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Archive for the ‘Future & trends’ Category

Small data; creating a superior customer experience

The headlines and news stories are predictable: Bricks and mortar are failing. Online is the future. Here at 6R, we know that this is an oversimplification, as online and in-store, experiences merge, good retailers are using data to focus on improving convenience and experience for their customers. It’s the balancing of macro trends with insight from going deep into customers mindset that gives detailed data we can work with. Customers want retailers of speciality goods to make them feel personally important and valued in a comprehensive shopping experience. Businesses in highly competitive fields need more than just smiling faces. They need to focus on making each customer experience a positive, unique and satisfying one. Strategic use of properly acquired data can help. We have touched on this before when we wrote about using customer data for efficacy. Data will be the biggest driver for retailers in 2019, as stores become more astute at knowing who their consumers really are. How Data Helps Your Business In the digital age, when businesses talk about data, they are referring to accumulating information on customers. This information helps the companies to better respond to consumer trends and individual customer desires in both marketing and sales. By studying various sources of data, retailers can create better experiences for their customers before, during, and even after, the shopping experience. Businesses need to develop a competitive advantage in today's retail environment. The increase in the use of customer analytics tools is improving customer retention and loyalty by creating personalisation at scale. Different Types of Data Most people are familiar with the idea of “Big Data.” Often, the connotation of this phrase, is a negative one, especially when it comes to concerns about social media data capture and the use of information from the general public. Big data, however, can help companies and services respond better to the needs of the consumer, and transform lives for the better. For example, Australian utility organisations have reacted to the challenges of poor customer service by using big data to develop better responsiveness in key situations. Fewer people may have encountered the concept of “small data.”  The difference between big and small data reflects that of macro versus microeconomics. Big data refers to mass movements and trends. Small data refers to gathering, compiling, analysing, and using data on individuals or smaller subsets to enhance their personal connection to the business. Rather than treating people as herds and groups, small data enables a more profound interaction. "Big Data is pretty incompetent at suggesting how to increase the love." [1] "In the 1990s LEGO’s sales were declining and executives were scared by Big Data research studies showing that Digital Natives were increasingly distractible and in search of instant gratification. Swayed by this data, LEGO was considering dumbing down its toys, making the kits simpler and even perhaps increasing the size of its iconic brick. But then Small Data convinced LEGO to do an abrupt pivot, going the other direction completely, after senior leaders visited the homes of their young users and talked to them about hobbies and leisure." [1] For small or medium-sized businesses offering speciality services or products in a narrow field, big data may not be as helpful as small data. Small data is what can help them to establish lasting relationships and connections that lead to return visits, increased sales, and word of mouth referrals.  The insights into the motivation of customers, gained from small data is incredibly valuable and provide businesses of all sizes with personal and emotional motivation. An Insight that is often lost in the 'averages' of big data analysis. How AI Boosts the Bottom Line Once a business decides to collect and use data, the major challenge is deciding how best to use it. Staff and computer systems can collect information, but then what? Artificial intelligence may be the answer.  AI services can automatically help its users to master sets of data and maximise their potential, without draining their resources. Although generally identified with sifting through big data caches, AI systems and software can adapt to the specific needs of a smaller business. Retailers can use AI to lift insights from customer transaction data, providing them with information to tailor in-store offerings. "Although the current mantra of deep learning says “you need big data for AI”, more often than not, AI becomes even more intelligent and powerful if it has the capability to be trained with small data."[2] Small data combined with AI technology can help retailers, to create a superior customer experience. ELSE, an Italian shoe company uses AI and data in a “bottom-up” approach. This approach uses data to target individual customers, to begin with, and then works up towards larger groups, rather than the other way around. ELSE has a virtual shoe sizer that uses simulation technology to match customer feet with the perfect shoe selections. Data Plus Customer Service Equals Results Data alone does not solve the problem of satisfying customers. It must conform to a business mission plan that emphasises customer service while exploring better ways to serve each customer. When great products, modern technology, innovative owners, and data (big and small) are combined, the business has the best chance to maximise its potential. We at 6R Retail love working with businesses that are looking for process improvements that will improve their customer experience and bottom-line profitability. If that sounds like you, please get in touch.   [1] Martin Lindstrom; Small Data: The Tiny Clues That Uncover Huge Trends [2] medium.com; Why Small Data is Important for Advancing AI

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Ecommerce is booming! (and with it packaging increases)

