It’s time for retailers to cut their dependence on holiday season shopping, and take advantage of opportunities to generate demand over a more sustained period of time.
When was the last time you stood in a pre-dawn line at a Black Friday doorbuster sale? If it was within the past years, you’re actually part of a dwindling minority of shoppers. Increasingly, customers are in shopping mode all the time, and deals that are restricted to a limited timeframe or buying mode are only a source of frustration.
In a recent Harvard Business Review article, brand-building expert Denise Lee Yohn makes the argument that retailers are over-dependent on the holiday shopping season, as the retail landscape has shifted seismically in the past decade. “It no longer makes sense to rely on disproportionate revenue from the holiday season to make up for the softness in sales during the rest of the year,” she argues.
Accommodate the way people shop today
So what does this mean for marketers? Yohn suggests that it’s time for brands to rethink how they promote themselves during the holidays and beyond, with marketing dollars better spent accommodating the ways people shop now.
“Customers don’t want retailers to dictate their shopping schedule,” says Yohn. Shoppers at every price point are becoming more accustomed to buying whenever the interest strikes them. They often shop from their mobile devices or in the stores during post-season sales, rather than at times traditionally associated with peak retail activity.
In their book Absolute Value, Itamar Simonsen and Emanuel Rosen posit the idea that people are now engaging in what they call “couch tracking,” or “keeping track of what they learn about products from reviews, friends, and news items on an ongoing basis.” This means that customers are likely to have well-formed preferences long before they have a specific plan to purchase. “Therefore,” concludes Yohn, “it doesn’t make sense for retailers to try to influence product or brand decisions only during discrete windows of time.”
In case you need further convincing, Yohn also points out that a disproportionate emphasis on the holiday season isn’t to a retailer’s best advantage even from a logistic perspective. “The large fluctuations in demand wreak havoc on supply chain, labor management, and accounting.”
It’s time for retailers to cut their dependence on holiday season shopping, and take advantage of opportunities to generate demand over a more sustained period of time. Millennials and other shoppers are increasingly choosing to spend discretionary dollars on experiences like recreation, travel, and eating out, rather than on products like clothing and shoes. To keep pace, Yohn suggests that “a year-round approach would likely help retailers compete with restaurants and other experiences which people seek out throughout the year.”
How to better distribute your marketing dollars
Here are three key takeaways for retailers looking to put marketing dollars to better use:
1) Encourage year-round “self-gifting”
Millennials are nearly as likely to buy something for themselves as someone else during the holiday season. Encouraging this tendency year-round could lead to more consistent purchasing rather than waiting for a holiday occasion.
2) Delay holiday-specific messaging
This one may seem counter-intuitive, but not having a holiday-specific message during fall months will actually help you capture wider demand. You also buck the trend of creating deal-fatigue, as shoppers quickly get weary of holiday promotions that start in October.
3) Make technology your friend
Says Yohn, “The technology and analytics now exist for retailers to better predict what people want and when they want it, so they should use these capabilities to move away from the traditional seasonal approach.”
This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management and Procurement.
it’s no secret that the world of Procurement is changing and fast. With automation, big data and burgeoning AI systems removing more and more of the profession’s “tactical” or “clerical” tasks, companies are calling on their Procurement teams to be more strategic, more nimble, and more innovative. They’re expecting their Procurement functions to deliver not just bottom-line cost-savings, but other sorts of value, adding to organizations’ overall competitiveness.
Procurement, you’ve come a long way, baby.
But a new survey of 200 C-Suite executives from a variety of industries and functions presents a rather dispiriting picture of the Procurement function today – or at least how it’s perceived. Held by Management Consulting firm Ayming, the survey explores a wide base of opinions from some of business’s top leaders – CEOs, CPOs, COOs, and CFOs – about the value Procurement has to add, and where it’s going to be in 2020. The survey, titled Procurement 2020, has lots of interesting insights, showing where Procurement is knocking it out of the park – and where it’s striking out.
The biggest headline takeaway? 83% of executives surveyed say that their Procurement function is not entirely strategic – meaning they don’t think it’s crucial to business leadership, and that it isn’t a key input when making high-level strategic decisions.
It’s a rough verdict, one showing that as much progress as the field is making, a lot of that development – the chance to be a true partner to business at the highest level – is still unfulfilled potential. Some of the other data is relatively damning as well: only 28% of executives surveyed viewed Procurement as a core aspect of their strategy. Morethan half (51%) of the executives do not consider their Procurement operating models to be effective as they stand today.
