VIEWPOINTS

UA-143857251-1

FROM WEB TO MOBILE
 
 Lynne Gardner - TSC Research Intern, April, 2020
Covid -19 Notes for Business
Improve your business: Some of these notes from Fortune Magazine's  Kate Rockwood, March 26 , 2020,  may seem self-evident and in the  throes of managing your business,  the details may seem unimportant.  They are, however, never more so.  How we do business is going to be forever changed after this pandemic, so it is most important to take stock of how you intend to grow.
  "Now is a good time to make changes. Think about ways to operate more efficiently. Review your marketing materials and see what needs updating. Think about your technology and social media accounts. And consider the future and what updates you’ll need to make to your business to address the new way of life after a pandemic. Although cutting your expenses is important, Unverzagt warns not to cut things that can make you money like marketing tools and essential staff."
Take advantage of deep discounts agencies are offering to update your site while you manage operations.  While you are in a holding pattern, it's a great time to focus on mobile too.  It is where  we have always been headed and now you have the time for work 'behind the curtain."  It will give you a head start when business returns to our new normal. L. Gardner, TSC -  April 2020

 

 

Insights on positive digital transitions 

 

“But I have a mobile app ..  The site works fine on the phone.” 

 

True, you have a mobile view, but is it delivering the loyalty and customer building experience that you deserve  with a mobile app? Don’t settle for ‘It’s OK” and instead, ask how can I use mobile apps to grow my business.

 

Mobile apps function differently than a server-enabled web mobile app.  Mobile apps do not require servers and therefore their functionalities are available anywhere, anytime and with the speed and security demanded by your customers no matter whether it’s a planned or an impulse purchase. Businesses today need to be present in all phases of a customer’s purchasing process, whether it’s trying to order last minute emergency gifts, missing sport equipment at a competition or your significant other’s sister’s newborn baby gift which you forgot.

Mobile apps help you differentiate your value proposition and enhance your competitiveness by tailoring the attributes and benefits of your brand in a target community of your own.  It’s secure and you are designing experiences to help customers achieve the desired outcome with your product.

Customer experience is proven to be a potent defense against price decline and is a powerful and responsive means to communicate your value proposition.   Here’s your chance to get ahead of the game so you are managing your market and responding to your competition.   Customer success strategy starts before the sale.  Your mobile app not only builds a loyal community with functionality but it provides you the measuring metrics you need to discern measurements of the active products sold and other metric of customer success which transform your customer using your product from satisfied to engaged and loyal.

The focus is on all interactions the customer has with the company starting at the earliest touch points of marketing and sales, through engagement, membership and after sales experience.  Does your data actually define your customer so you can segment and target a personalized shopping experience for them?  It’s well known that 60% of retail companies claim new client acquisition is a ‘painpoint’ and 20% claim client retention since customers switch so much between offerings.  A detailed customer profile helps you target the right customers and drive to sale. It also helps you understand ‘why’ your customers defect to other competitors so that you and modify your offering.

You can be agile and responsive to your customers. The personalization in your website and mobile applications along with content and segmentation information allows you to align better app and web messaging to your best clients.  Create data dashboards that answer how you are doing everyday.  Include deliveries (after sales), challenges, successes, inventory critical levels; apply the KPIs that are only as valuable as the actions they inspire.  If it’s not valuable to your goal with your customer interacting with your product, it’s not necessary on the dashboard.

You may ask, “If my website does that, why move to mobile app?”.  Because 60% of all transactions already are being conducted on mobile apps?.   No one wants to wait for slower transaction times or reward benefits, or delivery information updates.  When your customers log into your mobile app, you are building a safe, interactive, innovative platform for them to be rewarded for their purchase habits.  You are building loyalty and acquiring the customer information that help you make better product offering decisions and eliminating awkward, unrewarding buying experiences and faulty procurement decisions. 

In a sea of information and retailers, it’s good to be king and faster than your competition.  And along your technology journey to being king, you can engage your customers easier and more fully by moving into the next technology. 

ASSESSING RETAIL STORE SIZE AND THE IMPACT OF E-COMMERCE

CPG, FMCG & RETAIL | 06-12-2019

Sources: U.S. Retail Hot Buttons & U.S. Shopping Insights, Q1 2019; Nielsen TDLinx

 

It wasn’t that long ago that an array of U.S. retailers sought to be everything to customers, which led to a sizable scale-up in store size. In turn, the landscape welcomed an array of massive, brick-and-mortar retail arenas that sought to offer consumers anything and everything they might want during a shopping trip—all under one roof.

The days of all-or-nothing retail developments faded a few years back, but the retail landscape has remained on a steady growth tear—up until recently, that is. Between 2007 and 2018, more than 27,000 new retail stores opened in the U.S. But after a reliable streak of openings, expansion stalled between December 2017 and December of last year, as the total store count fell by 2,248. But well before that drop, we began to see that store size and store count were trending in different directions: Between 2007 and 2018, store counts increased while square footage declined.

Importantly, the growth of small-format stores (convenience, drug and dollar stores) has been a driving force in the long-term decline of store sizes—and closures. In fact, between 2017 and 2018, convenience and drug stores were the primary drivers of retail store closings. In total, more than 3,500 retail stores closed during that period.

Notably, small-format stores have been gaining ground on larger ones since 2009, which is when large-format size peaked at 10,516 square feet. Since then, square footage at U.S. retail stores has dropped 4.4%. The average size is now 10,051 square feet.

But not all large-format development has ceased. While warehouse clubs have only accounted for 1% of store openings since 2007, club sales are massive drivers of sales. Importantly, however, retail format does not guarantee success.

