Categories
CX E-commerce Technology Unified Commerce

How Do You Actually Achieve Unified Commerce?

Paid partnership with Manhattan Associates


What do you call a retailer with a relentless drive to enhance the customer experience? This may sound like the start of a geeky retail joke but it’s a serious question. We used to brand these more nimble businesses as “disruptors”. They were the ones ripping up the rulebook, defying the status quo and continuously elevating the shopper experience.

Today, I’d argue that all retailers need to adopt a mentality of perpetual disruption. In the fast-moving world of retail, today’s innovations quickly become tomorrow’s norms. You’ve got to keep evolving and experimenting. Failing fast has become a prerequisite. 

This was evidenced in a new study from Manhattan Associates. The inaugural Unified Commerce Benchmark for Specialty Retail in Europe assessed 50 retailers across three verticals (apparel and footwear, home and DIY, luxury) in five European markets (France, Germany, Italy, UK, the Netherlands).

Retailers were categorised as Leaders, Challengers, Followers and Laggards. The study then revealed common attributes of successful retailers across four categories: Search and Discovery; Cart and Checkout; Promising and Fulfilment; Service and Support. So what have we learned?

Firstly, the study called out four participating retailers as true leaders in Unified Commerce: Adidas, H&M, Leroy Merlin and M&S. These businesses aren’t just ticking boxes by offering capabilities such as real-time inventory statistics and product recommendation tools; they are actively embracing technologies that enable them to deliver more nuanced, and increasingly personalised, customer experiences.

And it’s paying off. The study found that Unified Commerce leaders’ revenue growth outperforms non-leaders by at least twofold.

Guided Inspiration, Rich Findability and Immersive StoryTelling

Leaders in ‘Search and Discovery’ help shoppers discover meaningful products, whether they are looking to fulfil an immediate need or are looking for inspiration. Most leaders in this space already bundle product offerings (offer suggestions to ‘buy the look’ or ‘buy the set’), and I imagine this will become the norm in the very near future as more retailers embrace the power of AI.

There is always room for improvement and Manhattan specifically calls out capabilities like offering real-time visibility on product description pages (PDP), inventory status callouts for low/out-of-stock items, and personalised recommendations on home page. Retailers should also strive for greater visibility of delivery times, for example by allowing shoppers to filter by fulfilment method.

Most leaders offer back-in-stock notifications and 100% of them provide product sourcing information and detailed content on sustainability practices. This is an important point – retailers must go beyond product features and really immerse the shopper in the brand’s ethos. Transparency is going to be key going forward. 

Unified Basket, Payment Flexibility, Frictionless Checkout

The biggest point of friction in today’s retail customer experience is due to the loss of context when transiting between the physical and the digital. Those retailers leading the way in ‘Cart and Checkout’ understand that a unified cart or basket is a foundational capability when it comes to that all-important connection across channels: 40% of leaders show personalised promotions and offers on PDPs and cart, compared to 6% of non-leaders. Most leaders also allow shoppers to view promo codes in cart and check product availability status by store in cart.

Given the proliferation of payment options today, most leaders also offer checkout with buy now, pay later (100%), Apple Pay or PayPal (70%), as well as the ability to use mixed payment methods for the same order (40%).

In-store and online cart abandonment is still far too regular of an occurrence in retail. In fact, more than one-third (35%) of shoppers said that they abandon their shopping cart because of lengthy checkout process and a whopping 37% said they will not retry if asked to re-enter payment or delivery details. It’s essential that retailers provide seamless checkout experiences that reduce unnecessary friction at the point of conversion.

Flawless Fulfilment

I’ve often said that the post-purchase experience tends to be more of an afterthought than a strategic priority. Well, that is finally changing as retailers recognise that a shopper’s product pick-up or delivery experience must be as seamless as their shopping journey. Not only do leaders in ‘Promising and Fulfilment’ make sure retailers meet or beat their delivery promises consistently, they do also so while being more environmentally friendly too.

Offering shoppers greater post-order flexibility, including complete or partial cancellations, and greater delivery/pick-up options are all areas leaders excel in. Sixty percent of leaders offer shoppers the ability to cancel orders post-purchase compared to 28% of non-leaders.