Interestingly, this last number breaks down differently across industries:
Retail executives had the highest confidence in their Procurement function, with 43% of retailers considering their Procurement operations to be highly effective – and 18% considering them to be somewhat effective. Retail also had strong marks in terms of its strategic value from Procurement, with 79% of executives saying that its Procurement operations were “mostly or entirely strategically focused.”
27% of Manufacturing companies viewed their Procurement operations as highly effective – with 24% considering them to be somewhat effective. The Manufacturing industry also led the way in terms of strategic value, with 91% of Manufacturing executives saying that their Procurement operations were highly strategic.
21% of Technology companies, as well as only 21% of Healthcare companies, viewed their Procurement operations as highly effective.
Dispiritingly, only 15% of Financial Services companies considered their Procurement operations to be highly effective.
The numbers represent a large base of dissatisfaction with how companies are prioritizing, training and supporting their Procurement departments. 44% of CEOs, as well as 44% of CFOs, consider their Procurement functions either very or somewhat effective. 52% of COOs gave a “very or somewhat effective verdict,” compared to (perhaps unsurprisingly) 56% of CPOs. Perhaps unsurprisingly, very large companies – most able to leverage a shared service model and consolidated spend – were most likely to report that they received a very high amount of value from Procurement: 36%.
Despite the survey saying that Procurement still has a long way to go, the broad base of executives surveyed often indicated a deep interest in helping the function get there. 48% of companies surveyed have either reorganized their Procurement function in the past 5 years, or are in the middle of reorganizing it, with a full 20% planning to reorganize Procurement in the next 24 months.
There are some other interesting and divergent opinions when it comes to how companies are seeking to increase their Procurement function’s effectiveness:
68% of executives surveyed believed that if Procurement gets involved earlier in new product creation, as well as long-term strategy, it’ll be able to add more value.
82% of CEOs believe that employee training and upskilling is a key way to improve Procurement effectiveness. In contrast, a 38% of CEOs believe that Procurement-specific technology is the answer.
A large percentage of CPOs (90%) believe that upgrading technology is key to improving Procurement strategy (compared to 76% of CEOs), but across different industries there’s some disagreement about the best way to drive further value from Procurement: In the Financial Services, Transportation, Retail and Technology sectors, executives saw people and skills development as the biggest opportunity to add more value through Procurement, whereas Manufacturing executives saw reorganization as the best opportunity.
We tend to think that surveys like this are an opportunity for the field rather than an indictment. And despite some of the more negative responses, we happen to know tons of Procurement departments who are excelling and creating true strategic value for their stakeholders. But if these surveys are anything to go on, there’s much more to be done. We encourage you to dig into Ayming’s survey, as there’s a lot more data we only briefly covered here.
How will self-driving, autonomous stores impact the retail industry and the supply chain?
This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management and Procurement.
Here’s another dispatch from the far-flung realms of emerging technology that will transform the Supply Chain – how products are brought to market, and how customers acquire those products.
We’ve written before about the upheaval Amazon has wrought on the Retail industry – whether it’s the company’s move into brick and mortar retail, its acquisition of Whole Foods Market seeking to improve its Last Mile Delivery, or its proposed use of drones to deliver products. We’ve also written about some emerging technologies – like augmented reality – that are blending the world of eCommerce shopping and a more traditional brick and mortar experience.
Suffice it to say, the retail industry is going through some major convulsions. With dozens of major U.S. retailers shutting down, and tons of new startups entering the eCommerce market, the landscape looks different than it did even five years ago. Companies are looking to the bleeding edge of technology to revolutionize the last leg of the Supply Chain, imagining the best ways to deliver products to consumers in 2020, 2030, and beyond.
Now, an idea that’s been explored in theory is seeing testing in Shanghai, a city known for its leadership in the mobile payments space, as well as its Blade Runner-style futurism.
Self-driving, autonomous stores
Analysts have touted autonomous drones and self-driving trucks as disruptive technologies to Logistics and Retail. Now, a great recent article in Fast Company profiles a startup called Moby which is testing a model of autonomousstores that drive around, seeking customers based on traffic data. Customers can “order” a store to drive to them, similar to how we order Ubers today. They then enter the store using an app and pay for goods with mobile payments. When the store is out of products, it drives back to the warehouse, or connects with another store that has excess supplies of, say, milk, to restock. Like a food truck, but one that also sells toothpaste, and replacement phone chargers, and apparel – using only robots.
