Tag Archives: Retailers

Window Shopping and Shopping on Windows

A running theme over the last few years in business news in the US and elsewhere is the terminal decline of the physical retail store. Many of the big name chains once thought of as bastions of the high street have fallen victim to the online juggernauts, on what seems like a weekly basis. The finger of blame is most often pointed at Amazon, whose profits continue to soar to such extents that some financial analysts are now claiming that their share price is overvalued and based upon forecasted earnings of massive proportions.

It is possible that President Trump may attempt to curtail Amazon’s growth through trust-busting legislation – something which could be motivated by his feud with The Washington Post and its owner/Amazon exec Jeff Bezos – however there is little legal ground to challenge the etailer simply because their business model and disruptive technology offers a better deal for consumers as things currently stand. It’s true that few retailers can take on Amazon based on pure pricing, however there are still assets which Amazon does not yet have: a large high-street presence and refined customer service.

I was speaking to a colleague recently whose wife works as a beauty consultant in London’s West End. She was upset that although their footfall was good and plenty of customers wanted to try out products, very few actually bought anything, and many could be seen price-checking and purchasing on Amazon before they even left the store. Let’s be honest: many of us do this every time we shop. Her general feeling was that they shouldn’t even bother stocking anything in-store. This remark was borne of bitter resignation, but some retailers have done exactly that, using a sophisticated omnichannel model to remove the need for significant store inventory.

There are certain categories where consumers will always want to try products in person, and which if prove unsatisfactory can result in a glut of expensive return logistics. Clothing and fashion is an obvious candidate; US brand Bonobos recently posted a $60m increase in revenue over the past five years, driven by their Guideshop setup. Consumers visit physical stores to see the new lines, try on clothing, then pay to have clothes delivered when and where they wish. The store itself does not hold large stock or inventory. Bonobos’ system challenges the assumption that most consumers want to leave with the product in hand, and has allowed them to reinvest logistical savings in staff training and a high service-level.

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This phenomenon is also seeing green shoots for technology sales, with showroom setups such as London’s Sandbox offering hands-on experience with new categories including VR. Like Bonobos, Sandbox’s function is to give consumers the chance to try room-scale VR, something Context’s 2016 VR consumer survey showed to be a key factor in purchasing VR. At this stage in the category’s lifecycle relatively few consumers have tried room-scale VR, and would therefore be unwilling to part with the daunting initial upfront cost.

These kinds of demonstrations are arguably more important for VR marketing than traditional advertising. VR can be a revelatory experience, but selling it to someone who has never tried it is an uphill struggle. It is also fair to say that many consumers shop online to avoid feeling pressured by a salesperson, and at present very few retailers can offer truly excellent face-to-face customer service. By removing the onus of making the purchase then and there, and potentially allowing for price reductions to compete with Amazon, Bonobos’ solution, or a modified omnichannel setup could be the saviour of the high street, not to mention a huge boom time for the distribution channel and drop shipments.

The art of window-dressing has a long and proud history, once a place of hubris for serious-minded shop attendants and source of satire for comedians, but now the whole store offers a window into (Microsoft) Windows.

by JW

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B2B – a risk for the channel or a missed opportunity for tech retailers?

The recent news about Amazon launching its B2B activity in Europe, starting in Germany, has generated a lot of press coverage. In the US it is reported that in the last two years the number of business customers shopping at Amazon has increased from 200,000 to 400,000, so resellers in Europe are concerned. “Amazon’s B2B challenge is a danger for the Channel,” was the headline on CRN UK’s front page.

So is this news a risk to the channel or in fact a missed opportunity for retailers?

Three years ago CONTEXT ran a conference which highlighted the opportunity of what we named “R2B” short for “Retail-to-Business”. Many retailers from across Europe attended this conference, but very few had the real commitment to make it happen. So will the news of Amazon’s arrival in this space make them wonder if they missed an opportunity? Surely if Amazon, with no stores, no experience of providing human-to-human customer service, and no expertise in business IT, can go for this sector, then the tech retailers can do so also.

