Posts Tagged "omnichannel"

“The only thing I want is …everything”

Given this statement of the consumer, “the only thing I want …is everything” in the omnichannel environment, the chains-brands make an effort on selection and prioritization of those initiatives more relevant inside each sector.

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Each functional area has a great specialist

Adidas on Web, Springfield in Mobile, Media Markt in Store, Kiko in Marketing and Apple in Customer ServiceOmnichannel by functional area

 

Strong presence of Inditex group in the top ranking of Store area

There are three brands of the group in the Store’s area top 10: Zara, Pull&Bear and Stradivarius

Amazon … remains the King

Excluding Store area, Amazon is still taking up the first place on Omnichannel initiatives terms although differences with retail operators are getting smallerMhe Consumer

its star omnichannel initiatives

  • Fashion: Click & Collect
  • Home: Stock Visibility
  • Technology: Comments and Track order
  • Health & Beauty: Rating and Videos
  • CPG: Delivery options and Own app
  • E-Players: Returns and Track order
    Omnichannel Index Mhe 2018

Health & Beauty Omnichannel Mhe Retail Index 018

*Other sectors such as Fashion, Home, Leisure & Technology and CPG are available. Please download below.

Priority of those initiatives with higher impact on Customer Experience

  • Given the flood of new alternatives of available omnichannel initiatives, is especially important to prioritize those that have higher positive impact for the Customer Experience in each sector
  • If new initiatives are not going with a format adaptation, commercial planning operations store, marketing and location strategy, the main return of investments will be lost

Omnichannel Mhe Retail Index 2018

 

 Mhe RetailCains coverage

 

Mhe works for retail chains and brands optimizing formats in an Omnichannel environment

SERVICES

International vision, consumer insights and external benchmarking

Omnichannel environment transformation

  • Customer Experience optimization
  • Assortment adaptation
  • Promotional activity optimization
  • Commercial efficiency in store operations
  • Locations strategy and POS typology

If you want to confirm where are you vs your competitors in an omnichannel context and where to go do not hesitate to contact us

More Info: carlos.dominguez@mheconsumer.com

Download Summary

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¿Where are you vs your competitors in an omnichannel context and where to go?

Leading retailers concentrate their efforts in those omnichannel initiatives that, mainly through mobile, have a greater impact on costumer experience and that entail an important operational transformation in the physical store. Here lies the main challenge of the sector.

banner-OMNI-tarjetas-prepago

Decathlon, leader for the second consecutive year

Decathlon, Kiabi and Ikea lead the top 10 of the multisectorial ranking. There is a strong omnichannel activity going on in 2018, highlighting that 6 of the top 10 brands that join the group of featured in this edition of 2018.
There is still room to incorporate possible new omnichannel initiatives. The most advanced score is 2/3 of the theoretical maximum possible.Top Ranking Omnichannel MHE 2018

Ikea Mobile Omnichannel MHE 2018

Advanced and Laggards

The level of omnichannel development is not linear and the digital gap between Advanced and Laggards operators is widening.
By areas, marketing is the main gateway to omnichannel and is where there is less difference between Advanced and Laggards.
On the other hand, in Store and Mobile areas, the gap between the two groups of retailers is more noticed.
Initiatives where there is a wider gap between Advanced and Laggards are: real stock visibility in store, click & collect and own app.Advance vs Laggard Omnichannel 2018Adnace vs Lggards by Area MHE

2018 vs 017 Evolution

The initiatives that retailers have incorporated the most, are those that integrate the physical store through the mobile in the customer’s journey related to payment methods, Click & collect and availability of stock.

Differences between the various Retail sectors

Leisure and Technology continues to maintain its leadership in the omnichannel field. There is a progressive convergence between sectors, highlighting the strong growth of Fashion.ranking by sector omnichannel MHE

methodology Omnichannel MHE 2018

Area and Chains Omnichannel MHE Retail Index 2018

Omnichannel is not a mere additional layer to the conventional management in Retail

The incorporation of new omnichannel initiatives makes more evident the need to transform and integrate conventional channels to achieve greater real operational efficiency, and not only additional costs for the existing business model.

