement omni channel business functionality to support consumer purchasing demands. At this point though, the major operational support requirements for consumer purchasing across channels has been implemented and retailers now need to focus on the collaborative consumer interaction to support the changing consumer shopping demands in the developing retail omni market.  This current phase of supporting consumer shopping demands requires incremental changes in consumer facing areas to develop relationships and shopping methods that support the consumer demands. This is an experimental process for consumers and requires a method (such as consumer/retailer collaboration practices) to sense and respond to the incremental shifts and changes.

 

Large legacy retailers can be successful and react as gazelles by implementing a consumer collaborative practice to allow these retailers to sense and respond the shifting incremental changes before they become business operational changes.  This requires a flexible control tower type framework that supports the collaborative practices and then supports the incremental changes required to support the consumer experimentation. This practice will be difficult to enact without a change in culture to focus on consumer collaboration and recognition of the change in the retail omni market direction and requirements.

 


Consumers have entered into an experimentation phase of shopping and purchasing that demands increase levels of collaboration to first identify and then support the changing demands.  Retailers now must develop a control tower framework that provides the flexibility and functional integration to quickly and easily support the changing collaboration demands of both consumers and extended supply chain partners.  The difficulty for retailers in this environment is that the changes are not large wholesale changes to the shopping and purchasing marketplace, rather they are what I would term as minor course corrections that although minor in nature they bring a great benefit to the consumer to support their lifestyle needs.  The control tower framework allows the retailer to sense and respond to these course corrections in a timely and efficient manner that will help to develop a stronger relationship and two way conversation with the consumer.

 

We are now past the age of large operational changes to support the retail omni market and are now in the relationship development phase of supporting the retail omni market.  This relationship phase requires less large wholesale changes operation or capabilities and more minor in nature refinements to the ways that consumers and retailers can utilize these operational capabilities to support the shopping and purchasing demands of consumers.  While the types of changes in this phase may be minor in nature, they will have a huge impact on the consumer relationships and therefore on the sales and success of the retailer. The consumer relationship with the retailer provides the ‘stickiness’ and reasons for the consumers to return to the retailer for shopping and the longer that the consumer stays with the retailer, either virtual or physical, the higher the likelihood that the visit will end with a purchase. 

 

Retailers should not delay in the implementation of this collaborative control tower framework because the delays can and will result in the inability to identify and adjust to the consumer demands.  This new environment is another example of an environment that is impacted by waves of minor changes and revisions that will quickly add up to major changes in the marketplace. The control tower framework is a critical piece to the strategy to sense and respond to the minor changes quickly so they retailer is not impacted by eventual major changes in the marketplace.  Again, the nature of the changes is such that if the retailer falls too far behind these retailers will not be able to catch up because the cycle of change is too quick. 

 

The nature of the marketplace is geared towards the gazels that can quickly sense and react to changing demands.  Unfortunately for the large legacy retailers, they have fallen into the structure like a large ocean liner that does not allow for quick and dramatic course changes.  It is for this reason that these large legacy retailers must develop the collaborative control tower that will allow these retailers to sense and respond to the minor course corrections before they can combine into major changes in direction that cannot easily be supported. 

 


We are entering into a new age of commerce that is driven by consumer experimentation with shopping and purchasing practices driven by their embrace of technology (Internet, social, mobile and network) along with a drive to support their lifestyle through experimentation with technology.  The experimentation with technology is driving the retail impact and requires a collaborative practice and reaction from retailers to support the quickly changing demands and consumer practices. Consumers are really not sure how technology can be used to support their lifestyle needs and this leads to a trial and error process that can best be described as a continuous improvement process that has been adopted by consumers to develop and change shopping and purchasing practices to meet their lifestyle demands.  This process leads to a highly disruptive retail environment that requires retailers to collaborate not only with their extended supply chain partners but also with consumers to develop the methods to support the consumer demands.

