No single industry has felt the impact of the digital economy more than Retail. For many Retailers, the advent of Amazon (among others) has created a set of imperatives that must be addressed not only to thrive, but in some cases, to survive. Six imperatives stand out as “must-haves” for Retailers trying to compete in the digital economy. This paper examines those imperatives and how SnapStrat can help Retailers turn them into advantages by enhancing cross-functional capabilities while delivering applications tailored to help companies make specific recurring strategic decisions.
As business context changes rapidly, new technologies are emerging where early adopters can quickly create advantages. “Respond and react” capabilities must go well beyond front-line customer interactions to create a truly agile organization. Where data-driven and agile methodologies have become a core part of Retailers’ experimentation around evolving strategy, these techniques must also become part of how companies continually evolve their strategies.
Retailers talk about the need to “fail fast” yet few are adept at deciding when a pilot is actually achieving its goals vs. one that should be shut down. According to a PwC survey , well under half of organizations use predictive analytical techniques for decision-making, and only about a 1/3 consider themselves as making fully data-driven decisions. In addition, according to the survey, senior executives see a huge need to increase the speed of decision making as a way of responding to changing business conditions.
How SnapStrat helps:
SnapStrat’s applications help to improve the outcomes of strategic decisions, and speed up the process, by providing transparency, workflow and analytics that allow the quality of decisions to improve over time. The ability to test scenarios and obtain quick feedback on decision impacts fits well into an agile-decision making model, and SnapStrat can support A/B type testing of strategy where appropriate. Plus, when teams collaborate on a single decision with transparent data and criteria, they can make decisions much faster and based more on logic rather than emotion.
Why?Traditionally, Retailers have made decisions in siloed organizations. These processes were adequate at the time because product and promotional cycles were long, and functional areas had time to respond to decisions made in a different silo. For example, the supply chain organization could react to merchandising product decisions that were made with 12-18 months of lead time.
Bain & Company, Modern Retail Supply Chains: Backbone for Omnichannel
Today’s Retailers are having to adapt to much more rapid business cycles to be able to respond to agile competitors and ever-changing product and consumer trends. This requires key strategic product and promotional decisions to be made across functions in parallel, rather than sequentially.
In addition, customers demand consistent experience across channels, which means that functions that previously did not have to coordinate now must make consistent decisions across digital, marketing, customer service, store operations, etc.
How SnapStrat helps:
There are two primary reasons why cross-functional decision making is so difficult for most organizations. First, the ability to access and understand decision-relevant data varies widely across different functional organizations. Second, different stakeholders typically have different criteria for how they would make a decision, and there is often no way to reconcile the contrasting views; thus the decision is either based on the objectives of a single stakeholder, or not made.
SnapStrat creates common views of data, presented in a way that allows a broad set of stakeholders to understand its relevance to the decision. It gives stakeholders the ability to create scenarios with different weighting of key criteria, which enables a transparent discussion around what is most important for the company. SnapStrat’s workflow makes it easier to build and adhere to clear decision rights in executing analyses and making decisions. In addition, SnapStrat provides collaboration capabilities that allow stakeholders to discuss specific scenarios or data visualization within the tool.
Data has become a huge enabler within every aspect of Retail. Technology provides the means to understand better, act faster and enhance the customer experience. Traditional Retail used a few off-the-shelf systems and viewed technology as a cost to reduce. Today’s Retailer must transform to both understand data and quickly adopt innovations that will impact their business.
As Retailers build analytic capabilities, it becomes ever more critical to leverage those capabilities to improve decisions over time. According to a Zebra study, nearly 70% of Retailers plan to invest in machine learning technology over the next 5 years.
How SnapStrat helps:
To become effective technology-centric organizations, Retailers must collect and leverage data to continually make and improve strategic decisions.
