Omni-Channel Retail Forum Breakfast – October
Our latest Omni Retail Forum breakfast kicked off with a summary from our last meeting.
Mass marketing no longer works and no brand is sacred, think Nokia and Kodak and customers have fallen out of love with Tesco. Additionally the tension in the market place is mass-personalisation; everyone wants personalised products and services but at low cost.
Even Boots, with their huge resources, struggle to map the customer journey from purchase of fertility tests, to pregnancy test, to supplements then nappies. There is just too much data.
The winners will be the businesses that are able to enrich and simplify our lives, think Apple. (Who, when awarded international retailer of the year, engendered grumbles from the traditional retailers that Apple is not a retailer.) But as a business, Apple make tangible the concepts of enriching and simplifying our lives, not just through the product but within the store experience.
For most though, the biggest issue remains, how to manage big data to predict consumer demand and realise the opportunity to personalize offers. There are not enough data-analysis wizards, so is AI an inevitable and essential solution to the big data challenge?
80% of data sets are common
Bill Nowacki, managing director decision science, kpmg, kicked off the discussion with the proposition that there is a step in-between where we are now and AI.
He cited three projects with very different objectives but which produced some very interesting commonalities.
Asked to predict university leavers (a costly failure both in financial and societal terms), the team were able to build a model to include variables such as commute time, first in family to university, diet and other behavioral routines. They were able to predict leavers 90 days before announcement to leave.
Other projects were to underwrite risk in a bank and sales forecasting for Pret a Manger which included variables like distance from bus stops and zebra crossings.
It was found that 80% of the variables were common to predict results in all three studies.
Of course, one has to contend with the phenomenon that is, the half-life of facts; all data is perishable. Nevertheless the ability to hypothesis test is valid and much of the data is free and open.
Digital to the core – kpmg
In-store behaviour needs to be understood before models can be built to predict demand.
It is vital for businesses to build an agile experimental design mind-set and capacity. This test and trial mentality is missing in most business. And this needs to be owned by the business planners, statisticians, economist and analysts in the business not IT.
And the hypothesis testing itself should be owned not by the CFO or CIO but the Chief Digital Officer. Importing a disruptive experimental culture that genuinely places the customer at the heart of the business is key. Oasis fashion retailer is reported as saying out of 100 things they trial they are happy if 5 make it to the customer. Fail and fail fast as they say or more appropriately learn and learn fast.
But with businesses being so risk adverse data evidence is required. Mobile phones create the opportunity to really understand customer preferences. A truism for all research is that customers do not do as they say.
The challenge of course is the legacy systems that are holding back businesses. They are looking at what has sold, so promoting the same pipeline of product, a long way from predicting demand.
kpmg future performance chart
Agility may come with a price
Everyone understands the value of creating agile organisations able to respond to ever faster changing market dynamics. But beware, there is the law of unintended consequences.
One business (who shall remain nameless, Chatham House rules) responded to customer demand for a new fee structure, but their actual end user customers saw this as a negative, reacted emotionally and with their fingers, boycotting the system.
There may be a price to pay in being too agile or without built in time to test adequately.
Data, data everywhere
If we are swamped with data, the key issue is to tie it all together and deliver consistent experiences across every conceivable interaction with the customer.
Businesses actually need a digital story-teller rather than digital analysts. They need to be able to provide actionable insight. Data will inform a gut feel it is not possible to be 99% accurate in all predictions, business must settle for 70% and create a series of options to investigate and test.
The burning bridge is not hot enough. Until the heat is truly felt, these issues will not be addressed.
In fact, a more apt name for digital story tellers is customer experience planners. An interesting topic for next time.
I am provisionally planning the next Omni Retail Forum Breakfast for Thursday 14th April 2016, do let me know if you would like to join us.
Best wishes, Christine
Christine de Largy, Managing Director of Impact Executives, experts in interim management, is passionate about the digital transformation of consumer businesses. She hosts a retail forum to facilitate debate around the issues retail businesses today face and also sits on the management and advisory boards of IORMA, the International Omni-channel Retail Markets Association.
About Impact Executives Ltd Impact Executives is a leading interim management provider to organisations of every size in the UK and globally. Originally formed as a specialist practice within PA Consulting Group, over the past 25 years Impact Executives has helped over 2000 companies, including more than two-thirds of the FTSE 250 – find the very best executive interim management talent.
Clients choose to work in partnership with Impact Executives because of our proven ability to offer client’s immediate solutions to improve their organisation’s performance through identifying skills-gaps, business process reengineering (BPR), turnaround, restructure and growth.
With offices covering the UK, the Nordics, Europe, Asia Pacific and North America, Impact Executives is part of the global recruitment specialist Harvey Nash Group plc. Over the past 20 years we have given clients and interim managers the confidence that we have the resources, expertise and focus to deliver results – fast.
For further information on Impact Executives, please contact Steffany Young, Impact Executives, Tel: 0044 20 7314 2011 Email: firstname.lastname@example.org
When: October 22, 2015
Where: Home House
Contact: Christine de Largy or 0044 20 7314 2011