The Top 4 Challenges in Retail & How Digital Applications Can Help

By Alex Fishlock – Digital Marketing Associate.

Everyone knows how demanding the retail landscape currently is. Based on the recent end of year and quarterly results of major players like M&S, ASDA, and the collapse of BHS and Austin Reed, it’s clear that conditions will remain ‘challenging’ for the foreseeable future.

Given our ongoing work with Clarks International and other major retailers, I thought I’d blog about some of the top challenges faced in this industry, and how digital applications (apps for retailers) can help. Do they strike a chord with you?:

1. Damage to Brand Reputation:

The Aon/BRC National Retail Risks Survey 2016 stated that damage to brand reputation is the number one risk facing UK retailers. With e-commerce enabling global trade, customers now have more choice than ever. Consumers can freely voice their opinions on review sites and social media, with a potential audience of millions. In short, customers are in charge and they have increasing demands- retailers must do everything they can to leave customers satisfied.

The key opportunity here is customer engagement – attract customers with your offering and make the value high enough for them to stay and have a positive impact on your brand. How? Digital applications are one way. Examples include several well-known food retailers building web and mobile-based applications which allow visitors to browse recipes, find out if the goods are in stock and place orders incredibly fast.

Another application was developed after several customer complaints to head office that items were difficult to find. The application interactively mapped out store layouts, along with store location and facilities, and changed depending on the visitor’s location.

A third application allows customers to use their mobile devices to scan items as they shop, removing the need queue to for checkouts. The process is simple –pick up item, scan, pack, instead of the laborious pick up, pack, unpack, scan, pack at the checkout.

All three of these apps are designed to save customers’ time by making processes more efficient, improve their shopping experience and engage customers in a personalised manner. Why wouldn’t customers use these apps? These simple applications are not confined to just grocers, but should be considered by all retailers – the opportunity to engage customers personally is a point which must be taken seriously to avoid brand damage, increase competitiveness and successfully differentiate in turbulent times.

2. Employee Engagement & Talent Retention:

One recent economic change is the new National living wage, which became law in April 2016. Due to the increase in labour costs, The British Retail Consortium estimates that 900,000 retail jobs could be lost. This will mean that staff are forced to become more productive or, with the loss of human capital, standards will slip and retailers will suffer. How can retailers make employees better engaged for improved efficiency with digital applications?

I recently read a blog where a member of the Mendix team discussed the value of a news portal using digital applications, similar to an internal intranet. The argument for this innovation was that it would be a rapid and affordable solution whereby staff would be able to access important company information on any device, at any time. I remember the days when information would be communicated to employees via paper memos or word of mouth, which is obviously somewhat unreliable. How could you be sure that every employee has received the correct information? With a centralised information hub powered by aPaaS, employees are empowered.

Linking to the challenge of employee engagement is the issue of talent retention, which is a major problem in retail. It costs to develop employees and businesses don’t want their human capital to leave after they have made this investment – far more cost effective to retain employees, provide adequate training and make them feel valued. To solve this problem, digital applications are being developed for retailers which enable their employees to access development materials at any time, in an interactive manner. Other hot issues relating to employee engagement in the retail environment are workforce planning and resource scheduling – in the wake of resource constraints, how can you make them as easy as possible to manage? With apps such as the Mendix retail employee planner. Retailers are seeing that digital applications can help to improve efficiency, reduce costs and save man-hours in these areas, thereby increasing competitiveness.

3. Data Security:

One of the major problems of e-commerce and the subsequent storing of data in the cloud is data security. With millions of customer records, it is not surprising that retailers are one of the top targets for cyber-attacks (retail is in the top 5 industries at risk). Indeed, Essential Retail reports that 90% of large organisations and 74% of small organisations had suffered security breaches, which cost on average £3 million. IBM suggests that consumer confidence declines after such attacks, with one retailer seeing a 46% fall in profit for that particular quarter – not securing your data can have hugely negative reputational and financial implications.

Retailers need to actively defend their data to reduce the risk of an attack – even a 99% success rate against attacks would be harmful. We’ve found that a major reason why organisations are developing cloud based applications is for increased data protection – as it stands, enterprise mobile apps are the most effective method to ensure that corporate data is kept secure on mobile devices.

Further to this point, outdated legacy systems are one of the top causes of sensitive data being exposed. Digital applications built on the Mendix platform can work in conjunction with these legacy systems (bimodal IT), or even replace them. This adds an extra layer of system security as access rights and application-level authorisation are kept in mind from the beginning. One example of this added defence is the secure login portal which we built for Clarks as part of their payslip application (see below). Authorized users are only able to access the application (which contained confidential payroll information) with their individual login details, managed by an administrator. This was just one measure built which effectively increased data security and reduced the risks of exposure and successful cyber-attacks.

clarks-demo-screen

4. Merchandise Planning:

Another challenge facing retailers is merchandise planning – not having the correct merchandise in stock, at the right place, at the right time. Given how volatile the retail climate is and the lack of product differentiation, this is especially important as customers will simply go elsewhere if products are unavailable.

One way to improve merchandise planning and prevent loss of business is through digital applications. Simple merchandise planning applications can visually tell the user when stock levels are dangerously low, and send notifications when an order needs to be made (or automatically re-order stock) – inventory planning.

Other ways that digital applications can improve merchandise planning are: ‘track and trace’ – retailers can see the status of incoming deliveries including route and ETA (especially useful to inform customers when items are due in); demand forecasting for optimal inventory planning; space planning to ensure store layout plans are adhered to (a visual fixture map with clear product locations – especially useful when changing product promotions and ensuring in-demand items, not poor-performing items, have sufficient shelf-space); replenishment planning (management can view real-time data on stock replenishment progress – how near is the store to being replenished for the next day?).

These merchandise applications can also be configured based on individual product lines, product categories and location – ideal for localised customer preferences. Finally, these applications use business intelligence and can display high- level data or detailed information for drilling down further – either way, these retail apps are an increasingly popular method used  for improving merchandise planning, aiding decision making and ultimately increasing customer satisfaction and profitability in the challenging retail environment.

Comment below if you have any thoughts on these challenges and if you’re considered digital applications as an option! Learn more about embracing digital applications to increase business performance with our FREE e-book.

 

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