These days the trends are moving so quickly that retailers have to have a genuine focus on what the consumer wants if they are to survive.
Technology brings new dynamic into being
Association of Sales and Merchandising Companies Australasia (ASMCA) chairman Keith Quigg says the retail market is changing dramatically, with retailers more genuinely focused on the consumer and new dynamics at play as a result of technology.
“This is much more so than in the past when retailers had a focus on the consumer but in truth were focused more on profitability and telling consumers what they needed,” he said.
Genuine focus on the consumer
“These days the trends are moving so quickly that retailers have to have a genuine focus on what the consumer wants if they are to survive,” Mr Quigg said.
“Globally, as these trends take effect many retailers have had to close their doors and sack hundreds of staff members; in Australia, Coles has reportedly released 450 executives and Woolworths has also reduced its numbers.
“This constituted not just a cost-saving practice but a necessary reassessment of business focus areas, with a conclusion being that ‘new people’ are required in line with new focus areas.”
Technology’s new configuration
Woolworths recently launched the Compass app, which enables suppliers to monitor the performance of their products in each store. The app represents a big change in that the retailer is dictating, to some extent, the priorities of service staff whereas previously it was entirely the domain of the service provider and supplier, points out Mr Quigg.
“Retailers, suppliers, and service providers are now having to have a strong conversation to make sure priorities are suitable for everybody – this will change the market completely,” he said.
“There is a natural tendency to assume that as long as communication is strong it will be a positive change. Service providers will have a better picture of what needs to be done to make merchandising better at the retail coalface.
“The supplier may not feel committed immediately to this change in relationship but in the end will be dragged into accepting it because of its effects on turnover.” Mr Quigg explains that if the retailer points out that turnover is down because of a specified issue, the supplier is obliged to take steps to resolve the issue.
“This makes for an interesting dynamic!” The other side is that the sales and merchandising companies, the service providers, are also getting much more sophisticated in the way they manage their markets, he says.
Bigger service providers and data
Bigger service providers are now moving into things like data filling, data collection and data analysis, Mr Quigg points out.
They are moving into backroom marketing support and into markets where, for example, they work more closely with pharmacy and liquor suppliers, in conjunction with the traditional retail supermarkets and hardware.
In addition, they are also looking at other general merchandise businesses and opportunities for extended and partnered service provision. “The reason for this and why they can move in this direction, is because manufacturing companies and suppliers cannot usually afford to have teams big enough to quickly handle the new level issues in the industry,” Mr Quigg said.
“This means that if they partner with a service provider that has 500, 1,000, or 1,500 people round the country, then between their own teams and the service provider teams they can pretty much fix any problem within a matter of days. The backend of this is real-time data that shows the job’s been done, as well as incoming knowledge on what the ongoing issues are.”
The result, he says, are improved relationships on the basis of technology providing clearer information, data, being more accurate and use of data being more acute when making strategic decisions.
“You can also be fairly sure that Woolworths will not be the only one that focuses on a better service/supplier relationship. Coles has had tender processes for quite a few years. Their data management will change in the future, but their tender process may not – the way they handle them will change.”
Mr Quigg points out that what will be of interest going forward is the relationship between independent retailers and service providers, which is not as strong as it should be. Therefore, the more support they get from service providers, the more chance they have of improving their relationship with their consumers and suppliers.
“The market is going to keep changing dramatically and the consumer intelligence side of technology is going to lead the future, rather than the brand or the product,” Mr Quigg said.
Technology main driver of change
Crossmark helps connect shoppers to brands in retail by providing field solutions ranging from merchandising and sales teams through to experiential brand ambassadors. CEO Andy Kirk says Crossmark continues to work closely with retailers.
“Crossmark is focused on assisting brands grow faster and more efficiently utilising data effectively,” Mr Kirk said.
“We offer national coverage of retail throughout Australia and support leading brands such as Lion, Twinings, and General Mills in grocery,” he said. He points out that one of the main drivers of change at the moment is technology.
Electronic shelf labels
The use of electronic shelf labels is beginning to gain traction in other markets and is one that is being slowly trailed in Australia, points about Mr Kirk.
The technology allows for a better customer experience, reduced retailer costs, flexibility in pricing and an opportunity to grow sales by reacting to market conditions and price matching. It’s an attractive option due to the high cost of labour in Australia.
“We’ve already seen global retailers such as Sears, Kaufland and others acknowledge the value and adopt this innovation into their stores,” Mr Kirk Said. “By having it all centrally controlled they’re not limited by their staff’s time and are able to better service customers with eye-catching labels and consistent pricing across all channels.
“Imagine being able to launch a price promotion across all, or some, of your store instantly.” He adds that the technology allows for dynamic and scalable pricing control, which opens the door for different time of day pricing such as higher prices in peak demand and lower prices for fresh produce nearing end of life while also absorbing the labour costs involved across the retailer network.
This availability of data is set to change much of the retail industry in terms of cross-market trends, which are coming out of the US and Europe, Mr Kirk points out.
“It’s driver a change from a more traditional call cycle-based approach to servicing brands and retailers by integrating data and insights,” he said. “This enables a tailored store by store approach, which not only more effective but also aligns with how retailers approach their own stores.”
Woolsworths’ move towards demographic clustering is a good example of this, making sure the right products are in the right stores across the country depending on shopper needs. Every store might have a different range, and it’s about understanding what does and should look like from a client’s point of view, says Mr Kirk.
“It’s about adapting what we do in each store, the products we service and how and when we go to the store. It’s a very tailored solution for each of our clients with a view on how we can best drive sales in every call we make,” he said. “From a Crossmark point of view, retailers are starting to share more and better data than ever before, which in turn allows us to service our clients and the retailer better.”
Mr Kirk says retailers and suppliers are continually looking at how they can optimise their in-store labour, which is resulting in the trialling of some interesting technology solutions.
“The use of robots in stores is something that is already in place with Walmart, which has scanning robots going up and down aisles checking on stock availability,” he said.
“Also, use of self-service checkouts and more recently Woolworths’ scan and go store trials using a mobile app to purchase good directly to remove the need for any sort of checkout.”
This excerpt feature is from Retail World's September 2019 issue.
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Andy has a deep understanding of the Australian retail environment and its shifting dynamics. Prior to CROSSMARK he has held a number of senior leadership roles in Australia and the UK, delivering retail strategy and field marketing initiatives for the blue chip brands. Andy is a firm believer in the power of data analytics to boost sales performance for brands and retailers.