In fact, Zendesk’s global study shows that most customers (45%) use embedded messaging over social messaging apps (31%) and text/SMS (20%). That might be great for self-service, but for commerce, boundless opportunities exist to move to where the customer lives, communicates, and socialises today.
Smart businesses understand that customers spend their lives in other chat and social media platforms – such as Facebook Messenger, TikTok, Instagram, WeChat, Discord and WhatsApp. More customers expect to be served in these channels; they expect to be able to transact with their brands of choice. Why should they go to a mobile banking app to find their balance? Why can’t they get it in WhatsApp? They are often learning about the next Jordan or Yeezy shoe drop from their social network in Messenger – so why not transact with them there? Consider all your own personal WhatsApp, Messenger and other messaging platform groups discussing social activities, sporting teams, school activities or the latest fashion – these are ALL opportunities for commerce (Figure 3).
And there are use cases now. Airlines – such as KLM and Etihad Airways – are engaging customers on WeChat, Kakao Talk, and WhatsApp, helping them reschedule flights and answering customer service queries. Telecommunications providers are allowing customers to raise issues on messaging platforms – and are also using them to upsell and cross-sell new services. Transportation providers are making it easier to find a car or the the next scheduled bus right there in the messaging platforms. Retailers – such as 1-800 Flowers and Culture Kings – are not only serving customers but finding new customers on these messaging platforms.
Going beyond the messaging platforms, businesses are also looking to serve customers on their smart devices – such as Amazon Alexa/Echo and Google Nest/Home devices. Alerting customers to order updates, shipping details and product promotions is becoming standard practice for leading businesses. Digitally-savvy banks are allowing customers to not only track their balance but also make transfers and payments using these smart platforms.
Customers are more comfortable with these conversational commerce options – and they actually expect you to offer such services on your site, in your app, on their smart devices, and on their messaging platforms of choice. Your ability to provide outstanding customer experiences will not only be your ticket back to revenue growth but the recipe for long term business success. Meeting customer needs on their terms is a good place to start.
Delivering a Personalised Conversational Customer Experience
Customer experience (CX) decision-makers will have to rethink how they approach building richer CX capabilities to deliver personalised conversational interactions with customers.
Messaging should become part of a wider AI, Data, and Mobile strategy. Contact centre teams might feel that this is too ambitious a project and would prefer to continue to serve customers through the more traditional channels only. So, it is important to identify the key stakeholder/s who will drive the initiative. And the contact centre team should work with the Digital, Innovation and Marketing teams.
Designing the mobile experience and in app messaging for CX should have some of the following features:
Ability to click a button to request for a service or escalate an issue that will, in turn, result in the company contacting the customer either by messaging or calling.
Giving customers the option to contact through popular messaging platforms such as Facebook Messenger, WhatsApp, LINE, WeChat, and others. Unifying these systems in a single interface that integrates with your customer service application is best practice.
Having one single interface to manage and make payments – within the app itself or on the social messaging platform. Conversational commerce is about creating an ongoing relationship with customers throughout the entire customer journey. Don’t just focus on the sale or the post-sales experience – customers expect to be able to interact with your business from their platform of choice regardless of their need or stage in the customer journey.
Embed deep analytics into the communication services to help the organisation better deliver a personalised CX.
Ensure you have a solid, unified knowledge management interface at the backend so that all questions lead to the same answers regardless of channel, platform or touchpoint.
Your opportunity to drive greater business success lies in your ability to better win, serve and retain your customers. Refresh your customer strategy and capability today to make 2021 an exceptional year for your business.
There have been a few articles recently about investment companies looking to buy large national US retail companies, for example, JC Penney and Dillards. Their historical approach was to purchase the land and develop the sites as a retail centre and operate their stores. They then lease the remaining retail space to other retailers. It is a business model which has been in use for many decades.
Historically a long and deep negative economic cycle has caused some retail operators/developers to sell part of their operations. This happened in the US in 1995 with Sears. The real estate development and investment companies’ interest is in exploring if there is a higher and better use for the properties. That is the essence of land economics, going from a lower economic use to a higher income/value use.