Check out the video:
Pretty cool, no?
Produced in partnership between Swedish-based startup Wheelys and China’s Hefei University, the Moby Stores are electric, solar powered, and allow customers to order products for their next visit based on voice activation. Wheelys’ background is in making mobile coffee carts for entrepreneurs, and it’s extending that manufacturing experience towards these new prototypes, hoping (perhaps optimistically) to eventually build the stores for $30,000. It’s planning to start commercial production of the stores by 2018.
It’s a wild idea, to be sure – with significant manufacturing and regulatory hurdles still to clear – but pie-in-the-sky technologies have transformed retail before.
There are a few cool implications for this model from a Supply Chain angle, beyond the obvious convenience of having a store that comes to consumers:
It potentially changes the approach to last mile logistics, possibly eliminating the human component in delivery – similar to drones, but with product selection.
These stores combine the convenience of eCommerce with the tactile experience that’s still brick and mortar’s strength in areas like apparel.
They will allow retailers to compete in the brick and mortar space without paying for rent / real estate, which is a huge barrier to entry and carrying cost making brick and mortar uncompetitive. Of course there are maintenance costs to consider, as well.
By allowing customers to “order” a mobile store to a nearby location similar to how one would order an Uber, this model can allow a very fast form of same-day delivery, something that’s been a “holy grail” for companies like Amazon.
We know that startups don’t always translate into industry-redefining enterprises, but even if Moby itself isn’t the future of Retail, it’s very possible that wandering stores will be a big part of the autonomous era.
Having a modern, flexible supply chain is important to finding the way out of inventory dilemmas.
Imagine your irritation when you try to place an order online and are greeted by the message: “We apologize for the inconvenience, but this item is out of stock.”
However, even if the item is in stock, your mood is likely to sour if delivery will take more than a few days — and, even worse, you also have to pay for shipping. If you’re anything like me, you will quickly find an equivalent product that’s available immediately and ready to be shipped that same day.
It’s in the light of this hyper-competitive environment that the current inventory crisis should be seen. To sum it up from the perspective of warehouse owners: these are good times. Warehouse rents are hitting new highs as vacancy rates sit below five percent in many major cities.
From the viewpoint of retailers, on the other hand, it’s a significant challenge. Excess inventory is building even as consumer demand remains relatively high. Well aware of the consequences of not meeting ever-rising consumer expectations, retailers have felt compelled to stock up to — at all costs — avoid that irritating “out-of-stock” disclaimer. On the other hand, a chock-full warehouse is not necessarily good for business or speedy fulfillment.
Modernity and flexibility are key
This is when the importance of having a modern, flexible supply chain really comes into play:
How quickly can the supply chain adjust to changes in demand?
What’s the visibility up and down the supply chain?
How aware is each link of what others are doing?
How fast can inventory be refocused?
Some companies like Nordstrom have invested in cloud-based supply chain services. In Nordstrom’s case, the acquisition of a minority stake in DS Co., a supply chain software firm, which links inventory management between retailers and suppliers, was designed to facilitate direct shipments from vendors to customers, thereby circumventing the need for more inventory space. When suppliers and retailers track the inventory of one another, the risk of out-of-stock disappointments is reduced and risk is shifted up the supply chain.
Put to practice, it means that an order placed on the luxury retailer’s website is routed to the manufacturer, which then ships the item directly from its warehouse to the buyer. The Wall Street Journal noted Nordstrom’s investment comes “as retailers are racing to compete with e-commerce companies such as Amazon.com Inc. to provide convenience and speedy delivery to customers while keeping costs down.”
J.C. Penney is also shifting gears to avoid inventory gluts. The new business model essentially turns part of the store into a showroom for one of its suppliers, Ashley Furniture. Instead of keeping inventory in store or in distribution centers, all orders will be shipped straight to the consumer from Ashley Furniture.
Drones are not surprisingly part of solving the inventory dilemma. Walmart, for example, is testing the use of drones to catalog inventory, finishing in one day what it takes employees a whole month to get done. The intent is partly to make the giant retailer’s supply chain more efficient.
Clearly, traditional retailers are exploring new territory to meet consumer demand.
What do you think is key to solving the inventory crisis?
