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Will crypto disrupt the retail industry?

Future of Retail Industry with Crypto POS supplychain payment returns Loyalty programs

Retail was one of the first and most disrupted industries by the emergence of the internet. What years later would be referred to as Web 1.0 drove exponential growth in remote selling with the eCommerce revolution. The arrival of Web 2.0 with social, mobile and SaaS was also very impactful, so much so that all of these innovations are now taken for granted and mainstream in the retail industry.

Some technologist now believe that Web 3.0 is the adoption of crypto for delivery of existing and new services. However this is not yet widely accepted as the next step for the Internet. The wild swings on the prices of coins largely impact the discussion on the potential utility of the technology. There are plenty passionate proponents and detractors. Add to that the leading industry in application is not retail but finance and the picture specific for retail is even less clear.

When most people think of crypto in retail, they think of the ability to accept Bitcoin as a tender. News of Tesla accepting Bitcoin for then stopping the acceptance of Bitcoin made headlines recently. With the price of Bitcoin moving up and down and being considered by many as an investment hedge against USD inflation it is unclear why would anyone use it to buy a car.

There are other use cases in retail which are more interesting. Arguably with far more potential to disrupt the retail industry:

  • Payments: this is indeed a wide potential area for disruption. Crypto should be able to provide anonymity and decentralization at scale for payments. Some services from DeFi (decentralised finance) will be made available to retail. While there are multiple approaches for feasibility, solutions around stablecoins are the most common. As of this writing there are already hundreds of different stablecoins in the market. Big retailers like Wallmart or El Corte Ingles might seek to create their own stablecoins while there are platforms available in which to develop solutions like Celo. Another utility is for consumers in developing countries. SkillNet worked in the last decade with retailers in Africa to introduce M-Pesa, which allowed for digital payments for people without access to a debit card. This new generation of solutions, over the next decade, will be able to extend the portfolio of financial services for those without or with limited access to traditional banking to include things like credit and insurance.
  • Personal identifiable information and loyalty systems: out of the Dapps (decentralised applications) being built at the moment, those that deal with customer information might prove most disruptive for retail. A key driver for retailers to unlock value is to provide a personalised experience. The main barrier of adoption, other than technology, is the initial disclosure and subsequent management of personal information with relation to privacy and security. Crypto can potentially provide the intermediate tier which enables personalization features without customer disclosing personal information or retailers storing such information. Combined with systems of reward which can also be blind to PII , this is an area for potential large changes. The business model for these applications in which selling customer data is not an option, remains to be seen. Loyalty systems based on blockchain are starting to emerge for other industries but are much less ambitious in leveraging a decentralised model.
  • Trusted supply chains: traceability in the supply chain through blockchain was perhaps the first enterprise use case widely in pursuit for Crypto. There have also been barriers to these solutions over the last five years. Schemes not being truly decentralised and open but being managed by large tech companies has been one. Another issue has been the link between proofs in the physical world and on chain proofs given the limitations of storage and the security considerations of the blockchain. Innovation to overcome these barriers is ongoing. The prevalent approach for implementation is to introduce smart contracts which have access to physical proofs through APIs that trigger on chain events. One example of these is Chainlink, which allows smart contracts on Ethereum to securely connect to external data sources, APIs, and payment systems .The scale of investment in these initiatives is already in the billions of dollars.
  • Receipts and return management: one way to easily classify blockchain initiatives in retail is to think of them as before or after customer purchase. For the latter, the creation of receipts and management of transactions is another potential area of disruption in retail. In a crypto solution, a receipt can be a token and a return policy a smart contract. Another potential approach is use of NFTs. Non-fungible tokens have raised in popularity due to outlandish purchases recently. These unique tokens can map to what today are serialised items in retail. In hospitality they could map to event tickets
  • Marketplaces: currently for a marketplace the authenticity and reputation of buyer and seller are critical for a particular transaction to take place. These are mainly driven by the previous activities of both users on the marketplace and the amount of data they are willing to share between them. Crypto can anonymise their identity and yet increase the security. It can also through smart contracts place proofs on the goods sold and hence change completely the technology and process that underpins these digital exchanges.

