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

Pricing during the product end-of-life markdown period

      For retailers of fashion-oriented or seasonal goods, markdowns are a critical component of the product lifecycle. Retailers not only have to determine when to begin markdowns, but also the initial reduction, a schedule for subsequent price drops and a plan for multiple stores.

We have seen retailers swing from trying to achieve Everyday Low Price (EDLP) to hyper-promotions as the bottom fell out of consumer demand, to a panicked response to consumers’ latest ability to compare prices, whether between online and store or between competitors [9]. Customers are increasingly going for promotional activity but without any customer data to support it.

TABLE VIII
Top Pricing Strategies

End-to-end promotion planning and execution Increased Promotions and Objectives realized Promotional strategies for every product/location combination

Retailers look for Markdown optimizer which can manage the complete markdown event, recommending time-phased price adjustments based on consumer price sensitivity, product lifecycle, inventory and other costs. Top pricing and promotion strategies of retailers are listed in the table above. We inferred that most retailers have limited visibility and information sharing among decision makers which lead to excess inventory or out-of-stocks. These retailers look for tool which can broad visibility and connect end to end promotion planning and execution, which will enable to synchronize both the base demand forecast and the promotional demand forecast. Retailers want increased Promotions with specific objectives like increased customer traffic with more targeted ads and promotions.

While mark-down can increase sales and consumer loyalty, it can also be expensive if it’s not effectively planned and executed. Markdown and promotion require execution of time-sensitive processes across departments and trading partners [10]. Retailers look for help in determining which products to promote at which locations, the optimal price to maximize profitability and effective consumer marketing strategies.

  Store execution and supply chain design

Retailers always look to improve its store execution to increase sales and customer satisfaction. Based on a research, it’s found that customer perceived in-stock is primarily driven by actual in-stock and customer rating of employee knowledge; overall customer satisfaction is primarily driven by customer perceived in-stock, payroll level, customer rating of employee knowledge and check-out efficiency; and sales is primarily driven by actual in-stock, overall satisfaction and payroll level [11].

TABLE IX
Top Store execution Strategies

Single projection of forecast across all channels Connecting current and future shoppers Integrated information flow of merchandise and distribution

Table IX has the list of important store execution strategies we inferred from our analysis. Customers want to have consistent information across all the channels hence it becomes important for retailers to manage inventory in an omni-channel fashion. This has come out as the most important strategies in managing a store. Another strategy which has not changed over the years is connecting the current and future shoppers. With lot of data, it’s difficult for the retailers to pick what is relevant and leave out what’s not.

Online store execution: More and more retailers are taking social media route to reach out to larger prospects.

TABLE X
Top Online store execution Strategies

Search Engine optimization Publishing contents to social media Manage public profiles

Table X has the list of important store execution strategies for an online store.

Based on our study, we found that retailers are fighting hard to get listed on the first page of search engine, which helps them to drive customer visits. More and more contents are published to the social media sites like Facebook. Infact, most of the large size retailers are moving towards Omni channel way where there will be a seamless information flow among all the channels. Third and most important point is that retailers do not stop just at publishing the content but also manages it. They try to satisfy angry customers over blogs or Facebook page.

Applying appropriate resources to understand customer and their requirements is the key for successful store execution. Retailers have to be on top of the market trends and understand economic factors in making plans. Challenge comes in executing these plans into orders, transfers, load builds, and transportation schedules. Another problem faced by retailers is "Execution gap". An execution gap is any implementation issue or problem that has a negative impact on the integrity of a merchandising program. A gap can range from mis-shelved products to poor sign placement or be as severe as damaged display components, or most importantly, a missed installation deadline [12]. There are many examples and each are avoidable with proper planning.