We hosted a fascinating discussion this morning, between retail experts Luke Ritchie, Grant Thornton Partner, and Mark Scatena, Target’s General Manager of Strategy, Online and Supply Chain, as they shared a depth of insight with a number of our clients from across the industry.
Together they consistently debunked the myth that “stores are dead” while acknowledging that the complexity of the customer journey – and the supply chain that rises to meet it – is constantly re-defining the retail playing field.
While they both described the challenge of profit enhancement within this environment, as well as the challenges faced by retailers as they shift to online, the discussion was profoundly positive. They described an Australian retail landscape that is not only fascinating and dynamic, but highly prospective, with a significant growth in the size of market forecast over the next five years. Proposition relevance to the customer will always remain critical to conversion, however the myriad of factors that can contribute to retailers securing a share of this growing market requires astute navigation. While marketing effectiveness models remain a source of debate for industry insiders, they introduced four emerging customer experience quotients for careful consideration, particularly in the context of the online shift. Where there used to be simply UX (User Experience), we now have FX (the Fulfilment Experience), TX (Team Experience) and XX (the Cross-functional Experience) added to the mix.
Both Mark and Luke also cautioned that the focus on profitability enhancement can come at the expense of innovation, and noted the tension in balancing these two clear needs, when, too often, one can seemingly oppose the other. What is good for driving an increase in any of the four X-factors, will likely put pressure on the profit factor, albeit in the short-term. But with 70% of purchases now starting online, the need to invest in the online experience, through to fulfilment and beyond, can’t be overlooked.
Technology remains an important enabler of innovation, but it is the customer-led innovation and deepening of touchpoints along this complex journey that will create the compelling and competitive points of difference. In this vein, re-inventing in-store pickup was also a key discussion point, with retailers looking to leverage the pre-existing cost structure of ‘click and collect’ and exploring ways to bring online shoppers into stores. Walmart was referenced for its innovation in this space, with Nordstrom also decreasing significant cost in its returns through re-locating its change rooms to the front of stores.
There were many more insights shared, and international examples explored, and we extend a huge thank you to Mark for joining us this morning and extending his insight to our clients on this important topic.