And shoppers are crying out for this: more than two-thirds of shoppers want a self-service option to be able to edit order after placing them. Meanwhile, nearly three quarters (73%) of shoppers value expedited deliver (same business day) but are only willing to pay less than €5 for the service.

Manhattan calls out the ability to highlight the carbon footprint / impact of fulfilment choice as an area for improvement. Shoppers are hyper-informed when it comes to pricing and product information, but too often they are fumbling in the dark when it comes to sustainability. I believe this will change considerably over the next decade and retailers must prioritise transparency to drive greener purchasing decisions.

360 Degree Service

Leaders in the ‘Service and Support’ segment offer shoppers a wide variety of service options from call centres to in-store assistance, social media support and live agents available via their website and mobile app. What is most important, however, isn’t the breadth of support options but the fact that they offer seamless continuity, consistent quality and always-on availability.

Leaders empower shoppers to self-serve most of their needs. Nearly all (92%) offer support on order modifications, returns and exchanges via chat/call and 75% offer their customers the ability to return purchases to drop-off locations.

In addition to problem solving, leaders also offer value-added services such as customisations, style/fit guidance and in-store hospitality to turn service interactions into a secret sauce of brand stickiness. Most leaders empower their store associates to check a shopper’s online purchase history while in-store (75% compared to 48% of non-leaders). They should also be striving for in-store appointment scheduling via their digital channels, product personalisation and allowing store associates to create or manage a shopper’s wishlist.

As I have said on numerous occasions, we are witnessing a democratisation of white-glove service within the retail industry. Don’t get left behind.

Download the full report.

Categories
Consumer Electricals Fashion Non-food retail Supermarkets

Why Currys is Nick Bubb’s 2024 Pick

Wonderful to have Nick Bubb on the podcast this week. We discuss:

🎄 Christmas trading results – winners and losers.
💻 Why electricals retailing is poised for a comeback in 2024.
📉 What JD Sports’ and Burberry’s profit warnings tell us about the state of retail.
🛍 What went wrong at John Lewis and whether Peter Ruis can revive the brand.
👗 Frasers’ stake-building strategy – what is the end game for Asos and Boohoo?
🛒 Supermarket switching and the importance of physical stores in food retail.

TLDL: skip to 26 minutes to hear 3 reasons why Currys is Nick’s tip of 2024. Last year, he picked Marks & Spencer so I’d listen up!

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Categories
Consumer Discounting Economy Inflation

A Year of Stagnation

Paul Martin, Global Retail Lead and Head of UK Retail at KPMG is the first Retail Disrupted guest of 2024. In this episode, Paul and Natalie explore:

🔹 The bifurcation of retail winners and losers.
🔹 Why consumers will be battening down the hatches in H1.
🔹 Breaking down the BRC-KPMG December sales data.
🔹 Promotions, margins, and the importance of stock visibility.
🔹 Economic outlook and impact of attacks on container ships in the Red Sea.
🔹 Opportunities for retailers in 2024 and beyond.


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Categories
AI ESG Retail trends

3 Retail Trends You Cannot Ignore in 2024

Paid partnership with Manhattan Associates


After years of volatility and disruption, might 2024 bring some much-needed stability?

I’m optimistic that we are safely out of ‘permacrisis’ mode, but that doesn’t mean that 2024 will be uneventful. Technology will continue to disrupt the status quo, improving operational efficiencies and taking the customer experience to new heights. Here are 3 areas to watch:

AI: From Intrigue to Implementation

The buzz and excitement of generative AI bursting into the mainstream dominated the headlines in 2023, with ChatGPT alone reaching 100 million users within just a couple of months. But things will really begin to heat up in 2024: this will be the year of deployment. AI is no longer hype; it’s reality. We are on the cusp of another ‘smartphone moment’ where AI will disrupt every aspect of the value chain – from product development right through to consumption.

From a customer experience perspective, the holy grail of hyper-personalisation is finally within reach. AI-powered shopping assistants are not the future, they are here now. Rich, real-time, relevant experiences are rapidly becoming the norm. I’m personally excited to see how AI develops in our kitchens, helping consumers not only with meal inspiration but also reducing food waste, and also how AI-enabled virtual try-ons might help tackle the perennial problem of returns.

