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Wednesday, 14 June 2017

Solving the real time availability problem for clothing retailers


At any point in time, most clothing retailers do not accurately know, across all of their stores and channels, how many of the products they have ordered, are currently available for customers to buy.

This creates disappointed customers who cannot buy what they want and is highly frustrating for staff, store owners and their suppliers. It results in poor service, missed sales and significantly higher costs.



This is a multi-billion dollar industry problem but one that we can now help clothing retailers to solve. 



We can deploy RFID technology and AI to enable retailers to capture and deploy real time stock availability data so they can increase sales, reduce waste and deliver much better customer engagement  



The core of the proposition is a multi-channel Real Time Product Availability Engine which uses RFID technology and AI to process product, order and fulfillment, replenishment and returns data and translate them into actionable insights that can be deployed in real time via retail applications and services including : ERP systems, order management systems, logistics systems, store compliance and workflow solutions as well as CRM, customer loyalty and customer service solutions



The early adopters of this new technology are delivering stunning results.

Real time availability data analytics are set to have as big an impact on clothing and fashion as the introduction of epos data in the 1980's and loyalty data in the 2000's.

Thursday, 31 December 2015

2016 - the year of cashback marketing ?

The UK loyalty programme market is thriving as most retailers, other than those pursuing a discount led strategy, offer some kind of loyalty programme to supplement their core proposition and to help them to understand their customers. In recent months we have seen the launch of new programmes from Waitrose, Morrisons, Pets at Home and M&S whilst mainstream programmes such as Tesco Clubcard, Boots & Nectar are used every week by tens of millions of consumers. These programmes are more or less the same today as they were when Tesco first launched Clubcard over twenty years ago - typically points based, requiring customers to remember to carry a plastic card and swipe it at the till and to carry paper based vouchers which they receive through the post or printed at till. There has been very little take up so far of digital enabling technologies from companies like Mobilize and Eagle Eye which offer significant cost savings to retailers and much greater convenience for customers. At some point this will surely change but the owners of these programmes so far have been highly resistant to change.

Meanwhile, under the radar and evolving from the world of online affiliate marketing, we are seeing the rapid growth of cashback programmes from Quidco, Top Cashback and, seemingly, just about every bank you can name.  What's going on ?

Well, for customers, cashback market leader Quidco delivers value that is in a different league from that on offer from the supermarket programmes. The average Quidco customer accrues around £70 per year mainly from their online shopping. The most savvy who use Quidco for online, instore and grocery shopping are earning £100's and sometimes £1000's per year. This is because Quidco provides cashback from over 5000 retailers and on average the typical retailer will give around 5% cashback per transaction. Quidco also provide cashback on leading grocery brands.

For retailers, Quidco provides access to millions of digitally savvy, affluent, high spenders who love to shop and who can be marketed to at a highly granular level based on their detailed shopping habits and reached at a much lower cost than through google. What's not to like about that ?

With banks its a slightly different story. After many years of silo based, shareholder centric, product and acquisition led marketing they are finally waking up to the benefits of customer centric marketing. Recognising that a surer way to create value for shareholders is to focus on serving existing customers better. A bank's best customers are typically those that are regular current account users as they have a much higher holding of higher margin products such as mortgages, credit cards and insurance. Hence the drive to acquire current account customers and reduce churn. Cashback programmes are emerging as the preferred option given the success being enjoyed by Quidco and others.

Our hunch is that we are going to witness significant growth and innovation in this space. Mainstream retailers will look to evolve their single brand programmes and offer their customers more choice and higher value. Banks will leverage their data assets to enable retailers to target those customers that matter most. More customers will accrue rewards instore by using their bank cards rather than a separate loyalty cards. Cashback on grocery shopping will grow significantly as fmcg companies continue to invest in direct to consumer marketing and seek to bypass the closed access programmes managed by dunnhumby and Aimia.  Speciality retailers, restaurants and service providers will switch marketing funds into those programmes that enable them to attract new, lapsing and loyal customers at low cost. Happy days.  

Wednesday, 7 October 2015

Has the botched sale of dunnhumby cost Tesco shareholders $1 billion?

Has the botched sale of dunnhumby cost Tesco shareholders $1 billion ?

Normally if you choose not to sell an income producing asset at least you get the consolation of keeping the income stream. A potential cash windfall is offset by continued and hopefully growing earnings.