A key difference this time is the use of advanced technology. We see this in many dimensions: building systems and operations; retail management, social media, entertainment and food and beverage (F&B) operations.
The Smart Building revolution in Retail is about changing the management philosophy of buildings and using technology to aid in the process. The defining characteristic of building smarter is not the application of technology or a function of outcomes on energy use or maintenance. Instead, it is a commitment to leveraging the overall footprint to achieve the goals that perhaps inspired the building in the first place.
Evolution of Space for Retail Activities
The old axiom of real estate is location, location, location. This means that every retail centre will have to be assessed for its best purpose for its locations and surrounding environment. Retail has been morphing in the past few years from a traditional purpose of picking something up to an intersection of shopping and entertainment. This combines on-premise activities with a buying transaction which can be handled either onsite or online. Technology infrastructure investment opportunities are driven by optimising the customer retail experience.
Retail centres are seeking new functionality, including the adaptation of both design and use. Below are four approaches we believe can be used to assess each retail centre.
Reuse: Retail Lifecycle – Consumption to Redemption
There is a shift from consumers discovering and experiencing products in a physical retail space to retailers delivering on-demand. Many smaller retailers have capitalised on this by becoming pick-up points for online orders. They hope to increase footfall by drawing the customer into their own premises when retrieving their online delivery.
Retail centres need to expand on this trend to become a fulfilment location rather than a retail shopping space. Consumers could pick up online orders, recycle used goods, get products maintained and repaired, have appointments for personal services (dental, eye, hair, dry cleaning, etc.), try and test goods in mini-showrooms and collect points and benefits from gamification activities. By having a centralised exchange facility with multiple functionalities, consumer data can be leveraged to create marketing pull activities such as exclusive shopping events, and personalised customer service based on preferences and purchase history.
The current square meterage can be reallocated for distribution including the use of dark stores, green recycling centres for 3D printed product disposal and retail pick-up and exchange points. Staff will not be salespeople, but customer delivery service managers. The technology opportunities in this area would be re-allocation of network resources; focus on efficiency in delivery and customer satisfaction; and automation tools for customer service staff.
Redesign: Blended – Community Environment and Retail Experience
An alternative and more involved development approach would be to redesign the retail centre with deeper use cases to get more customers to come and stay longer. If a consumer stays onsite longer, there is a higher probability they will spend more at the retail centre. The future retail centre (Figure 1) would include additional space usages for a community space, a distribution centre for pick-ups, expanded F&B and remote working.
The technology opportunities are in two areas: customer experience and building operations. From a customer perspective, some technology examples would include entertainment and gaming in the F&B area, digital signage and mobile device technology to further engage people. For building operations examples could include technologies to control climate, lighting, security, energy management and building management.
Redevelop – Living Space for a Quality of Life
In some locations, the retail environment could have an oversupply of newly development retail centres. This means the optimal use for the centre would be to change it to a ‘Village Community’ – a community where people can live, work, learn and play. It would encompass multiple uses – multi-family residential units, a community centre, learning centres for younger children and a co-working area. The technology opportunies would be identical to a connected Smart City – at a lesser scale. Smart residential solutions would make the living environmental more user friendly. Retail could include digital media, mobile push features, enhanced and operational technology, energy management, climate control and security. Schools could include interactive and collaborative tools. Parks would have Wi-Fi and enhanced security. Connected Services (eg utilities, fire life safety, security and communications) could include operational technology systems for utilities, audio and video security systems and communication.
Repurpose: Knowledge & Learning Environment
For some retail centres a redevelopment may not be required, but would instead need a major repurposing of the space. The repurpose could be as a learning or healthcare centre. Learning environments require large open spaces with high ceilings for auditoriums or class rooms; common areas for gathering in between classes; onsite housing for students; food courts; and adequate parking for commuters. A healthcare environment would require patient reception, examination rooms, inpatient rooms, surgical units, and administrative offices. It could also include a medical learning centre.
The technology opportunities would be to develop a 24×7 site, with technologies to support the key purpose of the centre. The learning environment could include collaborative audio/video tools for Smart Classrooms. The social areas could including advanced food ordering and delivery systems and multiple player gaming centres for entertainment. The living areas would include systems and technology for smart living. The parking area could include enhanced security and surveillance systems, and smart parking systems. Behind the scenes, the building operations would need to upgrade energy management, building maintenance and management, digital food court operations, and a wellness air quality system.
