Retailing is a competitive marketplace. A retailer must constantly evaluate its strategy and keep its focus on the ‘Added Value’ created for its customers and suppliers. In this article, I will discuss the relationship between Strategy, Added Value and Innovation. To be successful, retailers of all sizes need to adopt a measured harmony between all three aspects.
Strategy is an integrated set of choices about:
- Where a company will play,
- How it will play,
- What it wants to accomplish.
Added value is the total value created with the firm in the game minus the total value created without the firm in the game. In other words, Added Value is the value that would be lost to the world if the firm disappeared. This is possibly the most difficult question you can ask yourself and your management. If a firm in its relationships creates no new value, it had better have some clever way of claiming value. This is where Innovation kicks in. I will discuss an innovation that can create consumer retention with technology innovation later in this article.
A retailer can create value by two distinct mechanisms. By extracting a higher price for what you sell (e.g., building barriers to entry; creating switching costs) or by extracting a lower cost for what you buy (e.g., power vis-a-vis suppliers; multiple sources). The best-case scenario is to increase the consumer willingness to buy at a higher cost while building relationship with suppliers to supply at a reduced cost.
Maintaining one’s added value requires deterring competition. Competition within a defined pattern of conditions, process of retailing and similar types of retailing formats is not the kind of competition that matters. What matters is the competition that engages its shoppers, changes the set formats, new products, new technology, new set of suppliers and a new process to go to market.
Engaging consumer today should be the prime focus of any business. A successful retailer will always strive for a greater share of consumer wallet. For example, if a consumer spends $100 per week buying groceries from three grocers and your share is $30; you should focus on customer engagement programs, new technologies that increase this $30 spend to $70. There are various ways to do so. One of the best mechanisms will be to engage customers with iPhones, Android phones or Windows phones. More and more consumers are now using these smartphones.
How about distributing loyalty cards, gift cards, coupons etc. in digital format straight from the point of sale (POS). Shoppers need not carry plastic cards or paper clip coupons. Send them straight to their cellphone.
How about sending a ping notification to their smartphones as soon they pass by one of your stores. How about pushing a coupon when they are nearby the store location. Every smartphone comes with a GPS today that makes geo tagging easy for digital passes. Your digital coupon or loyalty card knows the coordinates of your stores and reminds the shopper that he can redeem his loyalty card to buy an item using his coupon. All this can be achieved with iVend Passes and its integration with SAP Suite of applications.
iVend Passes is a cloud based platform for retailers to deploy Digital Passes for Apple Passbooks, Windows Phones and Android smartphones. With its PCI compliant and SAP certified integration, any retailer running SAP Suite of applications can use IVend Pass. Integration with SAP Retail is explained here. The platform comes with open APIs and can be integrated with any frontend application. The platform is not only for retailers; airlines can use this platform for pushing boarding passes or any business that needs to engage consumers can run iVend Passes for better customer engagement. Have you seen the ‘Passbook’ icon on your iPhone and wondering what’s it all about? This the place where shoppers can store their digital passes. Android and Windows users download iVend Pass apps from Android and Windows marketplace.
Visit CitiXsys Knowledge Portal for iVend Retail download, learn more and collaborate. Engage your customers with technology and innovation.