Published on November 22, 2017 in Retail • Digital Transformation

If there’s one thing I learned from my time at Fujitsu Forum 2017, it’s that the retail world has fundamentally transformed and so has the way technologists talk about it.

And it’s still got a long way to go.

Our research earlier this year already uncovered much of the changes happening on the high street. The shoppers and retail employees we surveyed said technology does speed up the service they receive and gives them access to more information and personalised offers.

But they also called it too slow, unreliable and immobile, with consumers saying they’d choose a brand like Amazon or eBay over traditional names if the former opened shops on the high street.

With high street sales dropping at their fastest rate since the height of the recession, it’s clear something has to give.

And investing in the right technology now could be the answer.

With this in mind, I’m going to explore some of the most interesting retail insights I saw and heard throughout the event.

Customer experience matters more than ever

The days of competing on product or price alone are long gone, whichever industry you work in.

For the most part, products can be replicated, and the various price wars throughout the years have already taken a big chunk out of traditional retailers’ profits.

The only way to truly differentiate your brand today is through the experience you give to your customers – not just when they walk into your shop but every time they interact with your brand.

But today there’s an endless list of places those interactions could happen: social media, online ads, phone calls, face-to-face interactions, blog posts or even the copy on your packaging.

It’s an enormous challenge, but when you start digging into the research you can see why retailers are so keen to crack it.

Market researchers Forrester compared five pairs of companies over a period of five years up to 2015. One of the companies in each pair had a much higher customer experience score than the other based on Forrester’s own index.

In all five pairs, the company with the higher customer experience score achieved higher revenue than the other. Collectively, these companies also grew 14% faster than the lower-scoring companies.

This isn’t just marketing fluff – it could be the difference between outperforming your competitors or watching them leave you behind.

Jat Sahi certainly seemed to echo this sentiment during his talk on customer experience.

“Customer experience is often viewed as woolly,” he said. “And it’s also only seen in today’s terms. We need a much more holistic way to think about it.”

The thing slowing digital transformation down in most industries, he argued, is the fact that business and IT people aren’t talking to each other about the experience being offered to customers.

The future of retail is extremely uncertain, for instance, and unpredictable from one month to the next. Yet IT departments want to plan a two-year roadmap of technology investment.

This creates a conflict of long-term vs. immediate needs, but it’s crucial to get the latter right or you risk alienating your customers. When people are used to receiving products or services on demand, they’ll vote with their feet if expectations aren’t met.

Another nuance retail brands often miss as they create their customer journey is the difference between visible and invisible needs, Jat argued.

Visible needs could be anything from price to convenience.

But invisible needs include things like a sense of identity or belonging or the need for reassurance.

You take your kids to Clarks, for example, because you want to be seen as a good parent. You shop in Waitrose because you want to feel more successful.

As Jat put it: “I use a particular brand because it’s for people like me.”

Addressing these invisible needs early on is crucial to creating a customer experience that puts you ahead of your competitors, Jat said.

“Humans can only belong in so many places. Once Marks and Spencer has you, it can be very hard for their competitors to win you over.”

So what’s the key to achieving this hallowed position? Jat suggests data holds the answer, but it’s not just about collecting it.

“Everyone is getting closer to their customers,” he said. “We all have data. But you have to use it properly.”

One example he called out was using data to find out who’s most likely to complain. Then you can be proactive, targeting those people directly before they get to that stage.

He also talked about customer segmentation – splitting people into groups based on age, income and other factors and targeting them in a more personalised way.

“If you target the same people again and again with the same message it won’t work,” he said. “But segmentation allows you to change the message and the medium depending on who they are and what they like.”

Back office is the new front office

One talk I found particularly interesting was on Coop Norge’s journey towards enterprise service management.

OK, that’s perhaps not the sexiest of phrases on paper – but hear me out.

For the second-largest grocery retailer in Norway, with 5 billion euros in revenue and 28,000 employees, creating a strategic plan for managing services is a giant and important leap.

Coop Norge now has a fully automated warehouse with professional shared services throughout the business, and the heads of its enterprise business support systems and portfolio shared service functions – Anne Kristine Næss and Lise Hugdahl – were at Fujitsu Forum to explain how and why they did it.

The why stems from the huge complexity the brand had to deal with.

There are huge geographical distances between some of the stores. Each outlet has its own preferences ranging from hardware to groceries, and none of those stores talked to each other.

This created huge differences in processes and service levels depending on where that store happened to be.

And that complexity bled into other areas too.

Back in 2013 when this whole process began, there were 30 different points of contact with different opening hours.

Now that’s down to a single point.

So how did the company achieve such a feat?

The first step was gaining a view of everything happening across the organisation – a single view that clearly showed the gaps that needed to be filled.

For Anne and Lise, this meant redefining their roles.

They started holding user forums for customers and Coop members to help them uncover any problems.

It’s hard to open up your flaws and bad numbers to customers like this, they said, but it’s been instrumental in helping them improve.

From there they were able to establish common governance structures and service management tools across the company in a way that actually answered their customers’ problems.

But how did Coop Norge’s employees feel about such sweeping changes?

Naturally, opinions varied – some were keen to engage with the process while others simply ignored it.

