An economy marked by successive interest rate and petrol price hikes, rising credit card debt and high food inflation raises challenges and calls for innovation across the activity board. For the retailer, in particular, the adoption and appropriate application of a constantly evolving in-store technology is vital to a cost-saving operation and a potentially profit-generating business. Who better to ask for input on such decisions than the customer himself?
The value of consumer-centrism
To what extent does retailer technology need to be consumer-centric? Is there a relationship between shopper satisfaction and effective technologies? Is a positive shopping experience, made possible by technological intervention, necessary to exceptional retail performance?
Last month, shopping consultancy TNS conducted an international Innovation Survey to gauge shopper perceptions of the value of in-store technological innovation. The survey, entitled New Future In Store, was based on the responses of 4 600 primary household shoppers in Canada, China, France, Germany, Japan, Spain, the UK and the US. The survey’s core finding was two-fold: The common denominator among respondents was a high ranking of shopping innovations that free up time and most respondents expect those technological innovations to make their shopping a great deal easier in the not too distant future.
Some of the innovations expected to be in widespread use by 2015 are already in practice in some places today. These include shopping by social networking websites, collaborative product development, group shopping and the dissemination of sales and product information via cell phones.
The “Next Generation” Store
How does the customer envisage the “next generation” store? What devices and systems will it incorporate?
New Future In Store reports that 60% of shoppers across the globe believe that they will
be able to make fingerprint purchases by 2015. This innovation also proved the most popular among respondents. In the US, respondents were particularly keen on the “smart cart” conception. These thinking, interactive shopping trolleys will unburden the shopper of his traditional in-store work, from locating products to confirming prices, storing desirable information and executing checkout. Spanish respondents, on the other hand, were more in favour of the concept of a refrigerator network through which goods may be ordered and delivered.
Clothing retailers are under no less pressure to techo-evolve. A confident 73% of shoppers globally say they expect to be using interactive touch screens in dressing rooms to communicate with sales assistants by 2015. Half or more anticipate the arrival of 3D body scanning and interactive dressing room mirrors in the same period. Once again, these applications are expected to reduce the work and stress of the shopper.
South Africa
Locally, self-service through technological innovation is also a focal point, but South African retailers are more concerned with following a logical progression of development. And appropriately so. Getting the back office software in order first will facilitate future advancement. Also to be taken into account are certain local impediments to the introduction of those forms of self-service that involve transactions. South African consumers currently show a distinct preference for the check out clerk at the POS to a self check-out arrangement. Trust in the cashier and store still needs to be promoted. And of course theft remains a matter of concern across the country.
Conclusion
Retail technology is all about making collectively advantageous human connections. Irrespective of its location and the composition of its application, technological innovation drives real time retail performance. Keeping pace with technological capability translates into fewer buyer restraints and ultimately a consistently activated shopper. And at the end of the day, it’s all about an enhanced shopping experience – for the consumer and the retailer alike.
Thursday, August 14, 2008
The Gift that keeps on giving
Globally, the status of the gift card has been elevated from seasonal sales tool to year round money-maker. In the US, the gift card market is currently worth between $70m and $80m, and its penetration into the European market is rapid.
The benefits of what effectively boils down to a pre-selling of revenue lie in an exchange of small investment for good return. And that return is not purely monetary. Earning money in advance of the card being redeemed translates into a double whammy winning. Indeed, customers in Europe and the US spend between 40% and 140% more than the face value of the card. And, because they’re buying a gift for themselves, and because part of that cost is already covered, they also tend to select more expensive items.
But the gift card scheme also serves the retailer in less tangible, less measurable ways. It simultaneously procures for the retailer a peripheral marketing system whereby store customers transform others into same-store customers – at no extra cost to the retailer. Retailers also have the option of using the gift card as an employee incentive. And what’s in it for the bestower of the gift? Supreme convenience!
In South Africa, nearly every major retailer offers gift cards, and the offering is proving popular. Top end retailer Woolworths, for instance, launched its gift card last October, and celebrated the issue of its millionth card after just seven months. The Pick n Pay Gift Card was launched in December. With its focus on convenience and safety, this card is designed to be as much a gift to oneself as to another.
