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Retail Outside In

Shoppers no longer HAVE to shop at your stores!
In fact, they no longer have to shop at any store anymore. Shoppers don´t go online any more. They LIVE online, with the mobile device as their remote control to the world and to all aspects in life, including shopping. Yet, around 80% of mobile shopping baskets are still being abandonned. This rate is much lower when it comes to desktop purchases. In 2015, for the first time, Google observed more mobile searches than desktop searches.

Still, shoppers love to go to stores. Why? Still the same old promises: Convenience, expert advice, touch and feel, exploration and a unique social experience. Yet, what has dramatically changed is the customers´ expectation about those promises. Digital alternatives to fullfill their shopping desires have taught consumers to expect more of everything.

You have to make customer WANT to shop in your stores.
Really? I do not necessarily think so. It implies a focus on channel profitability and thereby fosters a wrong mindset.

What would the right mindset be? Quite Simple. Customer profitability and customer lifetime value. The shopper does not care about channels. Why do you? The customer also does not care about your internal considerations. Why do many traditional department store retailers still organize their sales floor according to internal considerations and wonder why they are in trouble? It´s Retail Inside out. It´s madness. Customer do care about experience. That´s why department stores in Dubai are thriving. Designed from day one with utmost customer experience in mind. Same concept: Department store. Different mindset: Retail Outside In. Retail has traditionally been an Inside Out model. That´s one of the reasons why Retail is one of the most affected industry by digital disruption. Retail winners will be the ones, who disrupt their own business model from Inside Out to Outside In. This will require organizational change management as well as a strategic approach to the next generation IT landscape.

Today´s Retail processes and the corresponding IT landscapes have  been build and carefully optimized for the old Retail Inside Out approach.

From channel profitability to customer profitabilty
Foot traffic in stores declined by 57% from 2000 to 2015. However, the purchase value for every visit increased by a factor of 2,6 [Mastercad Spending Pulse]. Finally, 64% of all in-store sales are influenced by digital [Deloitte´s Digital influence].

These three figures quite well portray the major shifts in customer behaviour. They also promote customer profitability as the true kpi in the digital economy.

The majority of the buy decision is already taken before a shopper enters your store. Thus, strategies that primarily focus on increasing foot traffic in the store are missing the point. Retailers must embrace that a unique customer experience is not an isolated interaction in the store, but rather a reliable, consistent experiences across all interactions. Being there in all the channels and being useful across all steps of the customer journey truly drives customer profitability. This exercise of mapping the customer´s journey from beginning-to-end forces Retailers to begin collaborating across departments and business networks for the first time. This ultimately implies new business processes and new (mobile) work experiences for business users. However, this is not enough. It also requires making use of IOT Outside In insights to connect the physical world in real-time with business software. IOT optimized business decisions are key in profitably delivering the ultimate customer experience. Delighting your customers is all about everyday innovation.

Visit our Retail experts at SAPPHIRE NOW to discover more about Retail Innovations in a Digital World. Learn more about the Apple and SAP partnership to revolutionize work experience on iPhone and iPad.

Ralf Kern is Global Vice President Retail and strategy ambassador for SAP. Interested in your feedback! You can also get in touch via Twitter or LinkedIn.

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