Mhe works for retail chains and brands optimizing formats in an Omnichannel environment

SERVICES

International vision, consumer insights and external benchmarking

Omnichannel environment transformation

  • Customer Experience optimization
  • Assortment adaptation
  • Promotional activity optimization
  • Commercial efficiency in store operations
  • Locations strategy and POS typology

If you want to confirm where are you vs your competitors in an omnichannel context and where to go do not hesitate to contact us

More Info: carlos.dominguez@mheconsumer.com

Download Summary

www.mheconsumer.com

To be up to date in retail:

Subscribe

Amazon Books. Physical store. Back to the future

Many successful online initiatives have been incorporated to a physical context with a traditional wooden atmosphere, excellent location, low merchandise density, and distilled assortment with the help of advanced sales analytics and customers ratings. Overall, it is a magnificent promotional tool for its PRIME service with substantial discounts in the selling price.

Traditional-Environment

Two years after the opening of its first physical bookstore, Amazon is operating with fifteen selling points in experimental phase.
We have recently visited the two establishments located in New York, the last one in 34th Street, opened only 4 months ago.
Lower in- density store compared to its sector (3.000 options vs 5.000 in regular conditions), eases the display of a more clear and effective visual merchandising. Frontal presentation of the books and the area dedicated to divide each one of the titles provides aid in the search of what you are looking for.

Mhe-valoraciones-Amazon-Books

The biggest innovation is the usage of the available online analytics to distil its huge assortment and be able to really offer the selection of more relevant books and with higher sales for the customers at the store. Among other criteria, Amazon apply the following:

  • online customers’ ratings. For example, book segmentation with a rating higher than 4,8 – over 5 – with more than 10.000 opinions
  • those books which customers have taken less than 3 days reading it completely in a mobile device, such as kindle
  • titles with higher number of reservations and pre-sales to its effective launch
  • books with higher acceptance level among online readers in the specific area where the store is located
  • cross recommendation of a book for those interested in other based on online sales analytics

Specific opinions and comments made by other digital customers are displayed individually on store shelves providing genuine help among the readers  

Mhe works for Retail chains and brands optimizing their formats in an Omnichannel environment

RETAIL STRATEGY

Prime-Offers

Books aren’t labelled individually with selling price because customers members of Prime service have succulent discounts, displayed in-store, above 25%. In practice, this duality of prices (Members / Non Prime members), converts the physical store in the best promotional machine of this service/subscription that is having so much success, and that Amazon encourages now with higher strength through monthly fees (10€) more affordable for new customer segments.

Children’s reading segment is over-dimensioned in a deliberate way to provide interaction possibilities which are not available online.

Besides books, Amazon offers in its stores an excellent display of digital reading devices, voiced personal assistants, digital services as music and tv. In short, an excellent opportunity to offer a showroom with interaction possibilities with the product and support of curated sales assistants.

Sale system is self-service with main support of digital devices and selective specialized staff maintaining in every case an environment of freedom of movement and action for store visitors.

Promotional activity is a reflection of what they have online and take advantage of the seasonality of each moment to make the product more relevant for the customer. For example; selection of titles of physical training as part of the promises and good wishes for the beginning of the year.

For purchase and payment of the products customers both the conventional ways and the Amazon own app can be used, having full integration between physical and digital channels.

In short, we can identify a fusion of digital initiatives, innovative in the world of physical bookstores, inside a wooden environment and traditional design including a little coffee area that brings into customers mind other stores of conventional chains, such as Barnes & Noble that have suffered the digital transformation in this sector.

We are facing a business model with great advances of digital integration and keeping relevant and conventional aspects of a bookstore. The fact that Amazon only has 15 stores (in two years) claims that Amazon Books will continue to evolve before proceeding to its potential expansion. It will be an authentic Back to the Future.

MHE, retail consultancy, works for brands and retail chains in strategy and operations in omnichannel environment.

More info: carlos.dominguez@mheconsumer.com

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Amazon introduces new patterns in the Fashion sector. Customer will decide.

The strong bet of Amazon in the Fashion sector is not only based on the powerful introduction of its new own brand “FIND” for men and women, it is also adding new patterns that are  new for the sector. Some of them will be appreciated by the consumer, others will not. Sometimes they might be replicated in the physical stores and, in other cases, they will have to remain in the online arena.

Dynamic Pricing

It is by far, the area where Amazon incorporates the largest number of novelties for Fashion.

