Reading the headlines these days takes great courage for many retailers and brands. We see stores closing, reliance on promotions & discounts to drive top line sales at the expense of profit, and the increasingly empowered customer demands goods on their terms, through any channel or device, and at the right price point. There’s no debate - the retail landscape is more complex than ever.
However, complexity breeds opportunity… and excitement! As shareholders and board members anxiously drum their fingers waiting to see incremental revenue and profits come to light, visionary executives must seek revolutionary models to drive success in this hyper-competitive environment. The retail industry needs to accelerate time to action and re-focus on profit driving decisions.
Do you know who your ‘loss-making’ customers are?
Every retailer probably recognizes some customers are low value, but can they identify the individuals that drain profit from the business? More importantly, do they understand the activities that lead to un-profitable customers? Home wardrobe shopping and promotion stacking are examples of behaviors that if run unchecked can significantly impact profit. With proactive identification of ‘loss-making’ customer segments, surgical marketing, promotion and customer service actions can be orchestrated to plug profit leaks and stimulate profit generating behavior.
Do you know the relative ‘efficiency’ of your merchandising assortment?
The more digital exposure (product views) you drive for a product, the more revenue you can expect it to generate. But what about measuring how well each item generates profit relative to the product views it receives online? New, innovative “moneyball” metrics can be transformative to a retailer. By tasking online site merchandisers to manage category performance with a lens of profit generating efficiency, metrics like product profit per product view can drive optimal and automated site merchandising decisions at the tactical and strategic level. For example, automated identification of overstocked, underexposed but highly efficient products can fuel automated site merchandising technologies (e.g., recommendation engines) to boost exposure for those items, resulting in increased profit and decreased inventory carrying costs simultaneously.
Do you have a strategy to optimize omnichannel retailing?
Despite tremendous growth in online retail and the headline making news of dynastic retail brands closing stores, brick and mortar retail is far from dying. According to CNBC and statistics provided by CoreSight Research, roughly 1700 store openings are planned so far in 2018. Omnichannel retailers will require a consolidated, customer-centric view across their enterprise if they want to understand cross channel dynamics like buy online – return to store, sku-level dispersion across stores, or basket affinity analysis differences between online vs. in-store transactions. If businesses continue to run and manage digital and store in silos, sub-optimal actions will result. Individual customers that appear profitable to one channel and not the other is likely to drive disjointed marketing decisions ultimately leading to a fractured customer experience.
It’s time to rethink decisions
Questions like the ones above just scratch the surface of challenges facing retailers in an extremely intense, competitive environment. Visionary leaders understand that changing retail economics, shifting customer behaviors, rapid technology advancements, exploding amounts of data to consume and act upon, and intense pressure of Amazon-level expectations require a new operating model. New technologies (including data science, artificial intelligence, machine learning and robotics) empower businesses with the insight needed to successfully rethink decisions. DynamicAction was purpose built for leading global retailers and brands like DestinationXL, Jack Wills, Wehkamp, and Eddie Bauer - serving as a ‘retail guidance system’ that prescribes actions that drive a customer centric and profit hunting mindset that can permeate the organization. Those retailers poised to thrive in this next retail age will be the ones that recognize decision reengineering requires a new operating model. What got you here in the past won’t get you where you need to be in the future.
Mike Niemann is Director of Partner and Product Management at DynamicAction. Learn more about DynamicAction, an official Virid partner, and follow them on social media @DynamicAction.
For more content like this, follow Team Virid on Twitter, LinkedIn, and Facebook, and be sure to check out our latest whitepaper on replatforming.