SnapStrat helps organizations leverage their data to improve their most important decisions by predicting future impacts, not just looking backwards. In addition, SnapStrat’s models learn and adapt over time, continuously improving decision outcomes. SnapStrat focuses its use of data on the areas where real business value is generated, making it much easier to avoid being overwhelmed with excessively detailed dashboards. SnapStrat works with an organization’s existing analytic groups and their data models helping to uncover the strategic insights in that data and use to make the organization’s most critical decisions.
Online Retailers have led consumers to expect a very high level of service and selection. Consumers demand an experience that is increasingly personalized and consistently relevant to changes they see around them. In fact, an Invesp study found that companies with strong omnichannel engagement capabilities had 2.5x the retention rates of those with weak ones. In addition, experiential in-store experience is becoming a critical element of differentiation for most brick and mortar retailers.
How SnapStrat helps:
Many organizations focus on answering questions around the transactional details of an individual’s customer experience – identifying the segment they are in, understanding their behavior, making a specific offer to match their profile. While these are important, the strategy that drives these details is where companies succeed or fail.
To be able to effectively deliver on a next-generation customer experience requires a highly agile customer strategy around both online and offline experiences. With rapid changes in business context and customer expectations, there are several critical strategic decisions that must be frequently reassessed, such as:
• Which stores should be opened, closed or remodeled?
• How do we allocate our marketing spend across major channels?
• Which categories should we emphasize within which channels?
• Which customer touchpoints are the most important to invest in?
• Where should we invest in-store customer experiences to achieve impact across all channels?
In looking at omnichannel strategy, SnapStrat compiles data from multiple sources and allows stakeholders to view cross-channel impacts rather than having separate views by channel.
No function within Retail has been more impacted by the changing business and customer environment than supply chain. Retail supply chains are being hit simultaneously with three fundamental changes:
• Increasingly rapid product development cycles create much shorter lead times in product planning, and require the ability to be flexible on inventory levels and mix after the initial plan has been created.
• Consumer expectations on delivery times have changed dramatically, yet distribution networks have largely been built with the expectation of long delivery lead times to periodically replenish stores.
• Distribution methods are also increasingly complex. Instead of a single distribution network feeding a set of Retail stores, Retailers must now ship from store to consumer, ship to store for individual pick-up, to homes, and even third-party pickup locations. These needs strain all elements of a supply chain from physical configuration to operations.
How SnapStrat helps:
Where supply chain strategies used to be focused primarily on increasing turns and limiting stockouts, they now must be far more complex. Retail supply chains must address a series of complex strategy issues on a recurring basis, for example:
• What are our physical DC capacity needs, and how should that be distributed geographically and between owned vs. 3PL providers?
• Given our physical capacity, how do we allocate different product categories to different facilities?
• What is the right trade-off for different products in terms of availability, ship lead times and inventory cost?
Through a combination of detailed data collection in online interactions and the near ubiquity of customer loyalty programs, there is a tremendous amount of customer data available for Retailers. While that data has been leveraged to improve transactional elements of the customer experience (e.g. which offers you see on a web page based on browsing patterns) there is often little connection between our customer insights and the higher-level strategies that drive customer experience.
How SnapStrat helps:
The key to strategic execution of the customer experience is alignment of overall strategy blended with data-driven customer insights. Decisions around where in the customer journey to invest, promotion strategies, and loyalty programs are highly strategic, but need to connect directly to the customer experience. Qualitative as well as quantitative input is key in measuring customer experience and SnapStrat facilitates a broad set of types of data inputs including the ability to generate and incorporate survey data, such as measuring impact on communities of customers. Some examples of recurring strategic decisions critical to creating a sophisticated customer experience are:
• How should we measure our customer experience, what should our targets be, and what parts of the customer experience should we invest in?
• How do we structure, time and target our promotional programs to have the highest impact on our most important customers?
• What are the outcomes we are trying to achieve through our loyalty programs (e.g. sales lift vs. NPS vs. product discovery etc.)? What rewards should we channel through our loyalty programs to get the desired outcomes?