In terms of anti-theft measures, local retailers are just as astute as their international counterparts. Today, shoppers will find that most gift cards are protected by scratch-off security codes and protective packaging to prevent information theft. Musica activates cards as they are purchased. Some retailers’ cards are only available on request, while others give the option of an online purchase.
The benefits of what effectively boils down to a pre-selling of revenue lie in an exchange of small investment for good return. And that return is not purely monetary. Earning money in advance of the card being redeemed translates into a double whammy winning. Indeed, customers in Europe and the US spend between 40% and 140% more than the face value of the card. And, because they’re buying a gift for themselves, and because part of that cost is already covered, they also tend to select more expensive items.
But the gift card scheme also serves the retailer in less tangible, less measurable ways. It simultaneously procures for the retailer a peripheral marketing system whereby store customers transform others into same-store customers – at no extra cost to the retailer. Retailers also have the option of using the gift card as an employee incentive. And what’s in it for the bestower of the gift? Supreme convenience!
In South Africa, nearly every major retailer offers gift cards, and the offering is proving popular. Top end retailer Woolworths, for instance, launched its gift card last October, and celebrated the issue of its millionth card after just seven months. The Pick n Pay Gift Card was launched in December. With its focus on convenience and safety, this card is designed to be as much a gift to oneself as to another.
In terms of anti-theft measures, local retailers are just as astute as their international counterparts. Today, shoppers will find that most gift cards are protected by scratch-off security codes and protective packaging to prevent information theft. Musica activates cards as they are purchased. Some retailers’ cards are only available on request, while others give the option of an online purchase.
A clean bill of health for the supermarket pharmacy
Clicks and Dis-Chem may hold the pharmacy monopoly, but Pick n Pay and Shoprite are steadily enlarging their share of the pie. Pick n Pay has been competing in the arena for three years, while Shoprite has produced a pharmacy offspring of 49 across the country.
And current conditions favour such an expansion of diversification. Single exit pricing, which puts a cap on the mark-up of drugs, poses a much smaller threat to the big gun retailers than it does to health and beauty specialists. And ongoing uncertainty about future regulatory legislation makes it that much easier for the likes of Pick n Pay to consolidate its share of the market. Bigger is better applies here and now. Couple the greater ability to be price-flexible with the consumer’s tough economic environment and you have a distinct advantage.
Another, probably inestimable, benefit of the in-store pharmacy is its generation of additional customer traffic. Shoprite, the grocery retailer that has invested the most in its pharmacies, has attributed a 33% increase in foot traffic to these additions. Woolworths might expect the same outcome from Pharmacy+ , the result of its partnership with the Netcare Group.
And, for those who claim they prefer personal specialist attention to ‘mere’ convenience, Pick n Pay has an answer. The retailer’s partnership with the Medical Nutritional Institute and pathology group, Drs. Du Buisson, Bruinette and Kramer, has brought to life an extension of its conventional in-store pharmacy clinic. The new concept primary care clinic, just launched in the Woodmead Hypermarket, boasts a multi-service offering in which conventional services like screening tests are strengthened by value-added options including stress management counseling, weight management guidance and insurance medicals. Staff are appropriately qualified and all major medical aid schemes are connected on-line. The tripartite alliance looks set to combine the convenience of a wide service offering with the assurance of professional delivery.
So what’s the down side? Retailers repeatedly cite a woeful shortage of pharmacists to help them realise their dispensary ambitions. But that’s a different matter altogether.
And current conditions favour such an expansion of diversification. Single exit pricing, which puts a cap on the mark-up of drugs, poses a much smaller threat to the big gun retailers than it does to health and beauty specialists. And ongoing uncertainty about future regulatory legislation makes it that much easier for the likes of Pick n Pay to consolidate its share of the market. Bigger is better applies here and now. Couple the greater ability to be price-flexible with the consumer’s tough economic environment and you have a distinct advantage.