Tech-Enabled Human Touch

As retailers recognised the value in repurposed, tech-infused stores, the collective view on bricks and mortar shifted from ‘liability in a digital era’ to ‘top asset’. The industry’s primary goal of the past decade has been digitising our physical spaces. As we look ahead to the next decade, the focus will shift to making our digital spaces more physical, more immersive, more lifelike. We’re already seeing this with the rise of virtual try-ons, liveshopping, social commerce and virtual shopping consultations, to name a few. Mixed reality is coming. In the future, we really won’t know where the physical world ends and the digital one begins.

As e-commerce transitions from its current static, transactional state to one of multiple dimensions, physical retailers will need to ensure they are leveraging their staff to provide a unique, elevated experience. Retailers must look to technology here to help democratise concierge-level service, allowing staff to serve the customer in both an efficient and highly personalised way – that’s everything from clienteling to allowing customers to pay on the spot or swiftly collecting or returning an online order. Tech-enabled human touch will differentiate the winners from the losers in 2024.

ESG: Firmly Back on the Agenda

In recent years, progress on the ESG agenda may have been quietly stunted as both retailers and consumers prioritised cost efficiencies. However, it’s safe to say that this is one trend that is never going away, and I believe sustainability will be a top priority for retailers in 2024 and beyond.

Transparency will be a key theme this year. Consumers look to retailers to guide them in their decision-making and, with heightened awareness around both greenwashing and bluewashing, there is simply no hiding behind false claims or labels. Retailers will be judged on their authenticity. They should be striving for honesty over perfection. Retailers must have full visibility over their supply chain and be able to effectively communicate their practices and standards to consumers. I believe we’ll see greater demand for product durability and traceability around retailers’ broader circularity efforts. Increasingly, shoppers will want to align with brands whose values reflect their own.

 

Categories
Consumer Economy Inflation M&A

2024: We’re Not Out of the Woods Yet

Falling consumer demand combined with a barrage of rising costs is set to create a challenging six months ahead for the retail sector – according to the latest assessment by KPMG/RetailNext Retail Think Tank (RTT) members.

With early indications of a disappointing Christmas trading period for some retailers, particularly in non-food categories, and food retailers resorting to increasing the level of promotions in order to drive sales this year, there will be very little respite for the retail sector as it enters 2024, according to the latest KPMG/RetailNext Retail Health Index (RHI).

Setting the scene for the challenges that lie ahead, the RHI, which assesses the state of health of the UK retail sector by considering the three key drivers of demand, margin, and cost, concluded that beleaguered consumers will hit the pause button on spending even further in the opening months of 2024. Despite having more money in their pockets than they did in Q1 23 due to reductions in National Insurance Contributions, wage growth outstripping inflation and lower fuel bills which has helped to boost household income slightly year on year, consumer sentiment is likely to remain low as the mood music around an ailing economy impacts their willingness to spend, the RTT concluded. 

The RHI has recorded a deterioration of retail health every quarter since Spring 2022 and this is predicted to continue in the first half of 2024, hitting 66 points by the close of Q1 24, a figure last seen in the height of the pandemic in 2020 when the UK was in lockdown. While the opening months of 2024 are likely to see a continued downturn in consumer demand, especially in non-food categories, it is just the calm before the storm as Q2 24 will see the sector hit by rising costs, including a hike in the minimum wage and a 6.7% business rate increase for most retailers. While demand is likely to pick up in Spring 2024 (Q2 24) as consumer confidence builds, rising costs will hit retailers, particularly those whose finances are not stabilised RTT members concluded, signaling potentially higher insolvency rates for small retailers and a boost in M&A activity – particularly in fashion and pure online retail, where there will be pressure on consolidation.

Highlights from the KPMG/RetailNext Retail Health Index included :

  • With household financial assets outweighing financial liabilities by £4 billion, the ability to spend will be polarised between households.
  • Savers enjoying higher interest rates are unlikely to be tempted to spend savings in early 2024.
  • Health and beauty are expected to be the only non-food category to see growth in the opening months of 2024.
  • Luxury retail and big-ticket categories will continue to experience a downturn in sales.
  • Sales growth for the big supermarkets in 2024 is likely to be more subdued, with the boost from grocery price inflation dropping away and pressure on volumes continuing.
  • Growth in 2024 will come from the discount and value retail channels.
  • London retailers face a ‘double whammy’ of rising business rates given the bulk of London’s retailers are multiples, and the fact that business rates in London are significantly higher than in the rest of the UK.
  • Further promotional activity is expected as retailers look to clear down excess stock and react to falling consumer demand.