The Future of Sustainable Retail Space
The decline of a retail centre is not necessarily a bad thing for a community. It is just the “Circle of Life” as an area evolves. Locations morph over the long-term. This has been seen in all the large cities around the world which have stood the test of time, eg. London, Paris, Amsterdam, New York, Tokyo and Beijing. The transformation also breathes fresh air into the surrounding environment. There are multiple layers of technology available to provide for an incredible Sustainable and Smart Community. It is large opportunity, not only for real estate developers, but also for technology vendors who understand the transformation process into the multiple variations of smart environments. Large real estate players and REITs will buy these retail portfolios and begin to transform older, low revenue, semi-vacant shopping centres into vibrant destination centres. Technology vendors should bring their ideas and systems to the attention of retail real estate owners early on in the the process. This will increase their chances of having their systems incorporated into the overall design concept and operational approach. It is a physical and digital transformation which improves neighborhoods, businesses and the city. It is a win for all.
Get more insights on the new use of retail space; and the functional and operational changes that real estate investors will need to develop for this period of adjustment in this report authored by Ecosystm Principal Advisors, Alea Fairchild and Mike Zamora
Woolworths eCommerce floor space spanning across 2,400 sqm is equipped with micro automation technology that allows it to segregate and move groceries from automated storage units that can hold an inventory of 10,000 products and bring them directly to those you pick the orders. The innovative model is designed to make the inventory storage space compact and move high-volume online grocery products to consumers with greater speed, efficiency and accuracy. While grocery products will be picked from automated units, perishables such as fruits, vegetables and meat will continue to be picked up by shop floor workers. Woolworths has employed 50 new employees to fulfil online orders and is expected to fill 100 more vacancies.
“It appears that Woolworths is continuing to use New Zealand to test new technology before introducing it into their much larger Australian market. They are extending the introduction of the technology they first announced for use in their New Zealand online fulfilment centres – the Auckland dark store in November 2019 with a second in Christchurch announced in January 2020,” says Ecosystm Principal Advisor Alan Hesketh. “The Carrum Downs, Melbourne, store will be the first implementation of automation in Australia. Woolworths has announced a third dark store for Wellington in late September 2020 – it would be surprising it was not automated as well.”
Talking about the increase in the use of dark stores, Hesketh sayss, “The challenge with the current model of online stores is the use of expensive retail floor space for picking orders that cannot be used to serve physical customers. With the increase in online sales, accelerated by COVID-19, the volumes are now sufficient in urban areas to make these dark stores profitable. This allows the use of lower-cost, centralised, distribution central space for the dark stores.”
An Example of how Retailers are Pivoting Successfully
Woolworths has been constantly developing their capabilities to improve customer experience and process efficiency. The demand for online products and groceries skyrocketed during COVID-19 which resulted in a temporary shortage of online products and Woolworths had to temporarily stop online ‘Pick up’ and ‘Delivery Now’ orders nationally. To ensure smoother delivery services, they partnered with Sherpa, Drive Yellow, and Uber. Earlier this month, Woolworths announced that six stores in Australia would go completely cashless. Woolworths has around 1,050 stores in Australia which operates on a mix of cash and e-payments.
To keep pace with the online growth, Woolworths automated dark stores will be a potential game changer as they are expected to be able to dispatch online orders five times faster, compared to a standard Woolworths store.
“This increased capacity also means Woolworths’ online offer is less likely to be overwhelmed in the event of another COVID-19 lockdown. This improved access to groceries will be an important benefit to vulnerable members of communities, as well as those customers wary of visiting physical stores,” says Hesketh.
“For their physical stores that support home delivery, Woolworths will now be able to repurpose or release the space used by the pick-and-pack operations. In-store customers will get a better experience without the Woolworths personnel picking orders in the aisles.”