Another, probably inestimable, benefit of the in-store pharmacy is its generation of additional customer traffic. Shoprite, the grocery retailer that has invested the most in its pharmacies, has attributed a 33% increase in foot traffic to these additions. Woolworths might expect the same outcome from Pharmacy+ , the result of its partnership with the Netcare Group.
And, for those who claim they prefer personal specialist attention to ‘mere’ convenience, Pick n Pay has an answer. The retailer’s partnership with the Medical Nutritional Institute and pathology group, Drs. Du Buisson, Bruinette and Kramer, has brought to life an extension of its conventional in-store pharmacy clinic. The new concept primary care clinic, just launched in the Woodmead Hypermarket, boasts a multi-service offering in which conventional services like screening tests are strengthened by value-added options including stress management counseling, weight management guidance and insurance medicals. Staff are appropriately qualified and all major medical aid schemes are connected on-line. The tripartite alliance looks set to combine the convenience of a wide service offering with the assurance of professional delivery.
So what’s the down side? Retailers repeatedly cite a woeful shortage of pharmacists to help them realise their dispensary ambitions. But that’s a different matter altogether.
Shaking Shrink
Last week, major food retailers Pick n Pay and Shoprite reported a distinct shift in the ‘contents’ of shoplifting perpetrated in their Western Cape stores. Luxury goods, like clothing and electronics appear to be losing their popularity in relation to basic necessities – food and everyday household items. The shoplifters’ motivation is becoming less about greed and more about immediate urgency. And it comes as no surprise.
But the shift also presses retailers to re-visit measures against the die-hard problem of shrinkage. The Loss Prevention Conference, held in May, reported that retailers suffer an average loss of 5% of their overall income annually. And there’s finally consensus that simply placing a security guard at the store entrance is woefully inadequate to the task. What’s needed is an integrated, properly managed shrinkage reduction programme that makes optimal use of human collaboration and technological intervention.
On the floor, the introduction of system checkers along the reception channel has proved effective in reducing losses. The requirement of multiple signatures on the delivery documentation – those of receiving clerk, system checker and system checker principal – ensures much tighter control of inbound stock. A more specialised link in the system is the “Hot Product Controller”. Guardian of more sought-after and more valuable items, he tracks the movement of goods from the point of delivery to the shop floor.
Technologies like CCTV may not be new, but they can be better managed for a better intelligence output. The employment of specialist operators and their co-operation with trained detectives effects a shift from passive to active so that maximum gain is squeezed from the application.
Security is a grudge spend for all of us, but for the retailer it’s also a running cost with built-in savings. Indeed, retail security has achieved the unofficial and unfortunate status of business function.
But the shift also presses retailers to re-visit measures against the die-hard problem of shrinkage. The Loss Prevention Conference, held in May, reported that retailers suffer an average loss of 5% of their overall income annually. And there’s finally consensus that simply placing a security guard at the store entrance is woefully inadequate to the task. What’s needed is an integrated, properly managed shrinkage reduction programme that makes optimal use of human collaboration and technological intervention.
On the floor, the introduction of system checkers along the reception channel has proved effective in reducing losses. The requirement of multiple signatures on the delivery documentation – those of receiving clerk, system checker and system checker principal – ensures much tighter control of inbound stock. A more specialised link in the system is the “Hot Product Controller”. Guardian of more sought-after and more valuable items, he tracks the movement of goods from the point of delivery to the shop floor.
Technologies like CCTV may not be new, but they can be better managed for a better intelligence output. The employment of specialist operators and their co-operation with trained detectives effects a shift from passive to active so that maximum gain is squeezed from the application.
Security is a grudge spend for all of us, but for the retailer it’s also a running cost with built-in savings. Indeed, retail security has achieved the unofficial and unfortunate status of business function.
Going Uptown Downtown
Woolworths clearly has an eye (and the guts) for opportunity. In a bid to cash in on the resurrection of the Jhb city centre, the group will open the first Woolworths ‘Micro’ Food store on Harrison Street at the end of September. And, based on its success, the group says it will open similar stores in other South African cities.