There are still technical barriers for the wide adoption of crypto but the investment in the sector and the amount of continuous innovation is impressive. The current performance limitations, high energy consumption and high transaction fees are barriers for this type of solutions but the use cases in which crypto has value could drive the innovation required to overcome them.

Some of the current limitations in crypto might need to be resolved before really going mainstream or the utility for some use cases just might win regardless at the end.

It is an exciting time to find out.

This Blog first appeared on Medium.

Photo by Stanislaw Zarychta on Unsplash

How do Modern Commerce Leaders justify investment and change?

This is the fourth blog in a series of four blogs( Read Blog 1, Blog 2 and Blog 3) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.

The last year has been challenging for almost every company’s bottom line. Even essential businesses like Grocery stores that saw a revenue lift, have also seen tight margins as labor and product costs rose. In this time of uncertainty, it may be hard to convince internal decision makers to make investments which will provide long term benefits.  

On a recent call, a client mentioned that they convinced a skeptical Chief Financial Officer (CFO) to invest in a new multi-million dollar app enhancement by simply demonstrating how easy it was to complete a purchase on a competitor’s mobile app, “within 5 minutes, because I was able to show how easily I could purchase a $30 Mr. Coffee Maker on my competitor’s app, I got the funding I had been asking all year”.

Change is often initiated as a reaction to market or competitive forces. However, a true Modern Commerce Leader is often trying to be an innovator, before these forces become apparent, and may not have the easy argument “our competitors are doing it”. In those cases, a more strategic approach may need to be taken to get stakeholders to agree to not only a major financial investment, but a commitment that their organization will adopt new operational process changes.

At SkillNet, we look at developing a Return on Investment (ROI) model as a 5-step strategic effort:

  • Step 1: Define Business Needs
  • Step 2: Identify Costs
  • Step 3: Identify Benefits
  • Step 4: Gather KPIs and Baseline Data
  • Step 5: Make a Decision

In our experience, getting a customer journey defined in step 1 is critical and its effort is often underestimated. The journey could be a new or enhanced process, but a trend we have seen accelerate over the last year is the re-platforming of existing journeys to new platforms. An example of this re-platforming is the replication of the in-store shopping experience through mobile applications. Retailers, across both softlines and hardlines, are offering virtual chats with in-store sales associates. Others are creating a curbside pick-up process that allows for complimentary sales to make up for the loss of impulse purchases that would normally happen in stores. Once these customer journeys are identified and mapped, potential solutions can be identified.

We also see many Retailers stumble when trying to see if their initiatives actually paid off. Hence we make sure to include a Step 4, where Key Performance Indicators are identified prior to making a decision. Below is a model for a recent ROI exercise just completed for another client which highlights the potential solutions based on the journeys and some key performance indicators we considered.

The major benefit of taking a more strategic view when justifying a project is the alignment you will gain from stakeholders. The benefits of this alignment include a common stakeholder understanding on how your customer’s experience will improve, the costs to get there, and what subjective and objective metrics will prove you made your innovation goals.

Watch the Webinar on customer engagement – Real Engagement is the new normal

Top three trends in customer engagement!

This is the third of a series of four-blogs (Read Blog 1 and Blog 2) from SkillNet on how Modern Commerce Leaders are adapting to the New Normal.  SkillNet defines a Modern Commerce Leader as a retail brand that is engaging customers through new customer journeys enabled by Technology. The flexibility and ability to adapt, provides these companies with a competitive advantage.  

