Nov 01 2013
In this age of retail consolidation where large retailers are growing ever larger and so-called “category killers” abound, it may seem that the best days of small and mid-sized retailers are behind them. As a salesperson who used to work for me in the home improvement channel once remarked, “There are two types of hardware vendors out there – those who sell to The Home Depot and those who want to.” I always thought that that quote succinctly captured the dynamic between large and small retailers in all channels.
The good news for small and mid-sized retailers these days is that the emergence of retail cloud-based technologies has leveled the playing field, making it possible for the ‘little guys’ to compete with the ‘big guys’ in terms of core retail competencies like customer marketing and supply chain effectiveness. In fact, the ability of smaller retailers to adopt new technologies more quickly than their larger competitors is turning into a distinct competitive advantage for those small and mid-sized operators.
There are three key areas where a new generation of technology providers is making smaller retailers more competitive – and in some cases leapfrog – their larger foes. Deployed quickly ‘in the cloud’ with no software, hardware or costly implementation, these solutions can be up and running within weeks, yielding positive business results almost immediately.
1. Improving Product Availability and Reducing ‘Out of Stocks’
Retail industry studies have shown time and time again that out-of-stocks at retail are a major problem, something that the average consumer knows all too well. Studies have shown that, on average, a consumer will experience a product being out of stock for every 13 products they shop for. It has been estimated that out-of-stocks cost retailers 4% of sales. Read that again: 4% of sales. And given that many small and mid-sized retailers rely on manual audits to trigger re-orders, the true cost is likely even higher in this segment of the market.
One way to improve supply chain responsiveness is to improve visibility along it; after all, how can you expect to react to a problem – or potential problem – that you don’t even know is there? Today’s new breed of Big Data retail intelligence software leverages product sales and inventory data to alert both retailers and vendors to low-stock situations so that corrective action can be taken. Web and mobile enabled, these solutions take store-level execution to a new level by providing a full suite of analytical tools to allow retailers to collaborate with their vendor partners in ways that until now were out of the reach of all but the largest retailers.
2. Deploying One-to-One Shopper Marketing
Being able to target individual shoppers with tailored offers or promotions based on their physical location in or around in a retail store, their purchase history or their current basket is something that has become possible with a new breed of digital retail marketing platforms. With this technology, the elusive personalized shopping experience is becoming a reality.
Retailers that can move quickly to harness this technology will reap first-mover advantage with connected consumers who prefer to shop with retailers that are digitally fluent and ‘speak their language’. A recent survey published by Responsys confirms this: 53% of consumers are more likely to purchase a brand’s product or service when the brand personalizes digital communications to that consumer. In fact, this number jumps even higher to 65% in the 18-35 year old demographic. Retailers – and their vendors – who ignore this reality do so at their peril.
3. Embracing Omni-channel Retail
Shoppers have options, not just in terms of where they shop, but also how they shop. How do traditional bricks and mortar retailers leverage their physical traffic to compete with on-line only retailers who might be able to pick off ‘showroomers’?
The new breed of integrated point-of-sale and digital shopping software providers enable smart retailers to essentially be all things to all people, offering personalized in-store store shopping experiences when needed, while at the same time being online and mobile when that’s what the consumer wants. Consumers don’t want to understand why the order that they placed online can’t just be picked up in-store on their way home from work. Or why the product that they learned about in-store and read positive reviews for on their smartphone can’t be ordered online from that same retailer after they’ve gotten home and made the decision to buy.
Omni-channel retailing software enables more nimble retailers to embrace the new ‘clicks and bricks’ reality faster than their larger competitors who may still be struggling to integrate their legacy point-of-sale and supply chain systems with their first-generation on-line store.
With the confluence of mobile technology, Big Data processing capabilities, and cloud services, retail-focused technology is advancing at a torrid pace. And this pace will only accelerate further as the younger cohort of digitally connected consumers moves into their prime spending years. Small and mid-sized retailers can use their nimbleness to their advantage to become early adopters of these new technologies and stay ahead of their larger competitors who will be on the tail end of the technology adoption curve.