More insights on the impact of the COVID-19 pandemic and technology areas that will see transformation post COVID, as organisations get into the recovery phase, can be found in the Ecosystm Digital Priorities in the New Normal Study
The impact of the cost-cutting measures that organisations are implementing, on CDOs and CIOs has been discussed in my report Managing Costs in the New Normal, where I provide guidance on how to address the necessary cuts.
Ina well-run online presence, retailers acquire a significant amount of data about their customers’ online behaviour. Data such as customer’s purchase history as well as how they traverse the site, how long they remain on the site and how they leave – often without purchasing. The challenge is how you can collect and use this data to improve the customer experience (CX) and increase sales in our new normal.
SRG, trading under banners such as Super Cheap Auto, BCF and Rebel across Australasia, has adopted a Salesforce tool called Einstein to address this challenge. SRG is using this AI engine to present product recommendations in several contexts across a customer’s online journey.
The impact of COVID-19 means overall sales across the group has declined. At the same time, online sales have grown to be generating almost 20% of the overall sales. Within these online sales, the AI recommendation engine has directly influenced 1 in 5 customer purchases.
SRG has developed a significant base of customer data since they introduced omnichannel and club offers; and are now seeing the return from this investment. Recommendation engines operate best when they have quality data in volume – and the proportion of and growth in, online customers using these recommendations is a guide to the quality of the platform.
Coping with Increasing Online Demands
Ecosystm research finds that over 56% of retailers are increasing their use of digital technologies for CX and will continue to invest after the immediate crisis. As always, getting the right value from this increased expenditure will be critical to a retailer’s price competitiveness and profitability.
With online sales growing dramatically, SRG’s online share of sales has more than doubled over April and May, the potential return from an engaging online CX has increased significantly. In turn, this has increased the importance of the online CX to a retailer’s competitive positioning and market share.
Tech leaders will be expected to provide direction on how to achieve this improvement, with AI engines offering an increasingly important tool in increasing the speed of response to changing customer behaviours.
With their mapping of customer journeys, SRG has been able to target specific stages in the journey for the use of the AI recommendation engine. Their focus on increasing the size and value of a customer’s basket provides the explicit measure of success. And SRG’s customers are showing their enthusiasm for these recommendations. The share of online sales influenced by the AI engine grew by over 600% in the past 12 months.
Customer expectations are continually being redefined by their experiences across the online environment, not just by retailers. In our new normal, with online becoming significantly important, retailers need to be consistently improving their offer to remain competitive.
Our study results shows that retailers are taking this step and will need to pay careful attention to their cost base and profitability while making these changes. SRG’s success with the AI engine shows that this is possible.
Lessons to Learn
COVID-19 has changed customer behaviour significantly, and tech leaders are identifying new tools and processes to improve their CX in line with these changes. SRG has continued its customer-focused omnichannel approach by adopting the Salesforce Einstein AI engine. By using one of their key sales metrics – size and value of basket – they have been able to assess the contribution of this tool.
There are some clear lessons for other retailers from their experience:
Be very clear on why you are introducing the new tool – how you are going to achieve value.
Understand the foundation that you need, to introduce new technology. You will find being successful using AI without quality data in volume will be difficult.
Experiment and learn quickly from experience gained. In this cost-constrained world, don’t over-commit to a new approach without evidence.
Use products and services that have a low cost of entry and a variable cost model. Cloud services generally provide this cost model.
Our research, along with press release such as SRG’s, show that retail leaders are continuously improving their customer engagement. As a tech leader, you need to be aware that customers will vote with their clicks, for retailers that are delivering.
And getting those non-essential costs out has never been more critical.
More insights on Retail organisations and their most significant response to COVID-19, can be found in the Managing IT Costs in The New Normal – Report
Zouk, the renowned nightclub with 30,000 square feet of space in Singapore uses this venue as a live streaming venue during the day to host bazaars for eCommerce vendors. From June 2020, it launched an online shop selling merchandise, bottled cocktails and food from its RedTail kitchen.
Transformation of businesses will require capabilities that were not created within their models. The instinct to survive in the short term will require businesses to create symbiotic partnerships. This will require some fresh thinking by business leaders.
Change the “Build” obsession and not try to own every leg of the customer journey. That will not only take time but also distract capital and management.