Successful retailers in B2B are those who have invested in a service capability. Best Buy and the Geek Squad, DixonsCarphone and Knowhow, the Darty van with “le contrat de confiance” emblazoned on it – these are the retailers that have invested in service. Sebastian James, CEO of DixonsCarphone, said at Retail Week Live in March 2015 “if we don’t invest in the whole chain we risk to become irrelevant”. Some etailers have also managed to create a space in this area – an example is LDLC in France which has set up a nationwide network of resellers who help their business customers to install and maintain their IT equipment.

If a retailer is keen to take on Amazon in the B2B area here are the 5 key steps to follow:

  1. Identification and targeting of business customers through the use of CRM and intelligent sales activity – for example, every time a customer asks for a VAT invoice, this is a sure sign that they are a business; or when they purchase more than 2 of any machine, this should be a sign. Human interaction with the customer is important, as well as the posing of key questions online. On Staples website, the very first action is to identify yourself as a business or as a normal customer
  2. Curation of business SKU’s – with the support of vendors, retail is a way of targeting incremental sales from small businesses of less than 25 seats. But it is necessary to have the right products, which are not always made available to retailers. You can buy a Lenovo Thinkpad for a B2B customer on PCWorldbusinessonline, at Amazon.co.uk, at LDLC but not at Fnac, Darty, El Corte Ingles or even Media Saturn.
  3. Category management to drive out the optimal product mix – the business SKU is part of an ecosystem – understanding the upselling opportunities to meet the full needs of the business customer is a key element of success. R2B market data is a vital support for retailers by showing top selling products and typical market baskets.
  4. Service at every stage – the business customer needs service in store, online, at the point of installation and support in maintaining equipment in a functioning state. This is the most demanding element of the proposition in terms of investment. Recently, I asked the CEO of a retailer in the Middle East if he was concerned about Amazon’s purchase of Souk.com, and he said “No! We will differentiate ourselves through our service offering.”
  5. Financing of small businesses – this is a key activity which helps SMB to survive and grow. Healthy credit terms and even loans help small and medium businesses to expand without fear of cashflow shortage.

It is not too late for retailers to enter into this space, and capture a market which is at risk from the ever-innovative and expanding Leviathan which is Amazon.

by AS

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Get Connected for the Smart Channels Summit, DISTREE EMEA, 26 February 2015

We have to win the hearts, the minds and budgets of consumers

Winning the hearts, the minds and budgets of consumers will be key for Retailers looking to succeed in Smart Channels. Currently only 5% of consumers know where to buy a Smart product, according to a study quoted by Hans Carpels at the CEO Retail breakfast in Las Vegas last month. Retailers will need to apply savvy strategies to capture consumers against a backdrop of a number of players looking to gain market share in a market increasingly targeted by home improvement companies, IT vendors, big-data driven insurance companies and smart home technologies.

The opportunities are huge: At the IFA last autumn, Jeremy Rifkin said that we are moving from a world of 13 billion sensors today to one that will use 100 trillion by 2030.

Hosted by CONTEXT, the Smart Channels Summit, held at DISTREE EMEA on 26 February,  will explore six themes to capture Wearables, Connected products and Internet of Things (IoT):

  • Educate the consumer: Stéphane Bohbot shares the role of LICK stores’ associates as coaches, helping consumers understand this new world of Smart possibilities
  • Make the ICT Retail channel attractiveJohn Olsen demonstrates EURONICS approach and Vincent Slevin will show ways that Samsung provides enhanced customer experience through its Retail solutions. After the recent launch of the first private-label 3D printer from Auchan, Flavien Dhellemmes asks if Retailers can go faster by investing in private label
  • Keep hold of your customers: with so many new forms of competition, a Smart hub solution like the Iris adopted by Lowe’s in the US, will be presented by Jean-Claude Kiessling from Qivicon (Deutsche Telekom)
  • Make service a differentiating factor: Join the discussion with three key Retail experts, and other panel speakers 
  • Pick winning products and categories: D-Link’s Smart portfolio from Luigi Salmoiraghi, and the collaborations he needs with Retailers to make Smart Homes a reality. Fred Brown, well-known to attendees of DISTREE conferences as the host of FRESH (an introduction to the latest, most innovative products), will share his expertise on identifying winning new technology products
  • Make it easy for consumers with a long-term and interoperable technology offering: expert guidance given by Benoit Van Den Bulcke, and we will hear about the AllSeen Alliance from EURONICS.

