Talking Retail Technology

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The Alternative Consultancy

In the modern age technology is an integral part of almost every business. In the retail industry where efficiency is critical retailers have been early adopters of technology, many innovations used in other industries have been developed specifically to address problem areas in the retail supply chain. This is a trend that will no doubt continue and while developments in many of the processes of retail - logistics and point of sale – are slowing there is much activity in the “soft” elements such as marketing and customer interaction.

Recently, the Intel Corporation launched its Connected Store concept in New York. Dubbed by some as ‘the future of retail’, it looks to show off the best of current technology and how it could affect retailers and consumers alike.

Using various Intel processors makes it possible for retailers to integrate several services, monitor statistics with ease and offers the luxury of remote manageability. In addition to this, Intel has also unveiled the Intel AIM Suite, a video analytics technology for anonymous audience measurements, this enables retailers to monitor age, gender and length of attention of each customer in the store. If used properly information will revolutionise customer interaction as we know it. Imagine the possibilities for marketing and advertising teams.

Although widespread adoption and implementation may still be a way off, the point is that it’s coming. Retailers need to embrace the change and invest prudently in technology in order to ensure the long term sustainability of their business. The future of retail really is an exciting place for those with an open mind.

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The 3 core principles behind Pick n Pay’s restructuring campaign, Consumer Sovereignty, Doing good is good business and Business Efficiency, are simple and straightforward and it follows that they therefore should be easier to affect and maintain. At the heart of the restructuring, as always with Pick n Pay, is the consumer and how their experience and interaction with the brand can be improved.

One the biggest changes is right at the top as the current Exco and Retail Management Board and Group Enterprises Board make way for a Group Executive consisting of accountabilities in Marketing and Sustainability, Buying, Operations, Supply Chain/IS, Franchise, Group Enterprises, Finance, HR, Transformation and Customer.

These are only the latest in a series of changes which began implementation in 2006. CEO Nick Badminton cites the most notable change as the fact that they are now a “more focused operation, having converted the Score stores to Pick n Pay and announced our intention to sell our Franklins operation in Australia.”
In addition, they have made substantial investments towards efficiency and sustainability. In terms of the latter, the retailer announced its intention to commit to zero waste to landfill by 2015 and dramatically reduce carbon emissions.

With regards to the sale of their Franklin’s operation, unfortunately the Australian Competition and Consumer Commission has chosen to oppose the proposed sale, claiming that if successful the deal would negatively affect competition in the retail sector. Furthermore they also cited an expressed interest in acquiring the Franklins chain by “unnamed parties.” Pick n Pay CEO, Mr Gareth Ackerman was surprised and disappointed by the decision and insisted that the sale of Franklin’s to Metcash would be in the best interests of Australian consumers.

Ackerman commended Badminton for his efforts and added that, “his restructuring is an important part of the total strategy of Pick n Pay. It positions us very well for the future.”

With all the changes in the pipeline it looks like Pick n Pay have a bright future however, some the sparkle may be lost if Franklin’s continues to weigh down the domestic giant. The sale would go a long way towards funding the extensive restructuring and without it said plans may have to be put on hold.

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Innovation is key to survival in any industry. It is what keeps a product in the market, what keeps some competitors on their toes and others on top, essentially it is what drives a business forward.

Recently, I was among a number of privileged guests to attend the latest of TNS Research Survey's Breakfast series presentations where speaker Ray Crook, TNS Asia Pacific, Middle East and Africa Director for Innovation and New Product Development, addressed the issue.

Out of the blocks Ray hit us with some numbers: $190 billion is spent on the technology sector and $19 billion spent in the consumer sector; 90% of executives have come to the realization that innovation is crucial to building inertia; and over 90% of consumers have unmet needs. Apart from being an eye-opener this also revealed converging points in the market, most notably that executives and consumers have a large overlapping interest which could be mutually beneficial.

However whenever engaged in innovation there are certain risks, least of which is product failure. There is also a large personal risk for the creative team, if an innovation fails this could potentially be career limiting. Thankfully, Crook offered some advice to avoid this. Top of list, an obvious but often overlooked step: do your homework. Find out what the needs of the consumers are, look for future gaps, what are the must have elements for the innovation. Furthermore, he advises a move away from the mass approach strategy to a more focused and targeted approach, when it comes to retail, everyone is not equal; consumers have different wants and needs, different levels of income, different priorities.