Retailers are using customer engagement not only to weather the current economic uncertainty but also to build a sustainable competitive advantage. As we surveyed retailers, both essential and non-essential, we are seeing three trends on how Customer Engagement leaders are investing their dollars strategically:

  1. Building or enhancing existing mobile applications from a transactional to a relationship building platform
  2. Investing in offers and programs to build customer loyalty
  3. Offering additional fulfillment options that not only promote safety, but convenience

When it comes to the first trend, there are countless examples of Retailers investing in their mobile apps. When mobile apps first arrived, they were often just designed as extensions to the company’s website, but now mobile apps have their own distinct customer journeys. An example is Avocado Mattresses which offers scheduled visual chat sessions with store team members, mimicking the in-store shopping experience from the comfort of your mobile phone.

On a recent webinar I hosted, Scott Steever, Adjunct Professor at Fashion Institute of Technology, shared his story of how his local Fairway grocery store in Brooklyn quickly turned on functionality that allowed him to have a complete contactless grocery shopping experience in-store with his app: self-scan, self-checkout, and Apple Pay all through his phone. He noted, “I don’t know whether they were working on that ahead of time or they just really pivoted quickly, but in any case, it really made a difference in terms of the experience of shopping with Fairway. It greatly reduced the anxiety for me as a consumer during the early days of the pandemic in New York City.”

Loyalty programs have been around for years, but recent trends show retailers are looking for innovative ways to reward their customers. According to a 2020 Marketing Week survey, 29% of brands are re-budgeting marketing dollars to fund initiatives to maintain customer loyalty. This trend is evident in mobile application integrations to existing Customer Relationship Management (CRM) packages to tailor discounts and recommend complimentary products based on previous purchase history. Other brands such as Levi’s are offering a special concert series for their top customers while Sephora is offering special private beauty events.  

The third trend we are seeing in engagement is providing customers with additional ways to acquire a Brand’s products. Obvious additions to fulfillment options have been curbside or drive-up pick up. On a recent trip to Target after placing an order using their app and requesting drive-up pick up, I timed how long I had to wait before the team member came out with my order: 33 seconds, and this was during a snowstorm! In Q3, Target reported that 75% of digital orders were fulfilled from their stores.  This helped them reach some remarkable sales increases (19% same store sales), while starting the quarter with 3 % less inventory.  

Another example of fulfillment innovation is seeing brands partnering with each other. Even before the Pandemic, Kohl’s was offering Amazon lockers and in person return services. Another interesting example has been a test where select Walgreens’ stores are offering Kroger grocery drive-up pick-up services.  

Even when we return to pre-pandemic behavior, we believe these customer journey enhancements will continue to be adopted because of the convenience and safety they provide to the community and the improved profitability that these journeys realize for Modern Commerce leaders.

Watch the Webinar on customer engagement – Real Engagement is the new normal

Do investments in customer engagements really work?

This is the second blog in a series of 4-blogs (Read Blog 1, Blog 3, Blog 4) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.

During this time of uncertainty, Modern Commerce Leaders have been investing in improved customer experiences to help them build customer loyalty and to weather a drop in traffic.

A recent McKinsey study showed that in last major downturn (2008 economic crisis) the top publicly traded customer-focused companies had three times greater shareholder return than customer experience laggards.

Customer experience (CX) leaders are more resilient during recessionary periods, experiencing shallower troughs and quicker recovery

Financial performance (total shareholder returns) of CX leaders vs laggards

Even before the pandemic and resulting economic downturn, Modern Commerce Leaders had already begun investing in customer focused innovation, but the pandemic increased the impetus to find new ways to engage with a newly home-bound customer.  More importantly, it also has resulted in massive changes to behavior, with customers being more willing to try new technologies thus reducing the challenges that retailers may have faced prior to COVID-19. As reported in CNET, Oz Alon, co-founder and CEO of HoneyBook, a financial tech startup in San Francisco said, “I do believe this is an opportunity. This is a huge event in the world, people are going to change their behaviors and a lot of things that have struggled for adoption will get a new push.”