This rich panel of speakers has been brought together by CONTEXT as part of what we call #newretailthinking – the ability to find new models and new formats in the old world of ICT Retail. CONTEXT will provide insight into best practices from across the world, and will chair this summit. We look forward to connecting with you there!

Join us at the Smart Channels Summit DISTREE EMEA, Monaco on 26 February 2015.

Meet with fellow ICT Retail professionals to focus on how the Retail channel will evolve to deliver smart technologies, solutions and services to consumers.

The session, hosted by CONTEXT, is entitled: “Smart Channels: Retailing Connected Devices, Wearables and Internet of Things (IoT).”

To register your interest simply visit: http://www.contextworld.com/en/smart-channels-summit1 or contact me,  Adam Simon, Global Managing Director, Retail Business Development asimon@contextworld.com

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Upbeat voices from Indies at PCR Bootcamp

At last month’s PCR Bootcamp in London, I found out how independent retailers are coping with a declining PC market, thin margins, new competition and a world of new opportunities based round IT services.

My first conversation was with Craig Hume, Director of Utopia Computers, an independent award-winning retailer based in Ayrshire. “Do you use social media?” I asked, as I prepared to take part in a panel on how to beat Apple on service. My idea was that, as Apple does not engage with their customers on social media, indies could definitely score points there. Craig told me about his social media approach: he is present and active on Facebook with 2,500 likes and on Twitter with a good ratio of followers to following (7:1) and so far little presence on Google+.

Here’s a snapshot of Utopia Computers comments page on Facebook:

Utopia Computers

Utopia Computers’ latest Facebook comments

I have to say, I was impressed by the outstanding comments about Utopia Computers’ level of service. I referred to them in my 30 second intervention, and thanks to our chance discussion, Craig helped me articulate the message that retailers have to engage, like Utopia, with their customers on social media, if they want to build relationships in today’s digital and online world. Whilst today’s 18-24 year olds – the majority of those engaging on Facebook – may do more liking than buying at this stage, they are tomorrow’s buyers. It is no surprise when you see this Facebook page that Utopia has won Independent Retailer of the Year three times in the last 5 years.

I read up the latest Apple news before coming to Bootcamp, and saw that Angela Ahrendts, the new Head of Apple Retail has said that she is going to reinvent the entire customer experience. This is radical when you think that for many the Apple customer experience is the benchmark. If she can do that, I thought, there is no reason why the indies should not have the same obsession about improvement – that is a way to excel and, yes, beat Apple on service.

Throughout the day at Bootcamp, I was curious to find out how indies are adapting to changing market conditions and customer requirements. I spoke to one for whom life is good now – an Apple reseller with demand for tablets from education establishments at an all-time high. Why do their customers not choose the large multiple retailers, I asked. Because they trust us and we are local. This is OK Just as long as the nearest Apple store stays safely in Birmingham, 60 miles away and tablet demand remains high. But there is a cloud on the horizon looking at our data for Q1 as tablet demand is definitely slowing down (Q1 2014 showed 9% Year-on-Year unit growth compared to Q1 2013’s YOY growth of 403%). On the other hand, change, I discovered, has been forced on non-Apple resellers. I spoke to a veteran who has stopped selling products, focusing entirely on service. Importantly, they have innovated, and as Darwin said, it is not the strongest species who survive it is those most capable of adapting. As CK Kohli, founder and owner of YOYOtech said in our panel session “Think local. Think solutions.”

One of the Bootcamp keynotes by Himanshu Pal from Kantar Retail addressed the risk of a resurgent Dixons following their merger with Carphone Warehouse. So, how worried are independent retailers about the merger and will Dixons invest in a capability which will threaten the strength of independent retailers, their proximity and ability to deliver service? Dixons will have a challenge to match the customised services or solutions that indies offer, was the sentiment I walked away with. Indies are investing in long term training for staff, so that consumers leave with a positive experience, said Rich Marsden, Director at VIP Computers and also a panellist. “Relationships with customers don’t come naturally – you have to invest.” We had heard in the Chairman’s introductory remarks, Christopher Phin of MacFormat, how Apple invest in weeks of training for their sales staff, so it was encouraging to hear that indies are taking the same serious approach. Note to PCR for next year’s agenda – it would be good to hear Dixons present!

