We asked some of the HSO Retail experts, Hector Hickmott, Business Development Director; Peter Sharpe, Enterprise Architect; Barry McKendrick, Head of Retail Practice; and Simon Sholl , Retail Consultant, to reflect on some of the challenges that our customers have faced this year, from a retail and consumer perspective, and how they anticipate these impacting the future.

In the past, it has taken a decade, or even longer, for game-changing technologies to evolve from just cool new things businesses would like to have, to must-have business productivity drivers. The COVID-19 crisis has sped up the transition, in areas such as AI and digitisation, by several years. A McKinsey survey*, published in October 2020, found that companies are three times more likely than they were before the crisis, to conduct at least 80 percent of their customer interactions digitally.

ACHIEVE EFFICIENT ONLINE ORDER FULFILMENT

Over the past year, there has been a massive shift from traditional “bricks and mortar” retailing to online. One of the major challenges has been the fulfilment of stock to satisfy demand. A traditional model may be a centralised warehouse, replenishing stock directly to stores all over the country. To try and predict that demand and fulfil orders has been very challenging.

“At HSO, we been working with our customers to help facilitate this”, said Barry McKendrick. “We have reduced, or almost cut out the amount of time that inventory spends in the distribution centre. We’ve done this in two ways. In Microsoft Dynamics 365 Supply Chain and Stock Management, there is functionality that allows for direct supplier to store delivery, therefore cutting out the warehouse and shortening the lead time of getting stock to the customers. Another way is by using Distributed Order Management, a multi-channel click & collect piece of functionality, which means that the retailer is able to satisfy demand in any store, from any store. So, they don’t have to hold lots of inventory in their warehouse; they can set up rules and logic in the system, which means that if a store doesn’t have stock, it can get stock from the closest store”.

BUILD STRONG ONLINE CUSTOMER RELATIONSHIPS

During the COVID-19 pandemic, customer engagement and the way retailers maintain and build their customer relationships has been bought into sharp focus. “A lot of retailers have a large store network and they’ve used that to build and maintain relationships with the customers that come in to visit them. When they lose that physical touchpoint, a lot more of the relationship building has to be systemised”, said Peter Sharpe. The businesses that have done particularly well over the last year are the ones that have gained a very firm grasp of the customer relationship, are able to provide the right levels of service, and engage with their customers effectively through online channels; whether that’s indirect marketing, social media, events and collaboration, or whether it’s through provision of services through their website and their Customer Service department. Sharpe continued, “We’ve seen quite a lot of enquiries coming from our retail customers about how they enhance the customer engagement piece much more online, rather than the previous store-based models that they had traditionally relied upon”.

TURN YOUR RETAIL STORES INTO A DISTRIBUTION CENTRE

The role of the retail store has changed, and one of the major challenges for a retail business has been when stores have needed to close due to the COVID-19 pandemic. “If you’ve got stock in the stores but the stores are closed, you can still use that stock to fulfill your online demand; and having the systems in place that allow you to do that is important”, said Simon Sholl .

“When stores have been open during the pandemic, changing rooms have remained closed, so whether customers buy in-store or online, they often end up buying multiple size options to try on at home”, said Hector Hickmott. “The online element of retail has grown significantly. Some of our retail customers say their online business has gone up somewhere between 200-800%. So those two reasons combined have seen a huge rise of goods being received back into the warehouse. The impact of this on a customer service team is significant, particularly when you layer onto this the fact that they were traditionally office-based and able to communicate face-to-face with each other, and with the warehouse etc., and are now all working remotely”. Hickmott continued, “Whilst there is an upside, it’s also been hugely difficult to manage that upside in a way that gives the customer the experience they are used to; and to do it in a scalable way”.

CONSUMER BEHAVIOUR PRE & POST CRISIS

We have learned a lot during the past year about consumer spending behaviour and habits. Last year, demand was based upon having a normal level of orders through the summer. “Retailers used the previous year’s levels and took whatever their growth targets were when planning”, said Hickmott. “As a result, during the pandemic, retailers saw high stock levels, with the bulk of their sales outlets being unable to sell the stock. The stock was then in the wrong season and some retailers had to take on additional overflow warehouses and restyle some of their products.” He continued, “It really has been a mixture of challenges during the past year that retailers have had to deal with, that on the face of it, weren’t immediately obvious”.

Over the next few years, the retail industry will transform to meet the needs of the consumers who expect personalisation, societies that demand sustainability, businesses that are adapting to new economies, and a future of global upheaval that demands resilience. Not all was bleak in business last year. One study found that successful companies had one thing in common: an accelerating pace of innovation. Now is the time to learn more, move forward and stay ahead by using the intelligent technology, such as the latest Microsoft Dynamics 365 business applications.

HSO works with some of the leading names in the retail industry such as AO.com. Find out how you can transform your business. Watch our Retail Recovery video series and book a complimentary Envisioning Workshop.

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*McKinsey Survey How COVID-19 has pushed companies over the technology tipping point–and transformed business forever | McKinsey