Customer Experience Impacting Retail Management (2012) - I of V

Abstract
Retailing is a huge industry (40% of the U.S. economy and the largest employer) that has consistently been an incubator for new business concepts. The retailing business, in today’s world is focussed on the customer’s buying experience. Focus on customer experience and understanding their needs can solve many retailers’ chronic problems such as stock outs and markdowns.
While the retail sector has always been very competitive, customers too have become more exacting, demanding ever-increasing levels of service. It is critical for retailers to understand their customers. The buying patterns those are critical to determining which products to stock and which to remove from the inventory. Visibility into how consumers buy items, how and when they bundle products can help retailers to forecast and plan. It also helps to improve customer satisfaction level.  Retailers can respond by increasing the variety of their products, becoming more prices competitive, striving towards higher service levels, and utilizing advances in computing capabilities and information technologies to improve their supply chain efficiency.
This is my second research paper, where we have evaluated the performance on following major themes: assortment and inventory planning, markdown and store execution of retailer and their strategies for next 2 years. SKU rationalization determining the proper depth & breadth of an assortment and forecasting within an assortment plan are immediate priorities for retailers. In today’s Omni-channel world it’s important for retailer to enhance customer experience, be it in brick and motor store or online or any other store format. We present the strategies retailers are planning to adopt in next 2 years for these four themes.

Introduction

In the 80's and early 90's Wal-mart pioneered new approaches to supply chain management and human resource management, and also influenced major established firms like P & G to change their approach to supply chain management. Dell has revolutionized the supply chain for PCs and prompted many firms to consider the direct model. Amazon.com, more than any other firm, has been credited with transforming the internet from being an academic toy to the primary technology influencing business today [1]. On the other side, we also see that most retailers have struggled to maintain profitability. Customer demographics vary by retailer and can be different within a retail segment. For example, while women buy more clothing and beauty products, men spend more on latest technology [2]. Demographic trends do affect retailer strategy and marketing. In today’s economic environment, companies cannot afford to carry large inventory. Theme of retailing has moved to satisfying customer with minimum inventory and thus increasing sales. This is the theme of our paper. We have focussed our study on such store specific parameters.

This research, based on the retailers of every revenue size and geographical areas, shows that retailers are investing in their assortment planning, optimizing Stock Keeping Unit (SKU) at store level, implementing pricing and promotions and focus on store execution. Our inferences are based on the data collected from Companies’ views expressed in their annual report and other disclosures, case studies published by the companies or by their vendors and practical observations being carried out in the retail domain. The research goal is to be able to understand what retailers are doing to enhance their customers’ experience at a store and in the process deliver a higher customer satisfaction, more shopping visits and increase its profitability.

Study Rationale

The retail domain has faced plenty of challenges in the past mainly because of the increasing competition and the customer’s choice in low spending. The retail chain executives are finding it difficult to cope up with the high levels of service and low costs, as the businesses face more global pressure.

The purpose of this study is to explore what retailers are doing to enhance the customer experience at a store and new trends emerging in the process and the challenges they are facing in doing so. We studied about 38 companies and their data present in public domain. The study was focussed on following four major themes:

·  Planning the assortment of products: Customer demand at every store is different. We will cover the strategies leading retailers are adopting for item and assortment planning so as to meet customer demand.

·  Optimizing the inventory carried for each SKU at every store: It’s important to have lean inventory. We will look at strategies leading retailers are adopting to optimise inventory at store level.

·  Pricing, especially during the product end-of-life markdown period: We will look at strategies leading retailers are adopting to improve execution of promotions especially during the markdown period to increase sales.

·  Store execution: We look at the brick and motor as well as online in-store strategies which leading retailers are planning to adopt.

The findings of the quantitative and the qualitative data show that the supply chain management can overcome the lesser customer spending and help retailers to lower costs. The trends and practices followed by the retail supply chain shows how to position the supply chain for the upcoming years. We believe that the findings from this research will provide insight into the new trends emerging from the way retailers are shaping their business to attract more customers and gain larger wallet share. We have talked about recent developments which companies are looking to implement in immediate future. We believe our study will help all those who want to track the latest developments in retail fields.