Much of the customer experience improvement has come with enhancements to existing mobile applications. Scott Steever, Adjunct Professor at Fashion Institute of Technology, on a recent SkillNet Webinar shared his own experience developing Mobile Applications for ABC Carpet and Home in New York City:

“Before the Pandemic, ABC Carpet and Home saw some customers wanting an option to be able to schedule an appointment and potentially initiate a video chat, online or through an app, with associates. Buying a $15,000 sofa or a $50,000 carpet is a major purchasing decision and anything we could do to facilitate the decision making process was seen as a win for the customer, sales associate and our bottom line. The Pandemic just pushed the adoption of this technology.” Professor Steever also added, “I think tools like this that are flexible and adaptable are very important in this age of COVID 19 because we don’t know when or where the next hot spot will come up. The good news is that we know this long-term investment and current adoption will give ABC a competitive advantage.”

Recent earnings reports seem to support this correlation between an enhanced customer experience and better financial/operational performance as shown by three customer engagement leaders:

  • Target: enhanced mobile apps, fulfillment and loyalty program
    • Q3 2020 saw digital sales grow over $2B and drive-up service grow over 500% in Q3
    • 20% increase in same store sales with 3% decrease in starting inventory for Q3 2020
    • 75% of digital orders were fulfilled by stores in Q3 2020
  • Walmart: enhanced mobile apps, fulfillment and new subscription program
    • Curbside projected to drive over $7B in sales and account for 33% of digital sales in 2020
    • Average basket size for curbside pickup were double that of in-store baskets
    • Q3 2020 saw the number of transactions drop by 14%, but average ticket increased by 24% and eCommerce was up 79%
  • Kroger: enhanced mobile apps and fulfillment
    • Q3 2020 saw 108% digital sales growth and 10.9% comparable store growth
    • Expanded to 2,213 pickup locations and 2,468 delivery locations, covering over 98% of Kroger households
    • Estimates that 50% of online revenue is coming from competitor’s customers

In conclusion, investments in customer engagements definitely pay off for retailers and, in today’s world, pay off quickly. The good news is that it is never too late to start. Given the speed with which technology changes can be implemented to support both digital and in-store experiences today, retailers will quickly see the benefits of innovation in improved financial and operational performance.

Watch the Webinar on customer engagement – Real Engagement is the new normal

Retail Spending is up 24%, if you are not seeing a bump you may have a long-term customer problem

This is the first of a series of 4-blogs (Read Blog 2, Blog 3, Blog 4) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.

Up through the Fall of 2020, the economy looked like it was approaching a “New Normal” of economic activity. However, pessimism based on poor holiday sales and political unrest has countered the optimism coming from new stimulus spending and vaccines. Uncertainty continues to be the defining term for 2021. In this blog, we will discuss where we are on the path to the New Normal, and how retailers can support customers changes in behavior.

First question we all have is “Has the bleeding stopped?” According to TrackRecovery.org, consumer spending in week ending January 17, 2021, was up 6.5% over same time period in 2020. Driven by $600 stimulus checks, retail spending was up 25%. Consumers have dramatically shifted spending from Entertainment, Travel, and Restaurants to Essential Retail and eCommerce.

Consumer Spending up 6%; retail spending up 24.5%

Source: TrackRecovery.org

Given this situation, if your business is not seeing a rebound in Sales, you may have a problem, in that your customer may have made a long-term behavioral change. These changes can be as simple as your customer still buying your product but just not coming into the store (reducing add-on sales), to your customer finding more convenient options from your competitors. Kroger reported in their 2020 Q2 earnings call that they estimate 50% of their new digital customers are coming from their competitors.

With this consumer behavioral change, not only does a business have to worry about  competitors, but also whether they have lost the traditional add-on opportunities in the urgency of making the shopping experience safer. When adding functionality online, retailers may have neglected to identify opportunities to replace the incremental sales normally associated with in store traffic. Traditional merchandising and pricing techniques, which offers add-on sales opportunities, just may not work if the customer is not walking your aisles, end caps, shelves, tables, four ways, or seeing your accompanying promotional signage.