But that won't be the case for Tesco who, according to observer estimates,  have given away income of about £50m per year to their former JV partner Kroger. They did this because Kroger had a change of ownership clause which was triggerable if dunnhumby came under new ownership. By negotiating an exit from the Jv and keeping all of the necessary people and technology they require, Kroger are able to continue to benefit from the services that dunnhumby were providing them but without having to pay fees to the UK organisation. As a quid pro quo,Kroger enabled dunnhumby to continue with a small US operation, search for another USA grocery partner and to be sold to a 3rd party.

The agreement has cost Tesco about £50m per year in reduced income (money that would have flowed to them via the USA JV) as it is highly unlikely that they will be able to find another partner that is willing to pay anywhere near the fees they received from Kroger. This is because Kroger are much bigger than their grocery peers and the other major grocers already have alternative analytics partners who are providing similar services to those provided by dunnhumby.

The second major clanger dropped during the process has been to redefine the contract term that exists between Tesco and dunnhumby. dunnhumby's profits arise as a consequence of its monopoly rights to use Tesco's Clubcard data. This was an in perpetuity arrangement that would have been attractive to a potential acquirer of dunnhumby but potentially might have constrained Tesco in years to come. So it made sense to put a lengthy contract term in place. By establishing a 5 year agreement, Tesco have thrown the baby out with the bath water, giving an acquirer next to no time to recoup it's investment and hence there are no longer any willing acquirers.

Consequently there is no sale and dunnhumby is left without its prized USA asset and the source of 60%+ of its profits and value!

Tuesday, 18 August 2015

The Power of Personalisation


The Power of Personalisation





Most retailers would say that if they could deliver a more personalised service sales would grow. Unfortunately this is easier to say than to do. There are three key reasons for this : 
Most retailers, other than at an aggregated level, don’t know who their customers are, their relative importance, the degree to which they are committed to the retailer’s products or services and the extent to which they are favourably or unfavourably disposed towards the brand
  • Even if retailers do know this, changing something in order to improve things, is difficult because employees tend to be organised around stores, channels or products and services rather than customers
  • Even if the retailer has the necessary insight and organisation skills, it typically lacks the required technology or fails to implement it optimally
These three constraints can be overcome as follows :

1. Building the necessary customer insight.

This requires harvesting all available data and crunching it to get an understanding of customers in 3 dimensions across all channels. The three dimensions are :

a) loyalty (how much does the customer spend, how frequently do they shop)

b) commitment (what share of the customer’s wallet does the retailer have)

c) advocacy (what does the customer think about the retailer’s proposition and service)

Retailers need a coming together of IT, marketing and data science skills organised so they can provide both a rear view mirror assessment of what’s happened and why and guidance to current and potential customer behaviours and attitudes.

2. Deploying a customer centric organisation model or project framework with a senior (ideally CEO) sponsor who can keep the project on track and help remove road blocks and barriers.
They key movers need to understand how and why the organisation makes the decisions it does and what will be necessary to change them. Getting the right people in the right roles with clarity of purpose, an holistic view of the organisation and the appropriate governance is key. The organisation needs to measure outcomes from (individual)  customers points of view in order to understand how attitudes and behaviour impact brand, operational, financial and service metrics. 

3. Understanding, procuring and deploying the right technology
Retailers need  to choose the right type of solution or service to ensure that results can be delivered quickly within budget and resource constraints. There is an equal risk of spending too much and taking too long to deploy as there is in spending too little and going off half baked.

The chosen solutions are likely to comprise :
Database software, segmentation and insight tools to enable customer understanding
  • Multi channel CRM via app, email, website and post to deliver personalised communications
  • Web personalisation to ensure the online experience is appropriately tailored to customer requirements
  • Tools to help stores to deliver layouts, presentations, experiences, ranges, prices and promotions that are appropriate to the customers who shop there
  • Programmatic media buying to cost effectively source new customers
Most companies can point to some examples of a personalised approach that have yielded positive returns for customers and shareholders but few would say they do the above consistently well.

 Tesco led the way on personalisation under Sir Terry Leahy but lost the plot when they began to focus on financial outcomes, ignoring the changes in customer behaviours and attitudes that heralded their downfall and haven’t evolved their 20th century loyalty tools for the 21st century multi channel and digital world.
Amazon, John Lewis and Ebay continue to evolve their online propositions favourably for customers but still have a way to go to deliver experiences that are truly personalised. 

Net-a-Porter assign high value customers a personal shopper and this has been a key reason for their explosive growth. These personal shoppers understand customer’s size, colour, style and designer preferences and create outstanding service scores whilst racking up huge sales commissions.   
Tomorrow’s winners will bring the benefits of a personal shopper to a mass audience and this will require customer centric insight, decision making and customer centric technology solutions.