The gradual return to the city of top-notch businesses during the last few years, coupled with planned improvements in public transport – Gautrain and Rea Vaya bus rapid transit (BRT) – look set to re-create a substantial inner city workforce with purchasing power to match.
The convenience store will be located in the same Amdec Property Developments building as several companies, giving those co-tenants doorstep proximity and shopping convenience. The building itself is situated within walking distance of the government precinct and the Gauteng Legislature building. It’s an egg waiting to be fertilized.
Stocked with lunches and prepared meals, as well as basic groceries, the 500m2 store will service the needs of that human concentration, making it unnecessary for them to make food stops en route home.
There is also a concerted effort, on the part of both government and the private sector, to draw residents back to the CBD. This has taken the form of new housing estates and the conversion of old and neglected buildings to stylish apartments. That residential community could also come to play a vital role in the long term viability of the undertaking.
The gradual return to the city of top-notch businesses during the last few years, coupled with planned improvements in public transport – Gautrain and Rea Vaya bus rapid transit (BRT) – look set to re-create a substantial inner city workforce with purchasing power to match.
The convenience store will be located in the same Amdec Property Developments building as several companies, giving those co-tenants doorstep proximity and shopping convenience. The building itself is situated within walking distance of the government precinct and the Gauteng Legislature building. It’s an egg waiting to be fertilized.
Stocked with lunches and prepared meals, as well as basic groceries, the 500m2 store will service the needs of that human concentration, making it unnecessary for them to make food stops en route home.
There is also a concerted effort, on the part of both government and the private sector, to draw residents back to the CBD. This has taken the form of new housing estates and the conversion of old and neglected buildings to stylish apartments. That residential community could also come to play a vital role in the long term viability of the undertaking.
Eating in
Last month, Woolworths launched its new wine bar at its V&A store. This chic, European-style café is the first of its kind, but it’s also an upward extension of the in-store dining concept that is fast gaining ground – and popularity - in South Africa. Woolworths has initiated the trend, and currently operates 36 in-store cafes across the country.
The in-store café is so much more than another eating alternative in an overcrowded shopping centre. Managed correctly, the relationship between the brand’s food retail and foodservice enhances the customer’s perception of the food on offer – its variety, quality, preparation and freshness. It also gives the retailer the opportunity to demonstrate to greater extent and effect its customer service. For a while, the customer-turned-patron finds himself before a business-in-action performance, the quality of whose output is immediately discernible. The retailer has a captive audience of real and potential shoppers.
It’s a no-brainer that all the food and drink on the menu is available in-store. In-store dining offers the retailer an effective method of sampling products and building sales. It’s all about a synergistic dynamic. First World department stores may insist on placing their cafes on the top storey, exposing customers to as much store merchandise as possible. Not so Woolworths, whose cafes are strategically positioned adjacent to the food quarter.
The in-store café is the next stage in the product lines’ evolution, and it adds to the customer’s options. Depending on his mood and schedule, he can purchase food in-store for home preparation, make use of the “to go” and self-service facilities or sit back and enjoy table service.
Another pro of the retailer café is its almost automatic generation of additional in-store traffic (although it’ll be interesting to see whether the Woolies wine bar becomes a destination in its own right).
One of the challenges retailers face when creating a food service facility is deciding on its size. Rent is high, space is at a premium and retail space is always going to generate more income than foodservice. At the same time, the in-store cafe is perceived by the customer as an added value offering, and it procures for the retailer exactly that – value.
Marketing tool, product showcase, mark of hospitality, business extension – such is the versatility of the in-store ‘diner’.
The in-store café is so much more than another eating alternative in an overcrowded shopping centre. Managed correctly, the relationship between the brand’s food retail and foodservice enhances the customer’s perception of the food on offer – its variety, quality, preparation and freshness. It also gives the retailer the opportunity to demonstrate to greater extent and effect its customer service. For a while, the customer-turned-patron finds himself before a business-in-action performance, the quality of whose output is immediately discernible. The retailer has a captive audience of real and potential shoppers.