Once a consistent need has been determined, a focused approach must be taken and detailed briefs, for strategy and continuity, must be drawn up. It goes without saying that original ideas are very important, but it is just as important to recognize exactly what consumers want, or more accurately what they need. They don't necessarily want something that is unique to the point of alienation, or something that is so far ahead of the competition that it's confusing. It is also important to address the issue of timing, just because you have a ground-breaking product it does not mean the market is ready for it.

When it comes to launch time one of the most important factors is excitement around the product. This can be done at various levels: digital campaigns; traditional advertising; in store promotion; word of mouth. The latter has proven to be very useful, shown to be twice as effective as traditional advertising. Get the word out, it's the only way to move your product.

Innovation is a fascinating industry and is among a small number of universal factors that account for the success of any venture. Therefore, familiarizing oneself with the subject matter is not merely an option but rather a necessity.

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Foodco's got game
This week marked the official launch of Game’s new ‘store-in-a-store’ concept with the opening of Foodco, at their N1 City outlet. After 4 decades of delivering “quality general merchandise and non-perishable groceries for home, business and leisure,” Game has earned a reputation as a quality discount retailer, and Foodco is no exception.

The vision is simple and straightforward, Foodco is a mean, lean one stop grocery brand. No frills, no fuss. After conducting extensive research, across the country, with numerous candidates, the brains behind the new brand came up with their new strategy and it can be summed up in four words, which is also the brand’s philosophy: fresh; fast; easy; value. And that’s exactly what you get. New stock will be delivered daily and Foodco’s private label, which goes by the same name, provides a host of alternative options to your favorite purchases at unbeatable prices.

Now, before anyone starts being cynical and pointing fingers and Walmart, stop. This project was in the pipeline before any foreign investment talks were even a whisper. So, hats off to Tyrone Vieira and Richard Millson who were in large part responsible for driving and launching the new brand. This is big step to take, and it goes without saying that the risk is also sizeable, but sticking to Game’s value driven guarantees, it’s hard to see how this could fail.

In addition to the new grocery brand, Game are also introducing Liquormart, stand-alone stores which will be found outside various Game and Foodco stores. Liquormart will offer an extensive range of alcoholic beverages at discount prices.

The launch only took place a few days ago, but the store has already been open for just over a week and to call it a roaring success would be somewhat of an understatement. A colleague of mine whose mother lives in the area, reported that she had been to the new store intending to do her grocery shopping only to find hordes of shoppers already swarming the new discount outlet!

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Retail trade sales rose by 4.6% in August 2010 compared with the same period last year, according to data released by StatsSA on Wednesday. The growth, although positive, is in stark contrast to many predictions. Yet, it was not completely unexpected, "the slowdown I think is more than what one would have anticipated, obviously part of the slowdown is the fact that it's post the World Cup, and there is no doubt that the World Cup did boost sales from May," said Kevin Lings, Chief Economist at Stanlib, to Reuters. This easing of sales has been anticipated for several weeks in large part due to the deflation of the post World Cup sales bubble.
In other data released by Stats SA, it was seen that retail sales grew by 6.7 percent in the three months to August, compared with the same period a year ago, also at constant prices.

In the manufacturing sector the atmosphere is equally glum as factory output only rose by 5.3%, a much steeper decline than anticipated when compared with the same period last year. During the month of August production fell 3.6%, a large part of the dip being attributed to the strike in the automotive sector.

Pick n Pay are having a tough week as they juggle local and foreign situations. In Australia the outlook is still uncertain with regards to the proposed sale of their Australian based Franklins business to Metcash. On Monday, Pick n Pay provided an update of their dealings down under which included an alternative exit strategy. The latter was partly due to the complications the South African retailer was having with the Australian Competition and Consumer Commission (ACCC). “The alternative exit strategy is the sale of the Franklins stores and other strategic assets individually or in groups via a tender process.” On the domestic front they’re facing some 27000 employees who are preparing to go on an extended strike after their wage demands were not met.

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