Commenting on the RHI, Paul Martin, UK Head of Retail at KPMG, said:

“Despite Black Friday sales going deeper and lasting longer than last year, indicators so far are that Christmas trading this year has been one of the worst since the pandemic hit, and although there is still all to play for in the final weeks of December, it is looking as if it’s too late turn fortunes around.   Whilst food retailing sales growth has been weaker than seen over Christmas last year, sales of non-essential goods have been deteriorating rapidly and will continue to do so as consumers keep an even tighter grip on the household purse strings.

“It has taken a long time for the economic challenges to feed through to consumer resilience, but it looks as if it’s happening now, and is set to stay with us, at least until spring.  The UK retail sector will likely continue to see significant downward pressures on demand, and margin, for the early part of 2024 but this could turn a corner by April, just as hefty increases in minimum wage and business rates hit the bottom line.  Retailers will be holding their breath for some good news in the Chancellor’s Budget in March.

“Retailers have been remarkably resilient over the last few years and are now well versed in being agile to cope with economic shocks and changing consumer demands. Pressures on consumers from high inflation may be easing, but the economy faces headwinds from the lagged impact of monetary policy tightening and rigid fiscal policy settings.  For the next few months, we expect the retail sector to continue to tread water as it moves from dealing with one shock to another.”

What the RTT members said:

Jonathan De Mello, Founder & CEO, JDM Retail Ltd:

Moving into 2024, with residential rents continuing to increase, more and more fixed-rate mortgages running out and inflation staying relatively high, the first two quarters of 2024 at least will likely see lower consumer demand and a concurrent impact on retail sales and margins.”

James Sawley, Head of Retail & Leisure, HSBC UK:

“We’ll see less distress in 2024, as many small businesses gave into the conditions of 2023, characterised by high inventory levels (low cash), peak inflation, peak energy cost and the rising cost of capital. We now have normalised inventory, low freight costs, falling inflation, and a clearer idea of where interest rates are settling, as well as an extension in business rates relief.  We are likely to see consolidation in some segments of the sector where high costs, intense competition, and softening of demand will make it a compelling or necessary move”.

Nick Bubb, Retailing ConsultantBubb Retail Consultancy Ltd: 

“Q4 23 saw a lacklustre performance with volume pressure in non-food categories and the real sense that consumers are tightening their belts.  Whilst a lot depends on what we see happen over the next few weeks, there has already been a lot of discounting and this is likely to continue after Christmas as well. As for the outlook for the retail sector in general, much will depend on when the Bank of England feels able to start to lower interest rates, to relieve the pressure on “big ticket” spending, although this is unlikely to be before the second half of 2024.”

Maureen Hinton, Retail Consultant:

“With costs rising and consumers remaining selective in their spending, retailers will need to deliver compelling offers, backed by strong finances, to succeed in 2024.”

Mike Watkins, Head of Retailer and Business InsightNIQ UK:

“After two years of falling volumes in food retailing, there is likely to be a return to volume growth in 2024. For many supermarkets, the quest to gain shopper loyalty – frequency of visits and total shopper spend – will intensify. The extension of loyalty schemes has helped pull back some spend lost to discounters. NIQ research shows that 54% of shoppers said that price discounts via loyalty cards were the promotional mechanic most likely to encourage them to spend with everyday low prices a close second (34%). This reinforces the need for the supermarkets to maintain transparent price strategies, price locks, and price matching.”

Miya Knights, Retail Technology Magazine, Publisher and Consultant: 

“With stagnant demand, 2024 will be a year of two halves in terms of retail health.  Competition is fierce and retailers will need a differentiator.   Technology investments will continue to help separate retail winners from losers throughout the year, just as it has increasingly done for over 25 years now, and at an accelerated pace ever since the pandemic.  However, where it may have previously been enough to adopt and deploy technologies that allowed operators to catch up to their competitors, those who genuinely innovate using IT and digital will succeed next year.”

