Retailing in the 21st Century
Impact of Technology: Ecommerce has transformed the business process worldwide, it is one of the most popular and essential form of business tools. Every business organisation is a part of it regardless of its size, due to the various addons factors and the outreach it offers. With the advent of technology worldwide, it has become convenient and easier for the sellers to conduct business transactions worldwide. The worldwide sales of ecommerce for 2014 was $1.505 trillion dollars. Most of the revenue worldwide was generated from Asia Pacific and North America. Ecommerce contributed to around 2.28% of the world wide Nominal GDP, it is expected to grow more in the next 5 years. China is the leading ecommerce player worldwide followed by USA.
Earlier, it was essential for a Seller to have a brick and mortar store to sell his products. The problem with this was he couldn’t reach to wide range of customers and it used to involve huge costs. Ecommerce has changed the business process, a seller can sell his products regardless of existence of brick and mortar store and can target consumers worldwide. The most common form of business transactions online are B2B, B2C, C2C and C2B. In North America and European Markets, B2C is the most common form of business model and in Asia Pacific and developing countries it is C2C. The most popular forms of products on ecommerce websites are Clothing, Bath & Beauty products, Electronics and Home Decor & Accessories.
Small Business Enterprises are major players in the Ecommerce business. Unlike Big business retailers they don’t have the capital to set up Brick and Mortar stores. The cost of setting up a website and conducting business online is affordable to SMB sellers and gives them better outreach as they can sell their products to International customers too. Retailers are shifting rapidly to the ecommerce model, as the old concept of brick and store model is dying. Unlike, in the last decade consumers don’t have time to go hours for shopping and stand in queues, they want the process to be quick and convenient. By setting up a store online, retailers can connect with their consumers and sell their products. The amount of sales revenue generated from ecommerce websites is higher compared to brick and mortar stores. As retailers are able to connect with new consumers and operate in new markets.
Popular ecommerce websites worldwide
Digital POS Systems Prior to the emergence of new Digital POS systems with the continual advancements in technology, POS systems basically consisted of in store screens for the use of advertising and branding. Recently however more and more Retailers are increasingly aware of the benefits of tapping into new technology of Digital POS Systems. (Anon, 2015) Retailers such as Burberry, Diesel and Nike amongst others have already implemented such technologies in some of their stores. New Digital POS Systems: ● ● ● ● ●
Allow businesses to connect better with consumers. Make businesses more efficient. Make Monitoring and controlling business activities easier and clearer. Create a better shopping experience for consumers. Provide information about the products/services to consumers.
Diesel uses digital POS Technology to connect people together through social media. This is done by integrating cameras in which consumers can share their shopping experience with their friends on Facebook.
(Ghedin, 2011) Harris + Hoole use digital POS Technology to connect people to their business, improving the consumers coffee drinking experience by allowing consumers to customize their own coffee, pay for, in addition to gain loyalty points.
(Kennedy, 2013)
NCR uses iPad checkout registers to help manage the business providing in depth financial analysis as well as staying connected to consumers via the Digital POS systems. (Digitalintelligencetoday.com, 2013)
(Posorlando.biz, 2015)
According to studies in Germany, ● 7 out of 10 consumers research prior to purchasing a product, establishing a “ROBO” R esearch O nline B uy O ffline. ● ROBO market worth over a recorded € 88 Billion. ● ROBO induced shopping accounts for 16% of all German sales Forrester a market research company has forecasted that connective technology will effect 44% Sales By 2016 (Anon, 2015) ROBO shopping is believed to be a growing trend among consumers, while POS Systems can deliver many advantages to consumers and businesses alike it could potential be highly costly for the business. It has been identified that ROBO consumers spend 82% more on instore shopping than nonconnected consumers, thus highlighting the importance in addition to the evergrowing trend among consumers. So why not make use of the increasing use of smartphones by consumers, By creating a POS system app that is downloadable to their smartphone, thus cutting the cost of other expensive Digital POS Systems. ● Diesel Cooperates with Facebook, using the “like” button to create a better shopper experience ● NCF cooperates with Apple and its devices to provide businesses with real time Financial data as well and consumer behavior trends Smartphones Use for (Germany): ● 97% Shopping Research ● 49% Store Location Search ● 63% While Shopping ● 24% Price Comparison ● 28% Direct Purchase (Anon, 2015)
With etailing rapid development in retail industry, many of physical stores in high street are deeply influenced by it, which requires that physical stores need adapt more effective measures to attract their consumers. In recent years, stores are concentrating on their storedesign in order to increase sales and brand awareness. Another crucial reason is that consumer more and more pay attention to shopping experience when they are in stores. Therefor, technology is not only used in ecommerce, but also in storedesign. “The statistic shows the results of a survey conducted in 2014 in the United Kingdom (UK) asking retailers on how much importance they think consumers attach to instore technology. The results have been sorted on a scale of 1 to 10, with 10 being extremely important. Of respondents, 9 percent believed instore technology was extremely important to consumers.”(statista,2014)
Technology instore design is so important to both retailers and consumers. With some convenient equipment in stores, increasing the sale for retailers and also be more profitability. Such as selfcheck machine in Tesco. Compared with other Asia countries, labor force cost is much higher. So using largescale selfcheck machine decreased cost fore retailers and also be convenient for consumers that save their time shorten the waiting time.