But there were plenty of discussions at every level to ensure as few people as possible felt alienated by the transformation.

Then there’s the question of measurement. How do you know if such a massive transformation has actually had a positive impact?

You can’t just measure it by revenue, Anne argued, because that can come from any number of factors.

Instead, she said, they measured customer satisfaction at store level – how people felt the shop looked, whether they were happy with the prices, service and so on.

Another metric they used was the extent to which they could reduce the number of people needed to man the IT service desk.

In the past two years, they’ve cut that figure by 10%.

I found this whole talk really interesting, and it’s a great case study for showing how the right application of technology can simplify even the most complex and disparate organisations.

Surely this is the way all supermarket chains will need to go if they want to stay competitive in the coming years.

Reactive IT is no longer an option

One of the key messages to come out of Fujitsu Forum generally this year was that IT is now fundamental to moving a business forward.

In retail, this is a particularly important point. Today’s consumers have a much lower tolerance for failure than they once did. They expect things to work at all times, and they expect things to happen quickly.

In fact, ‘a timely response’ ranked higher than efficiency or professionalism in a recent customer experience survey by Interactive Intelligence Group.

As I mentioned earlier, e-commerce brands have already set the bar high when it comes to meeting those expectations.

The top online retailers are all designed to make the journey to purchase as fast and painless as possible. But in many ways, the high street hasn’t achieved the same.

But we have been making some progress, and one exciting new area is the use of augmented reality to create a ‘self-fix’ environment. Fujitsu’s intelligent engineering offerings manager Ellie Theaker was there to explain what this means.

She showed us how you can use the camera from a phone or tablet combined with an app to get advice about an engineering problem in real time.

Point it at a broken chip and pin machine, for example, and it will provide you with a list of common issues. When you click on one of those issues you get an overlaid, onscreen step-by-step guide on how to fix it.

Catching and correcting problems quickly in this way is critical in a sector like retail, Ellie said.

Not doing so can lead to significant downtime, which in a busy shop could have a huge impact on revenue and the overall customer experience.

And this idea of proactivity – as opposed to reactivity – in engineering is increasingly becoming the norm. Or at least it should be.

Ellie mentioned a large retail brand Fujitsu has been working with that wanted to improve IT efficiency.

During the monitoring process, we discovered much of the inefficiency was coming from reboots.

“If something freezes,” she said, “the first thing we do is switch it off and on again and hope for the best.”

But this is a huge issue in retail because a till can take up to 10 minutes to start working again.

“That might not seem much,” Ellie said, “but when we added it all up we realised this brand was losing 172 hours of productivity every day.”

Think about that over the course of a full year – it’s a huge amount of time. Clearly, something had to be done.

Ellie and her team fixed the problem by monitoring the reboots, capturing information and proactively providing it to engineers so they could investigate it.

In the end, they found the majority of rebooting tills had ventilation issues causing them to overheat and fail.

A simple fix in the end, but one that could have turned into something much more damaging had a proactive approach not been taken.

Intelligent packaging brings multiple benefits

One other area of retail I wanted to touch on is the idea of intelligent packaging – something that came up a few times at Fujitsu Forum this year.

As Fujitsu’s Ollie Anderson said in his talk on the subject, the three most critical areas in retail are:

Supply chain
Store operations
Customer experience

Intelligent packaging, he said, involves using the internet of things (IoT) to improve all three of those areas.

Stora Enso digital and business development executive Ville Volplo was there to explain a bit more about how intelligent packaging works and what it can do.

His company used traditional fibre packaging for decades, but for the past several years it’s been using RFID technology to create packaging that you can read from a distance using radio signals. In doing so, you gain specific data from that packaging.

Sotra Enso’s remit, Ville said, is to capture all that data in the cloud and then apply it to business applications that could help retailers and manufacturers.

One interesting use case he mentioned was real-time inventory management and product information.

Many manufacturers are already using it to keep better track of their supply chain, he said. But retailers could also benefit from being able to track products from warehouse to store.

It can also help you create deeper interactions with your customers in-store.

Shoppers can use their phones to connect with the packaging on the shelf, giving you an opportunity to communicate with them about that product or related items.

Collecting data in this way can also help with anything from managing your daily operations to improving product safety, Ville said.

This latter point is particularly interesting when you consider the impact counterfeit products can have on a brand – both reputational and financial.

Counterfeit goods cost the UK economy £17.3 billion and destroyed 72,000 jobs in 2016, according to research by the Centre for Economic and Business Research.

But with intelligent packaging, you can guarantee something is legitimate because every product will have its own unique code that can be traced all the way back to the factory.

It was an interesting talk, but Ollie was keen to stress one very important point if retailers want to make this work.

“You can’t do this on your own,” he said. “It has to be a true co-creation effort. You need to be working with lots of other companies in future to get the data working in the right way.”

***

Those were some of my highlights from the retail sessions at Fujitsu Forum 2017, and the things that really got me thinking as I made my way back to the UK.

If there was something you saw or heard that I haven’t covered, however, I’d love to have a conversation about it.

I hope some of this inspires you as we head towards 2018, and I look forward to seeing you all at next year’s event.

Head to our retail page to find out how we can help you with the above challenges and more

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