It’s a no-brainer that all the food and drink on the menu is available in-store. In-store dining offers the retailer an effective method of sampling products and building sales. It’s all about a synergistic dynamic. First World department stores may insist on placing their cafes on the top storey, exposing customers to as much store merchandise as possible. Not so Woolworths, whose cafes are strategically positioned adjacent to the food quarter.
The in-store café is the next stage in the product lines’ evolution, and it adds to the customer’s options. Depending on his mood and schedule, he can purchase food in-store for home preparation, make use of the “to go” and self-service facilities or sit back and enjoy table service.
Another pro of the retailer café is its almost automatic generation of additional in-store traffic (although it’ll be interesting to see whether the Woolies wine bar becomes a destination in its own right).
One of the challenges retailers face when creating a food service facility is deciding on its size. Rent is high, space is at a premium and retail space is always going to generate more income than foodservice. At the same time, the in-store cafe is perceived by the customer as an added value offering, and it procures for the retailer exactly that – value.
Marketing tool, product showcase, mark of hospitality, business extension – such is the versatility of the in-store ‘diner’.
Friendly fire
In his report on the cabinet meeting held last week, President Mbeki announced the approval of a draft framework for a national food control agency. It’s an effort to address and contain the negative repercussions of a global price spiral phenomenon, with the poorest of the poor top of mind.
The idea is to fight fire with fire: a formal and institutionalized counter-attack against a less orderly – but no less formidable - systemic conundrum. In theory, the agency will serve as an internationally-seeing watch-dog, and posit appropriate and timeous government interventions.
But it’s not so clear-cut.
The Agricultural Business Chamber has been swift to call for greater clarity on the proposal and to voice its concern about the dangers inherent in direct market interference. They favour immediate measures to assist the hardest hit and tariff adjustments going forward.
In support of the proposal, Mbeki cited the success of the collaboration of the last pricing committee with a major food supplier in driving down the price of a basic food. His reference strikes an uncomfortable contradiction with the Competition Commission’s insistent finger-pointing at price colluders in the food industry. What’s more, it’s the basic food producing sectors – milling, milk and poultry – that have been implicated. How’s that for an unfortunate symmetry? Perhaps Mbeki’s “war room” should check on its arsenal before making any war declarations or enemy advances, especially if it’s to enter the battle without a sting in its tail.
The idea is to fight fire with fire: a formal and institutionalized counter-attack against a less orderly – but no less formidable - systemic conundrum. In theory, the agency will serve as an internationally-seeing watch-dog, and posit appropriate and timeous government interventions.
But it’s not so clear-cut.
The Agricultural Business Chamber has been swift to call for greater clarity on the proposal and to voice its concern about the dangers inherent in direct market interference. They favour immediate measures to assist the hardest hit and tariff adjustments going forward.
In support of the proposal, Mbeki cited the success of the collaboration of the last pricing committee with a major food supplier in driving down the price of a basic food. His reference strikes an uncomfortable contradiction with the Competition Commission’s insistent finger-pointing at price colluders in the food industry. What’s more, it’s the basic food producing sectors – milling, milk and poultry – that have been implicated. How’s that for an unfortunate symmetry? Perhaps Mbeki’s “war room” should check on its arsenal before making any war declarations or enemy advances, especially if it’s to enter the battle without a sting in its tail.
Downgrading for Success
Food retail is a fierce battleground at the best of times, but a combination of inflation, steady interest rate hikes and an all-consuming credit crunch presents a formidable challenge. Against that backdrop, the discounted price approach is proving to have real resonance with hard-pressed families, and it’s already paying dividends for some retailers. In a bid to gain market share, Shoprite cut its margins on basic foodstuffs for the six months to December. That lower price positioning has been instrumental in the retailer’s customer transaction increase of 10,3% announced at the end of June. Pick n Pay, always ready to fight the good fight, is subsidizing basic food items like bread and potatoes, while even upper-end retailer, Woolworths, has acknowledged the need for certain price adjustments. In its trading update for the 53 weeks to June, the retailer recognized its customers’ “spending pinch” and announced a reduction on entry level prices.
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