Rethink the customer needs – and this time think of the entire journey rather than an inward view of product-market fits. Customer needs are changing at breakneck speeds, so chasing and “building” these “fits” will always remain a common string amongst laggards.
Connect with like-minded ecosystem players and complement strengths with a single-minded focus on solving customer problems.
View technology stacks through the lens of your partners. There may be opportunities available from near open source technology solutions.
For example, FJ Benjamin will need the last-mile-delivery capability that will be provided by partners who have optimised in that field, Zouk has tied up with Lazada to host the bazaars and GrabFood is using underutilised taxi capacity to meet the increased demand for food delivery. There are many other examples in the O2O (Offline to Online) space.
This ecosystem approach is also relevant to other sectors like Financial Services. These firms also need to understand the changing consumer needs faster, with a mantra to deliver. Aspire, originally an alternate lending platform has gone through a metamorphosis and transformed into a Neobank. From a uni-product loan provider, it is now solving for a business account, card solution, integration with expense management solutions and continue to provide loans. Capabilities not necessarily built in-house.
The changing world will give rise to business models that will integrate and complement each other. Businesses with an ecosystem mindset will be winners while others might just be relegated to oblivion.
Visit Ecosystm’s COVID-19 research module to take part in the Digital Priorities in the New Normal study and get a benchmark of how you compare to your peers in regards to your organisation’s response to COVID-19.
For more information on Ecosystm’s “Digital Priorities in the New Normal”, please contact us at email@example.com
Retail organisations that had not walked the DX path found themselves struggling to cope in recent times. Ecosystm Principal Advisor, Alan Hesketh says, “Digital transformation in retail, as represented by deep customer understanding and omnichannel operations, is far from new. Industry leaders launched these activities almost 20 years ago and continue to aggressively develop these capabilities. Retailers not actively leveraging these capabilities to understand their customer preferences are at a massive competitive disadvantage.”
Anta Group Accelerates DX
The Anta Group, a sports products manufacturer based in China with over 12,500 stores, has launched a group-wide digital platform designed and deployed by IBM Services based on SAP S/4HANA. The initial phase of Anta Group’s DX included creating intelligent workflows and was completed in January 2020. This enabled the company to adjust its retail operations and switch to quickly to online channels during the COVID-19 pandemic.
Like any retail organisation, the Anta Group realised that their product offerings had to be diverse to cater to an evolving customer base. This growth required an upgrade to a group-level management platform to help the business run more efficiently across the entire value chain of procurement, supply, production and sales. The SAP S/4HANA platform gives the senior management a single view of data across business units to help with better decision making regarding production and sales optimisation. The company claims to have improved its supply chain efficiency by 80%, that has led to faster delivery and business growth even in these difficult times.
IBM Services has a role to play in providing the business intelligence required for agile decision-making. By integrating data from multiple sources – retail stores, multi-brand products, channels, customers, suppliers and finance teams – on the one platform can help Anta Group to settle accounts quickly and issue business analysis reports for different entities as well as a real-time view of the operation across the organisation.
Hesketh says, “Retailers must have an accurate, timely understanding of their customers’ behaviour and resulting sales performance. COVID-19 has dramatically increased the volatility of sales, making rapid recognition of changes essential. For those lagging in their digital transformation to acquire this understanding, an attractive option is partnering with organisations with demonstrated relevant capabilities; in this case with SAP, for the capabilities and performance of their in-memory product, and IBM for their configuration and implementation expertise.”
IBM and SAP evolving their partnership
In 2016, IBM and SAP had expressed intentions of increasing investments to help their customers on their DX journeys. As some economies move into the recovery phase, all businesses will be forced to transform – or keep transforming if they are already along that path. Last month saw IBM and SAP announce the evolution of their partnership with new offerings to help businesses transform faster. The next evolution of the IBM and SAP partnership aims to focus on faster DX time to value, innovation through industry-specific offerings, customer and employee experiences and providing flexibility and choice to organisations to run their workloads in hybrid cloud environments.