Natalie Berg, Retail Analyst and Founder of NBK Retail:

“As we look ahead to 2024, it’s worth calling out that whatever is thrown at retailers, they will be far better equipped to handle it than they might have been just a few short years ago. I wouldn’t suggest that 2024 will be uneventful, but I think retailers can certainly welcome more stability. The worst of the cost-of-living crisis is behind us, and although consumers have been surprisingly resilient thus far, we’re certainly not out of the woods just yet. Consumers will continue to exercise caution and restraint, leaving retailers to contend with somewhat muted demand, heightened expectations and cost pressures of their own – from business rates to hefty increases in minimum wage requirements from April 2024.”

Charles Burton, Director, Oxford Economics:  

“Despite further falls in inflation and, from the middle of the year, the Bank of England potentially starting to reduce interest rates, we expect the UK economy will struggle to gain momentum in 2024. Household spending generally will only grow slowly, and likewise retail sales. There will be some variation across the UK, with the south (London, South East and South West) performing better than average, with the Midlands, North East, and Scotland faring less well. This is very much a reflection of job losses in the industrial sectors feeding into overall regional performance.”

Categories
High Streets Supermarkets Technology

The Shoplifting Epidemic

Chris Noice, Communications Director at the Association of Convenience Stores, joins Natalie to discuss Britain’s shoplifting epidemic. They explore:

  • The scale of the problem and factors driving the growing wave of shoplifting.
  • What motivates shoplifters and is it a victimless crime?
  • Cops in shops – will we see more retailers and shopping centres collaborate with the police for in-store police stations?
  • From equipping staff with body cams to hiring undercover security guards – what more can retailers do to deter theft?
  • Retail staff abuse and the issue of under-reporting.
  • The rise of middle class shoplifting and how automation is exacerbating the problem.
  • Will retailers see more TikTok-inspired mass shoplifting rampages?
  • How can the government take action to curb the rise in shoplifting?

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Categories
AI Consumer Economy ESG Technology

Inflation, ‘Insperiences’, Industry Outlook for 2024

Richard Lim, CEO of Retail Economics, joins Natalie for a wide-ranging discussion on:

  • The health of the UK consumer and why 2024 will be a year of two halves.
  • Richard’s inflation theory (listen to find out!)
  • Combating cost pressures in 2024 – business rates, labour costs and more.
  • November data releases – interpreting the BRC retail sales and Barclaycard consumer spending data – from ‘insperiences’ to ‘revenge spending’
  • Digital transformation progress and where next for the industry.
  • Separating hype from reality – why generative AI is not ‘the next metaverse’ (in buzzword bingo).
  • ESG – managing conflicting consumer demands for convenience and sustainability.

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Categories
Amazon Consumer ESG Returns

In Conversation with Amazon UK Boss John Boumphrey

Recording live from the retailer’s new Second Chance store in London, Amazon UK Country Manager John Boumphrey joins Natalie on the podcast to discuss:

  • How is Amazon extending the life of returned goods through its Second Chance programme?
  • How can the wider industry overcome the returns challenge?
  • Futureproofing – with more disruption on the horizon, how does Amazon ensure it stays relevant to customers?
  • Consumer outlook – does JB expect consumers to remain relatively resilient as we move into 2024?
  • From drones to generative AI: what technologies and innovations should we be watching?

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Categories
Consumer Fashion

‘Positively Dissatisfied’ M&S, Trailblazer Next, Black Friday Predictions

Retail expert Maureen Hinton joins Natalie to discuss retailer resilience. Which fashion retailers are defying the economic climate and what is the secret to their success? Maureen also shares her views on the state of the consumer and whether the Black Friday deals will sizzle or fizzle.

Connect with Maureen on Twitter/X and LinkedIn

Learn more about our work at the KPMG/Retail Next Retail Think Tank

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Categories
Discounting Retail trends Returns

It’s Going To Be a Bumper Black Friday

Love it or loathe it, Black Friday has become a permanent fixture on the UK retail calendar.

Carrying black Friday paperbags

In this episode, Natalie shares her predictions and general observations around Black Friday 2023. You’ll learn:

  • Why Natalie is expecting a strong turnout this year.
  • Black Friday creep – why retailers like John Lewis are going earlier than ever before.
  • Whether the growing skepticism around Black Friday will impact shoppers’ willingness to participate.
  • Why blanket discounts are out and targeted promotions are in.
  • What the ONS and BRC data tells us about Black Friday 2023.

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