The key to winning in today’s retail environment is to serve your customers in the best way possible. This means giving them the products they need at a good price, and then fulfilling their orders in the speediest and most cost-effective way possible.
It’s a tall order, and the fact of the matter is, you can’t do it alone. To truly wow today’s modern shoppers, you need to collaborate, and leverage the resources of other parties so you can focus on what you do best as a retailer.
But, how exactly can you establish these strategic partnerships?
That’s what we’ll discuss in today’s post. We caught up with Chris Petersen, founder at Integrated Marketing Solutions and had a chat about how retailers can achieve success through collaborations.
Have a look at what he has to say.
Changes in the retail landscape and the challenges that you’re facing
One of the first things we talked about was the current retail environment and how it’s changed throughout the years. According to Chris, things are moving at a much faster pace than ever before, and the biggest driver of retail transformation are the customers.
There’s the aspect of speed. “A lot of retailers ten, fifteen years ago said, ‘Well, we need to be multi-channeled; we need to be online.’ That’s no longer enough because shoppers are looking for a relationship; they’re looking for speed; they’re looking for the ability to do mobile shopping, as well as physical shopping,” Chris says.
“So, the drivers of collaboration usually start with the customer, but the other aspect of it is the speed. Most retailers were able to adapt when they were vertical and fulfilling through the distribution centers. But, that’s no longer enough today. Two-day shipping is sort of a norm if you will.”
“And, customers are asking for even more; they want to be able to track their packages. They don’t want to sit and wait at home or worry about a porch pirate stealing something. They want real-time information on where the package is at, and transformation of where it’s going to go, even controlling delivery.”
Fulfilling those expectations is no piece of cake, and for many retailers, Chris says the challenge comes down to three things: a lack of talent, a lack of technology (and investment), and the industry moving too rapidly.
Collaboration best practices
Retailers can successfully navigate through these challenges by strategically partnering with third parties. The right partner will depend on your needs. They could be a vendor, a distributor, or even a technology provider. Whatever the case, here are Chris’ recommendations when you are looking to collaborate with others:
1. Start with customer, not the channel
“My first recommendation for SMBs is focus on the customer not on the channel,” he says.
SMB retailers need to know their customers really well; what channels they prefer and what their preferred customer journey is. The whole focus of this collaboration should be ‘how do I take the pain out? How do I improve the experience, and how do I engage the customer?’”
2. Differentiate yourself
Retailers need to focus on differentiation, adds Chris.
“You can do a lot of collaborations, but I think the key is how does that collaboration increase your ability to stand out and be distinctive? How does it increase your relevance to the customer?”
“One of the examples I am going to use is providing services. It’s one of the hardest things as a consumer to get when buying products anywhere. Retailers are starting to differentiate themselves by offering services to meet shoppers’ needs.”
3. Don’t forget about measurability and profitability
“Profitability should always be a concern. We can do lots of things and spend money to pay for outsourcing services, but it should add value to the business,” he says.
“Some of the key things to ask is how does it impact inventory? How does it impact conversion rates?
Collaboration should be measurable. It shouldn’t just be a good idea or someone’s thought to try something. It should be very testable and measurable.
Examples of effective collaborations
Chris provided great examples of retail collaboration in action. They include:
1. Retailers and distributors
One partnership that’s been around for a long time is retailers and distributors, he shares. “Smaller retailers simply do not have the bandwidth, the distribution centers or the capital to afford to handle all of their inventory. Distributors have been a part of the business, more so I guess in European and other countries than the US. Even in the US I think we’re seeing that distributors can be your [retailer’s] best friend and partner in fulfillment.”
Today, retailers can take their distributor relationships to another level by sharing more of their data.
“There is a new level of collaboration and dynamics with the distributor,” he says. “Many distributors are starting to offer capabilities of drop ship. It’s a very important example of collaboration because what drop-ship means is the retailer never has to take actual inventory or title of the goods. They sell a product online, they make sure that the distributors are holding the inventory, the distributor ships it either to the customer’s home or to the store. So, the retailer has the ability to lower inventory, SKU counts, the cost of inventory, but maximize their sales because they literally have a virtual shelf.”
But that type of process can’t be carried out in a vacuum.
“Distributors cannot begin to guess all the things that might be ordered. Therefore, there has to be very close collaboration of systems — point of sale, even forecasting. They should know what the demand is or there is no way the distributor will have the product to drop ship. It is a great example of an old style business relationship becoming very, very strategic to catch up to the customers’ demand and the need for speed.”
2. Retailers and malls or landlords
Interesting partnerships are also emerging between mall operators and retailers. Nebraska Crossing Mall, for example, has a mall-wide app which has features help shoppers navigate the mall, get updates, and find deals.
The great thing about it is that it leverages each store’s data to learn more about shoppers, so that merchants can serve them better.
“So, it is location analytics, it’s geo-sensing in terms of tracking, it’s a platform where retailers can make special offers to certain customers or certain hours of the day,” shares Chris.
“And interestingly enough, you could go shop in the store using the app, the store follows you home. And, you start seeing things popping up in your email or on your phone, and they’re not obtrusive.”
“The point of it is, is none of these stores could afford this platform on their own, but because of the platform and it all working together, they don’t see it as competition for the customer going down to the next store. Instead, they see it as a collective sort of thing of ‘how do we generate traffic and collectively optimize this place?’”
3. Retailers and third-party solution providers
“I had the opportunity and fortunate experience of being able to work abroad and I continue to be amazed at how far ahead some things are in India,” Chris adds.
“One of the most innovative, collaborative platforms I’ve seen emerge has come out of what used to be called the distributor. The company’s name is Ace Turtle.”
He continues, “They created a platform to help stores, apparel particularly, track orders online and stock in stores, and then optimize which store to send the customer to. They can even ship inventory from the store to the customer.”
“So, here’s a case where travel is difficult, even getting down the street several blocks for delivery is difficult. Through the integrated platform, they now have the data system where they can decide and say ‘No, traffic is too busy, we’re going to send the bike with a pair of shoes to the customer’s home.’”
It is an amazing network that small retailers and shops can plug into.
Bottom line: the future lies in collaborations and ecosystems
If you want to thrive in the coming years, you need to recognize that you can’t operate alone. Even retail giants such as Amazon and Walmart understand value of collaboration with third parties. It is high time for small and medium merchants to evaluate how they can do the same.
The post Collaboration in the Retail Industry: A Q&A with Chris Petersen appeared first on Vend Retail Blog.