Connected Retail: The next frontier for retailers’ operating models and metrics

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We are a third of the way through 2015 and there’s a new buzzword for retailers; Omnichannel is over, long live Connected Retail.

The latest retail report from PricewaterhouseCoopers ‘Connected Retail: Reshaping tomorrow’s operating model and metrics’ puts it like this:

Omnichannel retail is no longer enough to remain competitive and be successful in the retail industry. In the near future, we will see many retailers moving toward the next generation of retail, which is connected.

Connected Retail is an overhaul of the retail operating model and is different to Ecommerce, multichannel retail and even omnichannel retail.

It advances the key idea of omnichannel retailing — to deliver a seamless consumer experience across all sales channels — and looks at how technological advancements can alter aspects of retail: from supply chain, to marketing, and in-store and digital experiences.

“It’s no longer just about adding an online channel; it’s about a new operating model that is customer centric, agile and powered by data and technology,” the report states.

“Connected Retail means connecting the customer seamlessly to personalised marketing, the physical store, the digital experience, supply chain, seamless payment options, and most importantly to help staff to deliver a branded customer experience.”

The report suggest these key changes to the operating model:

  • Align physical and digital store operations under a single management team with incentives that are agnostic to channel of sale.
  • Put in place a flexible data infrastructure that is able to build a ‘single view of customer’ and deliver real time operations.
  • Start using sales performance metrics that are structured in terms of visitors, cost of acquisition, conversion rates and quality of customer relationships.

Digital will no longer be a department, but embedded in all aspects of the business.

For example, smart shelves could provide real time information on stock levels. Using a combination of sensors on shelves, equipment and products could provide up-to-the-minute information, this data could then be used to monitor inventory and re-order stock automatically based on shelf weight, produce lifespan or activity on the shelf.

Using technology to recognise customers and form relationships with them is another key aspect of Connected Retail, which includes real time marketing. Imagine recognising if someone has just put a product in their basket, based on smart shelf weight and consumer GPS location, and being able to instantly offer them a discount on a complementary product via their smartphone.

The report also discusses customer tracking technology which requires retailers gain customer consent through an app and/or privacy setting. Essentially consumers will have to opt in to having their location and buying habits tracked. The challenge for marketers is to ensure that consumers are happy to trade this information if there is a real benefit to them.

Suppliers are also expected to adjust their operating models, in particular increasing their direct interaction with consumers through digital channels, including selling direct to consumers and establishing their own consumer insights.

“Consumer goods companies also need to have an increased focus on direct-to-consumer interaction and experience to ensure that their brands retain value when competing with retailer’s private labels,” the report states.

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