Hesketh adds, “But the product and implementation partners are, while important, not the real determinant of the success of DX activity and time to value. Retailers must recognise and commit to the strategic reshaping of their business, taking their large workforces with them on the journey. This is a high-risk change. A strong relationship between product vendor and implementation partner, as SAP and IBM demonstrate here, assists in reducing, not removing, this risk.”
If you are a Tech Buyer, you can visit the research module to take part in this study and gain access to a benchmark of how you compare to your peers in regards to your organisation’s response to COVID-19.
For more information on Ecosystm’s “Digital Priorities in the New Normal”, please contact us at firstname.lastname@example.org
In his report, The Path to Retail’s New Normal, Ecosystm Principal Advisor, Kaushik Ghatak says, “Satisfying their old consumers, now set in their new ways, should be the ‘mantra’ for the retailers in order to survive in the New Normal.” To be able to do so they have to evaluate what their new business requirements are and translate them into technological requirements. Though it may sound simple, it may prove to be harder than usual to identify their evolving business requirements. This is especially difficult because even before the pandemic, the Retail industry was challenged with consumers who are becoming increasingly demanding, providing enhanced customer experience (CX), offering more choices and lowering prices. The market was already extremely competitive with large retailers fighting for market consolidation and smaller and more nimble retailers trying to carve out their niche.
In the New Normal, retailers will struggle to retain and grow their customer base. They will also have to focus aggressively on cost containment. A robust risk management process will become the new reality. But above all else, they will have to innovate – in their product range as well as in their processes. These are all areas where technology can help them. This can come in the form of technology partnerships, adopting hybrid models, increased usage of technology across all channels and investing in reskilling or upskilling the technology capabilities of employees.
Re-evaluating the Supply Chain
One of the first business operation to get disrupted by the current crisis was the supply chain. Ecosystm Principal Advisor, Alea Fairchild says, “Retailers are finding themselves at the front-end of the broken supply chain in the current situation and there is an enormous gap between suppliers and buyers. Retailers will have to aim to combine inventory with local sourcing and become agile and adopt change quickly. This will highlight to them the importance of transparency of information, traceability, and information flow of goods.”
Ecosystm research shows that supply chain optimisation and demand forecasting among the top 5 business solutions that firms in Retail consider using AI for (Figure 1).
“In the New Normal, consumers are going to demand the same level of perfection that they have received and at the same cost. In order to make that possible, at the right time and at a lower cost, automation has to be implemented to improve the supply chain process, fulfill expectations and enhance visibility,” says Ghatak. “Providing differentiated CX is intimately dependent upon an aligned, flexible and efficient supply chain. Retailers will not only need to innovate at the store (physical or online) level and offer more innovative products – they will also need to have a high level of innovation in their supply chain processes.”
Digital Transformation in the Retail Industry
Ecosystm research reveals that only about 34% of global retailers had considered themselves to be digital-ready to face the challenges of the New Normal, before the pandemic. The vast majority of them admit that they still have a long way to go.
With COVID-19, the timeframes for digitalisation have imploded for most retailers. The study to evaluate the Digital Priorities in the New Normal reveals that in Asia Pacific nearly 83% of retailers have been forced to start, accelerate or refocus their Digital Transformation (DX) initiatives (Figure 2).
So, what technology areas will Retail see increased adoption oF?
Fairchild sees retailers adopt IoT, mobility, AI and solutions that deliver personalised experiences such as push notifications. What they are likely to do is blend different aspects of their physical and virtual environment to create a solution for customers. “To address in-store processing, hygiene, safety standards and compliance requirements, retailers will change their processes through a combination of resources, KPIs, automation, task management software and switching the information flow.”
Ghatak thinks automation has a significant role to play in improving both CX and the supply chain. “This is also an opportunity for retailers – both online and in-store – to create a solution experience where technologies such as Augment/Virtual Reality (AR/VR) can help. While retailers are adopting these technologies, with 5G rollouts, there is potential that the adoption will implode in a short time-frame.”
Those retailers that are not re-evaluating their business models and technology investments now will find themselves unprepared to handle the customer expectations when the global economy opens up.
Ecosystm Principal Advisors Kaushik Ghatak and Alea Fairchild were part of a conversation with Ecosystm CEO, Amit Gupta. Watch the video here ?