Top Retailer Concerns and Strategies of mitigation April, 2014
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Cyber crime threatening the consumer confidence
Physical Stores topple costbenefit equation
Continuous discounting is threatening to be ingrained in Retailer DNA
Smartphone access does not mean a guaranteed sale
Potential concerns of Retailers
According to a study by Cisco, 52% of shoppers showed willingness to share information with retailers if they were assured of a discount on their next purchase In general, customers are known to be more willing to share their personal information and purchase preferences with a high-end retailer if there is a possibility of winning coupons However, while the millennial customers share information easily, not all customers do. And against this, there is always an undercurrent of uncertainty and uneasiness in the minds of many customers, especially in the wake of data breaches at famed retailers like Target and Neiman Marcus
E-commerce has been a buzzword for about 5-7 years now, yet c.75% of retail transactions are still carried out at brick and mortar stores Thanks to the mayhem of Ecommerce and thereby the need for ‘social media engagement’ with customers, the retailers seem to have forgotten the need to keep the ‘physical’ experience of the store pleasant, engaging and enriching for an average customer There is, additionally, no denial of the fact that the physical stores are great ‘display assets’ for the retailers which help them meet the customers’ need for ‘touch and feel’; but do come at a significantly high cost; making the the need to potentially exploit them even more pertinent
Many of the retail stores have been degrowing and shutting shops post recession. Many have been surviving by discounting and deep-discounting to stay afloat, hurting their margins in the process What the retailers are missing to understand is that many of these chains do not have a differentiator outside of discount: they do not have a seamless online-offline sales process, nor do they have a unique product or brand offering. Or they simply do not have on offer a single ‘musthave’ item that the customer could not live without While discounting is here to stay, it is needless to say that, it can at the most, be a survival strategy and the retailers will have to look for alternate strategies in order to grow and continue to thrive
While the industry has been abuzz with the explosive growth of Smartphones and the ability of shoppers to transact through the same, there is enough evidence that says that most customers use smartphones to browse through what they want to shop, look up and read reviews and at times even to locate nearby physical stores where they can actually go and browse through the merchandise and then execute a buying decision The abandonment rate of transactions originated on smartphones is estimated to be as high as 75 to 95%; and retailers could not be stressing any lesser on the need for addressing this high ratio of potential revenue that is lost
Mitigating Strategies
Top Retailer Concerns and Strategies of mitigation
• Strong association and coalition work alongwith bodies like Information Sharing and Analysis Center (ISAC) • Increased data security • Making data security audit recurrent and more robust • Ingraining preventive data breach policies into the DNA of finance departments
• Making the payments simpler by enabling the employees to accept customer payments using connected devices – thereby, making the sale more service oriented and quick. Giving suggestions for buying as well as catering to after-sale should be encouraged • Making the buying experience an overall fun experience
• De-phasing deep discounting policies by introducing a valueadded entertainment mechanism, or making the process of online-offline shopping more seamless • Redefining addressable customer and his / her needs and realigning product portfolio to suit them, reducing or adding few categories in the process
• Create a two-pronged sales strategy for the medium of smartphones: 1. to locate and entice the customer and 2. to enable him / her to transact • Making the buying experience less cumbersome by not forcing the buyer to register, making the payment process more robust and safe, making the look and feel of the app more enticing etc.
Source: Secondary research and SGS Analysis