 

Most consumers are open to social interaction and especially the millennials and this is driving this surge in consumer collaborative commerce.  Consumers are going to interact with other consumers and they are also going to use the technology and the tools available to support their shopping.  Retailers need to recognize, and embrace, this simple fact in order to succeed. Consumers will collaborate with all partners and the large legacy retailers are fooling themselves if they think that they can control consumer interaction in shopping and purchasing.  Consumers have demonstrated over and over that they will utilize collaboration and technology tools to overcome limitations in their shopping and purchasing capabilities that are either planned or inadvertently enacted by retailers.

 

The only way that retailers can successfully react to these consumer changes and demands is to get ahead of the curve through increased collaboration with consumers.  This increased collaboration is the means to develop relationships with consumers in the retail omni market and retailers must embrace this practice in order to survive.  There really is no other way to look at the current retail marketplace and the sooner retailers themselves understand and embrace this new reality, the sooner these retailers will be able to sense and respond to the changing demands.  The large legacy retailers have systematically eliminated the direct consumer interaction through their drive in cost reductions and reductions in sales staff developing the relationships with consumers. This must now be re-learned by these same retailers and most importantly learned to support in the virtual retail marketplace that is now so important to consumers.

 

The genius of Amazon was the recognition of the importance of the consumer collaborative relationship and their focus on developing this relationship.  This focus on developing the relationship has paid off dramatically now as the retail marketplace has evolved and even been driven by experimentation from both consumers and Amazon.  The large legacy retailers now must recognize their deficit in consumer collaborative commerce and focus on the development of these capabilities. Consumers will continue to experiment and push the limits of technology and collaborative shopping and purchasing while Amazon continues to experiment as well with new capabilities.  There is no time left for the large legacy retailers to delay their embrace in these capabilities, they must also embrace collaborative commerce with consumers and this means dramatic changes in the culture and the retail framework.

 

tbrouill

Collaborative Commerce

Posted by tbrouill May 14, 2018


Collaborative commerce is an interesting term that brings the method of shopping to attention as it relates to the purchasing aspect of the retail omni market.  Collaborative commerce really describes the omni market shopping and purchasing practices that focus on the relationships between consumers and retailers. This is the bottom line and frankly the key factor to the changes experienced now in the retail marketplace.  These changes will not slow and retailers will only be able to support the changes by changing their focus from control to collaboration with the customer. Collaborative commerce is the natural result of the changes demanded by consumers to support their lifestyle needs.  Again, consumers have used technology and the Internet to support their needs. They have been open about their desires to simplify the shopping and purchasing process and retailers must now catch up and support these demands to survive.

 

Consumers and retailers have been at odds with each other it seems for a long time and it two the Internet and a visionary retailer like Amazon to take advantage of this consumer unrest.  Consumers are not unreasonable in their demands, in fact consumers are the driving factor behind collaborative commerce practices. It did however require a retailer such as Amazon to recognize and react to these consumer demands.  Consumers are more than happy to share their considerations and desires for shopping and purchasing capabilities. Collaborative commerce is nothing more than the next stage of the retail evolution and relationship between retailers and consumers. 

 

The challenge for retailers is the relationship. Retail has always been a social activity and consumers have always been drawn to the relationship and retailers have always depended on the sales associate.  The challenge for the larger and especially the legacy retailers is they have been focused on cost cutting measures that resulted in reductions in the sales associates that supported the consumer relationships.  The desire for the relationships did not subside, only the retailers’ support for the relationships. Now these same retailers that have focused on cost cutting measures to meet consumer demands are forced to create the abilities to support the virtual relationships with consumers.  This seems to have caught these retailers unprepared and requires a concerted effort develop the capabilities.

 

The good news is that consumers are more than willing to help in developing the collaborative commerce capabilities if only the retailer would ask.  This has been the focus of Amazon since their inception because they recognized the need to develop virtual relationships with consumers. More than anything else that Amazon has done in developing into one of the largest and most successful retailer, their development of the personalized relationship with consumers has probably been the greatest factor in their success.  It seems to me that Amazon recognized the consumer relationship deficit early and focused developing the virtual relationship to make up for this deficit. In addition to the virtual relationship, Amazon focused on a means to encourage the consumer to return to the site based on cost in product and delivery.