That said, the vast majority of stores that opened between 2007 and 2018 were small format: 46% were dollar stores, 25% were convenience stores and 16% were drug stores. Five percent were super centers, and only 1% were warehouse clubs.

From a consumer demand perspective, it’s clear that small formats and value players are winning in the marketplace. Convenience, drug and dollar stores have driven store count expansion since 2005, while growth across other formats has been less consistent. More than 2,300 new supermarkets have come online since 2005, for example, but this channel has seen its fair share of closures, tear-downs and rebuilds as well. It’s also worth noting that much of the growth in the supermarket channel has been driven by high- and low-end niche players like Trader Joe’s, Sprout’s, Whole Foods, ALDI, Lidl and Save-a-Lot.

Many factors are driving consumer shopping trends, which are consequently shaping physical shopping environments: fewer full stock-ups; more frequent trips for smaller baskets; abundance of choice; proximity to an array of options; increased spending on eating out; and e-commerce.

 

THE E-COMMERCE IMPACT

There is no questioning the impact that e-commerce is having on how consumers shop and buy. According to Nielsen e-commerce measurement powered by Rakuten Intelligence, U.S. e-commerce sales of CPG items totaled $65.2 billion for the 52 weeks ended January 2019, up 29% from $50.5 billion in the previous year. We’ve also tracked a 32.7% compound annual growth rate over the past three years. E-commerce isn’t new in the past three years, however, and when we look at store closings during the last decade, we see that specialty retailers selling electronics, apparel, books, toys have been the most vulnerable to the growth of e-commerce.

It’s true that certain mass merchandise retailers have experienced difficulties over the past 10 years as well, but the closings associated with those difficulties have been more the result of format conversions and performance within certain companies than consumers switching to online options.

That’s not to say that consumers aren’t gradually adopting more digital and omnichannel preferences over time. They are, and many are starting to embrace omnichannel shopping avenues that leverage digital for many of the CPG items the buy from traditional outlets. Click-and-carry sales, for example, have grown from 4% of online consumer packaged goods (CPG) sales to 11% in just two years. This adoption, in fact, has hindered Amazon’s growth in recent months, and there’s no doubt that omnichannel and online purchasing will continue growing across categories.

In looking at store count trends over the past 10 years, we’re able to forecast which categories are most vulnerable to future e-commerce growth. That’s because store count changes across the U.S. have moved in sync with the adoption of e-commerce across categories. This gives retailers in vulnerable categories insight into how quickly they will need to develop meaningful value propositions aimed at driving increased foot traffic.

Time is of the essence. The same number of stores had closed in the first three months of 2019 that we saw close in all of 2018.

Sources: U.S. Retail Hot Buttons & U.S. Shopping Insights, Q1 2019; Nielsen TDLinx

HOW DIGITALLY MATURE ARE YOU?

“Champions vs Laggards.”

Lynne Gardner - TSC  Research Intern, July 2019

A BCG (Boston Consulting Group) study of 1800 companies across industries in the US, EU and Asia, found financial institutions and telecommunications industries were the most digitally advanced with more than 25% of them in a digital excellence “Champion” qualification.  On the opposite end of the spectrum, energy and the public sector were gonged with 40% qualifying as digital “laggards”.  Accenture has reported that 50% of their fortune 500 list has disappeared since the year 2000 and just this year, 300 retail bankruptcies have been filed with indicators pointing at more stores closing this year again, than ever.

Tools, technologies and business processes need to be updated to enable business transformation. Maximizing your investment in IT comes from managing applications as well as data and security so you can enable innovation with new technologies.  Transform your internal business processes too and watch how technology works for you!

 

Retail is in the “hotspot” for digital transformation.  Companies know they have to modify how they do business but it is a challenge to move from where they are now to successfully transitioning to where they need to be.  Transformation is daunting, true, but remember:  “change, move or die.”

 

A couple things you should know:

  • Digital champions spend more than 5% of Operating expenses on digital projects.

  • Digital champions devote more than 10% of their employees to digital roles or projects

  • Digital champions scale up digital solutions largely over the laggards and aren’t drawn to get stuck in use case pilots. (Source:

  • BCG, Grebe report)

 

 

Digital leaders make larger investments in technology and IT than laggards do. 

Transformation takes its own unique shape of process, people and technology.  The dots get connected in various ways depending on needs and resource status, but they are the markers on the path to getting through the transformation and into the zone where you need to be.

From the same studies, just 25% of retailers are leading with digital maturity.  They are unlocking value by understanding the customer experience and behavior in ways just not possible with study of brick and mortar sales.  They are using their enhanced data capabilities to unlock core sales value and lean out the supply chain while gaining better understanding of the customer experience and monetizing their media assets with their sites.

Leading retailers have a true “test-and-learn” philosophy where data - informed decisions and experimentation are routine.  When IT is really working for you, it shows in your sales, your supply chain, your customer loyalty and it expands your brand.  The goal that retail digital champions understand is to collect, analyze and activate audience data with more surety and speed.  Every retailer has their own strategic priorities of how to unleash the positive outcome of updated technologies. 

Due diligence and needs analysis are helpful in determining how you’ll connect the dots to innovation and better sustainability through use of apps and data and having a technical team to partner with provides you the best of all worlds.  You can define what your strategic vision is and they can help you with the process decisions, work flow mapping, employee engagement and data analysis which provide you clarity to higher sales and the digital transformation that will successfully rudder your business. 

 

The Smart Cog, LLC ….all rights reserved @2020.

To schedule an introductory consultation, please fill in your contact details.  Let's get started on a Smart Review.  OR, just give us a call @  617 500 1817.

Thanks for submitting! UA-141913079-1