Continuous changes in Prices

For a similar clothing product, Amazon changes prices an average of 9 times during the season, while a department store (eg Macys) just changes 2,1 times per season, and clothing specialists, such as Kohl’s, just 1,6 times per season.
Sales period will not be the same ever. Relevant price endings and price points for costumers in brick and mortar won’t have the same importance in an online environment.

Different prices at colour level and size for the same model

Amazon doesn’t innovate just in time factor. The difference with fashion specialists is that Amazon starts with just one unique sales price for all colors and sizes in the same product and applies its predictive analysis based on sales, stock and availability at size and color level.
Amazon prices by colourAmazon colour and sizes selling price

Thus, it is usual practice in Amazon that, for the same garment they provide different prices based on color and size and always based on customer sales criteria and not original cost prices and mark-up.
It will be difficult to implement these criteria in stores. But, who knows… 3 years ago nobody could imagine “free delivery” at home just the day after the purchase.Amazon sizes and prices

Consumer ratings

The massive use of user generated content, providing ratings and comments by other costumers, has demonstrated huge effectiveness in other retail sectors where Amazon has a higher weight, like electronics. Fashion is introducing this new pattern that provides confidence in Brands based on other costumers opinions.
The use of costumer ratings is done through filters and relevant segments for each type of product. In addition, Amazon incorporates costumer opinions from other countries where the same product is sold. Amazon manages in a superlative way the popularity of the products by UGC.Amazon consumer ratings

Echo Look

This initiative provides the facility of take pictures of products tested at home by customers. Through a specialised application you can receive recommendations about other products or offers regarding different brands that combine better with costumer preferences. It is like a “personal” assistant to facilitate the clothing purchases. Amazon Echo Look

Prime Wardrobe. Try before buy

In this case, Amazon provides to their “Prime” clients the possibility to monthly receive a box with 3 to 10 fashion products selected by customers to be tried at home. The costumer try on it at home and can return the garments they are not interested in.
Based on the number of items that the customer acquires, they receive a 10 to 30 € discount. This service is similar to the “subscription” model in other sectors. It is an advanced version for home of smart fitting rooms, which its use is now increasing throughout retail chains. Amazon Prime Wardrobe

Prime Service. Shopping consumer networks

The success of the “Prime Amazon” service (even with an additional charge) it has been an inspiration for the development of other shopping consumer networks services, such as SHOPRUNNER, which allows retail chains provide similar experiences to Amazon but without investing in disproportionate structures for their activity.
Shoprunner

 

 

Other innovative initiatives for fashion

  • Wider development of the size range maintaining same model
  • Incorporate, in a selective way, men products among women items taking advantage of the fact that more than 40% of men products are bought by women
  • Literal description of products evolution to “tactile” descriptions that compensate the no physical presence of the product
  • Private brand sponsorship, promoting in a simultaneous way incomes from third brands

But not all Amazon initiatives become successful. The Amazon branded “Style Code Live” TV channel for interactive purchases has been cancelled after one year try out period without good results.

With Amazon new fashion patterns, clients are having the chance to try new experiences in their purchases, some of them will be demanded to other competitors in physical store environments as they will get used to.

MHE, retail consultancy, works for brands and retail chains in strategy and operations in omnichannel environment.

More info: carlos.dominguez@mheconsumer.com

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Continous increase of e-Commerce sales participation in all retail sectors than comes with an slight Ebitda reduction during the last five years

restoration-hardware

Restoration Hardware

  • Tell me in which retail sector you are and I will tell you what percentage of your sales should come from eCommerce (from 4% in mass market sector up to 22% in leisure/technology . Also what growth perspective you should have.
  • MHE, retail consultancy, has analysed the results and eCommerce performance in 55 retail chains representatives of major sectors such as fashion, leisure/technology, home, health and beauty and mass market formats in USA during the last five years (2016-12). This market provides good and consistent data and available to the public. 

 

 

e-Commerce participation  as a % of total salesTarget-electronics-Interior

  • e-Commerce already represents 9% of total sales in the whole group of retail chains selected
  • Leisure/technology sector keeps on heading the group (22 %) without any surprise in the sales
  • Starting point was not very similar depending on which sector you are but as time goes on, a convergence of major retail sectors can be perceived. Home sector, with an outstanding +23% eCommerce CAGR sales growth is catching up quickly
  • Health & Beauty are coming closer and closer in many aspects and eCommerce is not an exception for this merging trend.