In 2018 alone, Australians spent a grand total of $28.6 billion ($20.3 billion USD) while shopping online. As of January of this year, this amounts to 9% of Australia's total retail sales.  All of this online shopping means that the amount of packaging is also on the rise. Further predictions by Statista show that Australia is on track for a huge leap in total revenue growth online, possibly by as much as 15.1%, which creates more and more packaging for you to deal with. While online shopping grows, so does its impact on the environment The number of packages and parcels each Australian receives per year is increasing. On average, Australian shoppers get 2.3 packages every year (and I know full well that I get more than this in books alone). This creates a unique problem that we have to deal with. How do you meet the consumer demand for "what I want, when I want it, and where I want it", without a massively detrimental impact on the environment? The overall goal is to meet this demand with minimal environmental impact, especially in terms of excess cardboard and plastic packaging and CO2 emissions. Adding to this problem is the fact that most retailers and eCommerce platforms haven't been able to master the art of packaging in a way that maximises customer convenience and sustainability. Taking, for example, China's record-setting Singles' Day sales; in the two minutes, five seconds after midnight on Singles' Day, Chinese buyers spent a collective ¥10 billion yuan ($2.07 billion AUD) through e-commerce giant Alibaba's various platforms. By the time the clock hit 1:47, sales were 10 times this amount. Alibaba closed Singles' Day with a sales total of ¥213.5 billion yuan ($42.5 billion AUD). While both Alibaba and competitor JD.com have pledged to use biodegradable packaging to cut down on waste, research conducted by Greenpeace East Asia said many plastics marked "biodegradable" and used by Chinese e-retailers could break down only under high temperatures in facilities that are limited in number across the country. Greenpeace estimated that by 2020, "biodegradable" packaging could produce roughly 721 truckloads of rubbish in China every day. As Australians are fast adopting international shopping behaviours, retailers here need to address and have a strategy in place to minimise the environmental impact. What packaging solutions are on the horizon? A key section of your product's journey is the "last mile" of the delivery process. This is the point where the package meets the buyer's doorstep; the most expensive part of the shipping process and for the customer, it is the often frustrating "out for delivery" stage that seems to go on for eternity. New technology is helping companies to explore a crowdsourcing approach to optimise the delivery process. Online retailers can partner with non-professional couriers to help them complete their deliveries. While this looks like it will speed up deliveries in urban areas, it requires refining to improve cost efficiencies. Drone tech is another exciting development that has been trialled in Canberra. It could help enhance the delivery process and potentially reducing the amount of packaging waste. However, an increase in drones will make our skies more crowded, contribute to noise pollution, and the results of the trials have raised concerns with citizens who relate that the noise has been invasive. The short clip showing the drones in action didn't look like it was reducing packaging but instead, increasing the amount of waste we're creating. Pre-cycling is another approach to packaging reduction. This involves removing a lot of the packaging waste, by selling products without any packaging, or, with a significantly reduced amount. This way, you won't have to worry about disposing of the packing correctly when you open your item. Less thinking about how to recycle it but a bit more effort in terms of remembering to take those empty containers to the store. What other ideas are there to reduce packaging whilst not compromising on the convenience of online shopping? We're thrilled to work with retailers who want to create seamless experiences for customers. 6R Retail has already had the pleasure of working with forward-thinking retailers on their omnichannel projects. This is an exciting time for both consumers and retailers, and we invite you along for the ride (drone and the driver-less car not included).

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Stores Evolution – Where are the humans in this place?

The WEF 2017 report says we will see 15% of stores close in the next decade. Last year saw the highest retail closure numbers in the USA and 2019 is tipped to follow suit. Australia has a significant amount of retail space per capita and this trend seems destined to head our way. But fear not, according to Cowan and company there’s no cause to think that stores are no longer relevant, we’re seeing a shift in focus, “retailers continue to invest in top malls in the top metro areas at the expense of lower performing malls.” As retailers focus on optimising the performance of their investment in space and inventory, in this evolution of stores, I wonder, where is the human element going to fit in? No doubt about it, stores are evolving. What are customers looking for in stores? A store is now a place where you can pick up an order that you’ve bought online, try on/check the item before taking it home, return or exchange it for something that has already been delivered. It’s a place where you can have a bit of fun, some light entertainment that has you engage with the emotional story of the brand, touch and try the products before you commit. It’s a place of immediate gratification, and maybe that’s why it remains enduring and powerful as a place to (potentially) lift the spirits. A recent trip to the gorgeous space that Mecca has in the Strand Arcade would certainly support this! [caption id="attachment_6156" align="alignnone" width="300"] Mecca Strand Arcade, beautiful in-store experience[/caption] As the store evolves further it could soon become even more It could be a place that recognises you as a customer when returning to it and surface helpful information. A place that reduces the purchase friction or assists with after sales service. It could be a place where the shopping experience is not necessarily facilitated by humans. It’s not new news that allowing customers to grab and go without queues has great appeal.  The introduction of Amazon Go, and other variations on the theme, like scan and go Apps has me wondering where the human element of shopping will end up. Will stores evolve to a point where we need no humans at all? Customers just love convenience, and they are willing to give their information away (most of the time) if it means a more convenient experience. Grocery shopping is a weekly necessity and the online version has not been as successful for me as the in-store experience (I like to select my fresh produce). Thinking about cashier-less aisles and stores, they work well when it’s a quick transaction, buying a few top-up items or a quick lunch purchase. A full trolley with the family weekly shop is not compatible with the DIY checkout.  It will be interesting to see how far the cashier-less stores like Bingo Box go and whether this type of purchase process works for more complex purchases. My favourite store interactions are still dominated by a friendly and helpful human that knows the product in their store and where to find it. I see the juggle first hand working with retailers that are constantly evolving to stay relevant, using the technology that is available to them and getting their stores to evolve. The pressure is on not only to deliver quickly but at the same time to remain, customer focused. To create a curated selection that your customer is interested in, I think will still require the input of humans to create the 'newness' and 'freshness' - have you ever noticed that machine learning just keeps giving you more of the same that you've already had? It's a very exciting and interesting time that we're living through.  I believe retailers that keep a focus on the human element (particularly for that emotional purchase) will succeed, because fundamentally stores are evolving faster than humans have.

