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Expert Opinion: Competing in today’s dynamic retail market place


Scott Gillies, Director of Retail, Asia Pacific, Manhattan Associates

The retail landscape is undergoing a major transformation and retailers that don’t make fundamental changes will at best continue to lose market share or worst will simply disappear. There’s no question, retailing is tough. Between frequent inventory turns, unpredictable weather, viral styles, and flat-out duds, retailers are constantly walking the line between having too much or too little inventory.

All too often, stock can end up being in the wrong place when there is a demand spike in one location – and the supply chain can’t redirect the inventory to that location quickly enough. Brick-and-mortar retailers don’t have to stick with old traditions, processes and systems. They can gain the necessary agility they need to increase sales, margins and customer loyalty – by embracing omni-channel retailing.

The trend towards more online retailing and omni-channel retailing varies considerably across the different countries of the ASEAN grouping. Taking one of these as an example - Malaysia - shoppers here are becoming more digital savvy, and online shopping is now considered ‘mainstream’.

In fact, recent research suggested that 68 percent of Malaysian consumers would shop on their mobile devices during the holiday season just passed. Indeed, Malaysia's rapid smartphone penetration – at 63 percent in 2013 (compared to 47 percent in 2012) also motivated retailers to seek alternative advertising channels, such as leveraging Instant Messaging platforms.

The biggest challenge, however, for retailers is the rising cost of living that has evidently affected Malaysians' purchasing power. The price hike for foods, services and petrol is likely to affect the growth of Malaysia's retail industry.

This reduced purchasing power puts more pressure on pure-play brick and mortar stores, not just in Malaysia but in other countries across the region, to transform the way they engage with and sell to their customers to remain successful.

Instead of worrying about this short-term setback, retailers should focus on implementing strategies that will benefit them in the long run. After all, price is not the only factor-keeping consumers from coming back to the store. Products need to be available to customers when they want them and delivered wherever is most convenient.

We are now in an era of omni-channel retailing which is making companies rethink retail from the ground up. The digital and mobile revolution has placed buying power in the hands of the consumer in a way we have never seen before. A commerce revolution is underway and consumers are demanding a personalized experience, wherever they are, however they choose, from online to mobile to in-store, adding increased pressure on retailers.

While many traditional pure-play brick and mortar stores are slowly adopting omni-channel practices in the hope of competing with both local and international online retailers, the challenge isn’t just about competing with Lazada, Rakuten, eBay or even Amazon. Now, it is about retailers getting closer to their customers, their preferences, their purchase histories and their preferred point of commerce.

To support such an approach, brick and mortar retailers need to re-assess the role of stores, people and technology as they seek to fully embrace the omni-channel challenge. This includes:

1. Leveraging stores – stores and shop-floor staff offer the greatest competitive advantage against online retailers. When executed correctly, retailers can create a positive, seamless shopping experience every time a consumer enters the store. With the right systems and with smart devices to provide comprehensive information about competitive pricing, product availability and alternative products, the shop assistant can become a critical asset in helping create an in-store experience that cannot be replicated online.

2. Visibility of the customer and their orders as well as available inventory in a single view – success is about building and turning relationships into revenue. You can’t sell what you can’t see.

3. Breaking away from the siloed mind-set – retailers can no longer think about the on-line and off-line world independently.

4. Investing in enabling technologies – the web front-end is only the beginning of the story. Retailers have been preoccupied with creating great-looking websites and customer-facing systems. But to be truly omni-channel, retailers need to be able to execute on the promises made on their websites. This is about solving the most complex problem - optimizing fulfillment and service excellence - and is where profits and losses are counted.

With pure-play online competitors capturing customers with low prices and wider assortments, omni-channel retailers must draw on their strengths - the myriad customer touch-points at their disposal - by leveraging their people and intelligent core infrastructure technologies to enable omni-channel convergence.

Only with this core can they hope to bring together all the tools at their disposal and excel in servicing the customer and creating an unparalleled shopping experience.

Scott Gillies is Director of Retail, Asia Pacific at Manhattan Associates. Having worked at Manhattan Associates for more than 15 years, Gillies recently joined the local Australian team from the company’s headquarters in Atlanta. Gillies is responsible for supporting uptake of the company’s retail offering, Manhattan Zero Disappointment Retail™ throughout Australia, New Zealand and the broader APAC region.

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