 

 

e-Commerce CAGR sales growth  per retail sector in period 2016-12 

Yearly growth rates across sectors can be grouped in three bands:

  • Home goods with 23% CAGR
  • Leisure/technology with 16% CAGR
  • Fashion, heath and beauty and mass market with 11-12% CAGR

 

Impact on Ebitda

  • Ebitda has suffered an small erosion during the period 2016-12 reaching 6% of sales in year 2016
  • Negative correlation is shown below between eCommerce sales share and achieved Ebitda. This reduction can be caused by several factors including lower prices, higher operation costs (certainly at the incipient eCommerce phase) and potential store sales productivity linked to eCommerce cannibalization

 

“Winners” segment

  • We have identified a group of retail chains (winners) that are over performing in the period of 2016-12 to check how eCommerce is doing in these organisationsulta-beauty
  • e-Commerce sales mix (15%) in 2016 is much higher than the average for the whole companies group (9%)
  • Winners are enjoying a higher substantial CAGR in sales over the period (2016-12). What really makes “winners” different is the CAGR sales growth for their physical stores 12%. Therefore, it is clear that their good performance is not only based upon eCommerce activity but improving significantly also their stores productivity
  • On the other hand, Ebitda has suffered during the same period from 19% on sales to 16% in year 2016

Future developments in the retail sector will not be purely eCommerce based, spite of its continuous sales growth. The transformation should include as well a clear physical store improvement task.

The main challenge ahead in a growth mood will be to sustain the current Ebitda (as % of sales) and satisfying at the same time new Omnichannel customer expectations.

 

MHE retail consultancy, works for major brands and retail chains to improve strategy and operations in an Omnichannel environment.

More info: carlos.dominguez@mheconsumer.com

 

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L´OCCITANE and NYX lead Health & Beauty OmniChannel sector. Spain

Traditional selective and mass market channels convergeTop Health Beauty MHE

Marketing MHE OmniChannel
Main Findings
NIX Omnichannel MHE

Health & Beauty is just behind the Leisure / Technology sector in terms of developing OmniChannel initiatives and ahead of the Fashion sector.

Ecommerce is relatively recent in the sector and already reaches reasonable levels as% of total sales value (eg L’OCCITANE 11%, ULTA 7%).

L’OCCITANE and NYX stand out as the most complete omnichannel operators.

The ” Young / Makeup ” (NYX, Kiko) chain segment lead the omnichannel innovation. Especially in the areas of marketing with video tutorials, content generated by users and influencers and with the use of social networks such as youtube and Instagram.

Three out of four chains already offer marketing with contents of self-help and advice.

More than 80% of the chains provide user reviews and comments (UGC).

Although ¾ of the chains offer their own apps, they do not get very positive ratings from their users (Kiko being the exception). The bet to improve the experience of the mobile through the WEB is strengthened between the operators and ahead the own apps.

2/3 of the chains facilitate the online possibility of personalizing the purchase as a gift.Loyalty programme MHE

Opportunities

Despite the high frequency of purchase, only 1/3 of the channels allow the integrated use of their loyalty programs through the mobile.Content marketing MHE

Only 1/3 of the chains facilitate visibility of stock availability in real time at individual store level.

Only 10% of the operators have the “Click & Collect” service (substantially inferior to other sectors like Fashion).

The “Natural” segment has found in OmniChannelan excellent allied support to communicate their Brand values in a more reachable and personalised way.

OmniChannel is helping “Fast Beauty” in a clear evolution towards the world of FASHION.

The  tradiitonal”selective” and “mass market” Health & Beauty channels converge through the OmniChannel, blurring the borderline among them.

Direct sales to consumer activity by large brands (DTC), are taking advantage of OmniChannel and it is making progress.NYX

Attributes

Where your chain stands up now and where it should gear up to in OmniChannel? ¿Which are your main priorities to apply? ¿How MHE can help you?

Omnichannel Retail 365º

More info: carlos.dominguez@mheconsumer.com

OmniChannel Retail MHE  Index is also available in other sectors: Fashion, Home, Leisure/Technology,  and Food Super/Hypermarkets

 

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