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Use customer data for efficacy (‘experience’ not required)

Data will be the biggest driver for retailers in 2019, as stores become more astute at knowing who their consumers really are. The Future Forecast 2019 Report goes on to talk about how smart retailers who use data to provide thought-provoking cultural experiences will prosper in this future. We can see that the evolution of experience retailing is becoming more pervasive all the time with the introduction to stores of smart mirrors, skin scans, recommendation engines and geofenced VIP access. All exciting uses of data that lead to (potentially) improved experiences for customers. This information that we share, whether consciously or not, allows businesses greater insights into our preferences. It (potentially) lifts the bar! Which means that, every time an experience is improved, it becomes the new ‘bar’ by which we measure the next one. When the experience doesn’t match the expectations, we are, as customers, left feeling flat. I have spent the last couple of weekends in pursuit of laptop and microwave replacements (they both broke down in the same week). Two replacement purchases, so I was just looking to continue as I had always. In both experiences, I walked away from the incredibly helpful salesperson feeling buoyed and looked after, but the interactions after that left me with a blah kind of disappointment. In one case, the third party repair/replace service was nothing like what the salesperson in-store explained, and in the other case - I had to wait in another in a queue to pay for my purchase whilst four (yes FOUR) people behind the counter did ‘non-serving customer’ activities. In a ‘helpful use of my data’ moment, the store had my details from the last purchase. It was not, helpful to have to step through multiple ‘steps’ to complete the purchase. Standing in a queue to put my credit card on the payment device is rather tedious! And it gave me time to count the number of people behind the counter not serving customers. Whilst the cashier-less experience has arrived in Amazon stores, we have not yet refined the completion of the sales transaction into one easy interaction at the local Good Guys. If it was possible to pay in the moment and go and pick up my microwave, I would have left the store with that (still) fresh feeling of ‘helpful service’. The basics of dealing with the person in front of you first and foremost are stopping store experiences from being productive and pleasant. A replacement purchase like a microwave doesn’t really need to be an ‘experience’; there’s a bit of product comparison but no real need to entertain me. I don’t need coffee, donuts, styling advice or a free set of steak knives. A helpful salesperson and an efficient way to pay and get out of there would be most helpful to me!

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Why it’s so important to get Returns Right!

Last week at the Sydney Retail Tech meet up Max Ryerson (@MaxRyerson) shared with the group some of his research and insights on the future of retail. Some of the big trends that he has observed in his global consulting practice are indicating that more and more of the purchases we make in store are ‘digitally influenced’ (think browsing, research or purchase). His figures showed that in Australia we see about 50% of store purchases influenced by digital, in the USA this is now up to 80% with the forecast that this will get to 100% in the next year or two. In one of his points, he called out the importance of click, collect and returns. At 6R we’ve worked on a few click and collect projects and reviewed several returns processes, and we advocate that making the returns process easy for a customer is a win for any retailer. However, the small distinction of putting those three words running together in ONE thought /sentence was a shift. 30% of online purchases are returned. (Read more)

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What price do we place on transparency?

Transparency of price and cost, and the somewhat related trend towards supply chain transparency, has the capacity to better inform customers, at the point of purchase, about the distribution of payment that goes back through the chain; something I would welcome in my weekly grocery shop! Exposing the right information to customers, and hitting the sweet spot on price first time has a lot of benefit for retailers too; less spent on markdowns, inventory stagnating and greater awareness of when and at what price to introduce new product. (Read more)

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