 

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The Purchase Experience – who cares? Retailers, it’s a Question of Survival

A 30 second video extract set the scene for the inaugural strategic forum hosted by CONTEXT at Melco Club last week. A man was calmly fishing on an ice floe, when suddenly, Jaws-like, a whale burst through the ice and the man disappeared. Chris Petersen, veteran consultant on Technology Retail and our keynote speaker, asked the audience who the whale was, and most people said Amazon. But Chris turned the issue on its head, and pointed the finger at the Retailers themselves and said the whale is the internal mindset inside your own companies, because you are not prepared to change. So now we were engaged with our guts or as the French say in our “tripes” – it is a question of survival.

Our topic was “The Purchase Experience – Who Cares?” – a deliberately provocative theme – of course we all care, but when the consumer gets less than a wonderful experience buying technology is it the Retailer’s fault or the Vendor’s? Senior leaders in the Spanish and South European consumer markets came together to explore collaborative ways of making the Purchase experience better. At the Forum there were positive signs of connections being made, meetings taking place (even one on the following day) for Retailers and Manufacturers to trial out new ways. As Inés Bermejo, HP Consumer Director, Spain and Portugal, said, “we have to trial new ways of doing things”.

Chris showed us examples of the Purchase Experience which work – the Starbucks secret menu, the Tesco virtual stores in S Korea, Build-a-Bear with their phenomenal CRM, the John Lewis omni-channel journey – getting the different channels to collaborate and not compete. There are still so many retailers where online and offline have competing objectives and organisations. And the maths is simple according to recent studies quoted by Chris – consumers who shop omni-channel, the new normal, spend 350% of what single channel consumers spend. Why not have some of that? Also size is important in today’s omni-channel world – there is a race to be small again with Walmart opening up new stores of 1,200 square metres compared to the old leviathans of 20,000 square metres. We know this in Europe where the hypermarket format has been dying a slow death in the last 10 years. But it is also a change in understanding of the store’s purpose. “The store is now a distribution point” said Chris Petersen. Of course, it always has been, but the point is making the whole omni-channel experience easy for consumers, and that is why Amazon and other e-tailers are looking to open stores or use other people’s store network.

When the Advisory Board panel spoke, they captured the sense of urgency – “we have to bring the human touch to selling technology” said Ramon Abad, head of Business Development for AMD in Spain. “We need to be better at explaining what technology does” said Ines Bermejo from HP. “We must integrate online and offline” said Eugenia Albares, head of buying at Fnac Spain. “Computers are such an important purchase for people, we have to make it an experience for them…” added Javier Galiana, head of Consumer Marketing for Intel Southern Europe, “…or else it is just about price.” Maite Ramos, General Manager Iberia Consumer Business for Lenovo said that the tech industry has to do their best to attract people with the resources they have. For example, they are using bright colours like red and are also investing in store within store. Lastly, Gonzalo Ruiz, head of Windows & Office Consumer Channel Strategy, spoke passionately about how Microsoft work with retail partners to design pilots based round research on consumer behaviour, which leads to better results.

Chris Petersen ended his keynote by giving participants a fascinating insight into one specific measure – GMROII – which is commonplace in the US, less so in Europe, to calculate the impact of different retail programmes. It stands for Gross Margin Return on Inventory Investment and allows retailers to measure for every dollar they spend, the return which they get including the impact of both gross margin and inventory turns. With the decline in gross margin in Best Buy from 35% in the glory days to 23% currently, and with a rate which is declining by 1% per year, Best Buy has had to look very hard at its inventory, and the white hope for 2014 is that store inventory is now online which according to the CFO in the Q1 investor call in May 2014, will unlock $2bn of the $3bn inventory which they hold. According to this measure, a score of 2-3 is good, and 1-2, which is where most technology retailers are, is ok at the higher end. But where Best Buy sits at 1.25 it is dangerously close to 1, which is where retailers close up shop.

Chris left us with a recipe for technology retail in these difficult times.

  1. Pilot new initiatives putting the consumer, omni-channel and the purchase experience at the heart
  2. Measure the outcomes using GMROII
  3. Pursue the best – “results count – everything else is conversation!”

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