Regarding on retailers, technology used in store design can also increase brand awareness. Such as window installation that is a good way to attract consumers who are passing by.
Regarding on consumers, technology in store design give better customer experience for them when they are shopping. Following are some examples: “Interactive magic mirrors are also becoming more prominent within the retail landscape as retailers such as Republic, Selfridges and River Island have installed this particular technology instore which allows shoppers to try merchandise on and post it on social media network sites without removing their clothing.”(Zingcheckout.2012)
“The Whisky Shop, one of the UK’s largest specialist retailers, took brand storytelling to the heart of the design at their award winning London flagship store, using tablet technology as a vital narrative tool.” (bouncepad,2012) It has desk Ipads with headphone to give consumer more details about its shop.
Luggage brand Samsonite installed technology instore design that is touchscreen brand wall was introduced in Selfridges “This is the first time the brand has ever used such an interactive device. It allows customers to learn more about the company and its products through a catalogue, films and customer reviews.”( Retail design world,2014)
“Burberry also features RFID microchips in some items of clothing which when worn, transform mirrors into screens showing how the clothes look on a catwalk.” (the guardian,2014)
Loyalty programmes: Loyalty programs are everywhere in the retail industry. Customers interact with them multiple times almost every day: whether shopping at a grocery store, buying a cup of coffee, or purchasing a new DVD. In other words, retailers have become convinced that it is possible to buy customers’ loyalty.
Loyalty programs are designed to change members’ behavior by providing an interlocking series of benefits and rewards. Companies can provide a variety of incentives, from special discounts to improved service to free items. The main rewards currently offered by retailers are: ● Discounts (such as 25 percent off) ● Value/frequency promotions (such as spend $200 and get a free ham, or buy five deli sandwiches and receive the sixth free) ● Special sale times. All of these rewards are geared toward cost savings for the member. Discounts are an important part of the loyalty reward structure. I would think in general that that the initial reason for joining a loyalty program was to save money. However, discounts cannot be the only benefit offered by a retail loyalty program. Giveaways and discounts, unless they are vendor funded, are incredibly costly for retailers. A loyalty program must generate both competitive advantage for the retailer and switching costs for the member.
Ultimately, to create an effective loyalty program, retailers need some kind of discount to lure customers into the program, but then they also need to create other means of locking the customers in (ensuring longterm loyalty) once they are part of the program. Retailers create these switching costs by moving beyond discounts to delivering an array of targeted benefits and services to their loyalty program members. Customer loyalty programs provide retailers with such benefits as improved reputation and brand equity. They also provide concrete, measurable benefits, such as: ● Decreased price competition ● Increased customer retention ● Decreased marketing costs ● Greater share of wallet (share of expenditures) ● Improved inventory management and turnover ● New revenue streams
Loyalty Cards for Measuring the Customer Behavior Loyalty cards are commonly used in today’s retailing industry. Loyalty cards, or in other common name, club cards are a very effective example of constructing consumer loyalty. The main purpose of the loyalty cards is to build customer loyalty by making promotions that are addressed to the customers individually (1). That way consumers get special offers that are given to them personally so they can save more by using these loyalty cards, so they prefer same retailer and increase their profits.
The loyalty cards also gives access to the retailers to keep records of their customers so they can track their customers’ demands. With the help of these records, retailers can offer the customers personal offers that makes them feel more connected personally (2). By using personal offers not only customers attracted, also the retailer decreases the chances of making promotions that will not satisfy the demand.
Keeping tracks of products that are purchased by the customer also helps retailers to understand the demands in a particular area that the store is located. For instance Tesco store which are located near the offices stall more lunch products than the stores located suburbs (3). This way retailers can understand the demands of their customers not only considering city also considering neighborhood and stall their stocks more efficiently. The information of personal demand helps the customers to save more and helps the retailers to earn more due to savings provided by efficient understanding of demand correspondingly more efficient usage of stocks in specific stores.
Usage of loyalty cards has disadvantages as well as it has advantages. It is not always advantageous for smaller retailers than bigger companies. One example is as Tesco is one of the biggest retailers in United Kingdom, sometimes Tesco changes the customers’ demand by adjusting their supplies according to their records (3). This may cause other retailers to lose customers because of the big retailing companies.
Loyalty agreements are also used in a different way. Conventional loyalty cards are only valid for one specific customer but there is another way of attracting customers by using loyalty agreements. There is a system called “card linked offers”, which makes tracks consumers’ credit card and offer promotions from different brands according to their demands (4). This way consumer’s credit card can be used for variable companies so that they can make personal offers for the customers and increase their profits while the customers are also saving money. It is clear that the loyalty cards are mutually beneficial for consumers and the retailers. Tracking consumer demand, help the retailers to adjust their supplies and offer personal discounts which is also beneficial for the customers.
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