I was recently on a call with a Midwest Essentials Retail client, and one of the initiatives they have undertaken to address this uncertainty, is to partner with SkillNet to improve customers mobile shopping experience and to offer additional customer engagement functionality that not only mimics in-store experience, but in many circumstances enhances on it. This functionality includes additional fulfillment options, appointment scheduling, loyalty program, inventory availability, personalized marketing and an enhanced consumer shopping experience.  

What will help retailers regain lost sales is identify what has changed in their customer’s journey. One of the ways to identify this is through financial modeling by analyzing traffic and average order values, by channel, pre-2020 and post-2021. Using technology to bridge the gap and to enhance customer experience will go a long way in deepening customer engagements and help getting the dollars back while enabling growth.

Watch the Webinar on customer engagement – Real Engagement is the new normal

AWS Cloud re-engineering for Modern Commerce in the age of COVID

In Partnership With Amazon Web Services

Companies are accelerating the move to the cloud of more of their critical business applications. However, lift and shift strategies don’t maximize value and pure microservices approaches are not practical for most organizations without very significant investment.

In this webinar, we will cover practical reengineering examples in AWS to help retail and hospitality organizations increase the value of their migrations to the cloud. Including:

  • AWS Guidance Patterns for Migrating your existing POS solution
  • Extending omnichannel capabilities in AWS
  • Creating new customer journeys leveraging  your existing applications and AWS

Accelerating Retail decisions with real-time data

Brief

Europe’s largest health and well-being retailer accelerates the pace of retail business decision making by implementing a data lake to enable stores to respond in real-time to customer needs.

About the client

The client is Europe’s largest health and well-being retailer of branded and own-label products across a wide range of vitamins, supplements, specialist food, sports nutrition, and ethical beauty. Founded in 1870, they focus on making people healthier and happier, operating more than 1300 stores worldwide as well as an expanding e-commerce business.

Challenge | Continuous product innovation requires real-time data

The client constantly innovates to meet customers’ needs, whether it is ethical sourcing or digital transformation to provide a world-class shopping experience. Continuous product innovation requires the client to better harness their data in real-time to make decisions such as refilling store inventory to avoid stock-outs, product manufacturing batch-sizes, offering new discounts, promotions, and customer rewards.

The business decision making was based on spreadsheets using data collected in silos from diverse systems and sources such as stores, audited sales, online sales, and SKU/stock data. This meant the process was slow (up to 48 hours to collect data), prone to mistakes (no single version of the truth), and not able to support business information requirements. This lack of real-time visibility was impeding the pace of innovation and customer responsiveness.

Solution | Improving business efficiency and customer experience through a data lake

After identifying the key business areas and decision insights required by client’s business finance teams, SkillNet created a data lake as the single source of truth by integrating data from multiple source technologies such as stores, audited sales, online sales and inventory. Using Oracle’s Business Intelligence platform, SkillNet automated data collation and report generation.

Hundreds of manual spreadsheets were replaced by automated reports that were run hourly, daily and weekly. Business users now have the ability to create near real-time visually impactful reports with self-service tools.

The solution enabled retailer’s team to gain visibility and proactive actionable insights across store systems and various lines of business.

Benefits | Making Better Decisions with real-time data

  • Availability of near-real-time (as compared to 2 or more days earlier) integrated data with automated reports
    • This has considerably reduced business decision cycles
    • Proactive decision making due to the business teams’ ability to generate user-friendly reports with near real-time data
    • Near real-time hierarchical store dashboards (Region, area, Store) and KPI reports on sales, ACT, conversion, engagement and loyalty participation
  • Dashboards with deeper data insights have helped the client’s business & store teams uncover newer insights
    • More informed decisions regarding inventory, discounts, shrinkage, product scan data and channel resulting in better responses to customer requirements.
    • Teams are being able to view sales data in near real-time and be more effective in their stock allocation and replenishment
    • Reduction in thefts and shrinkage
  • Regional Managers were spending ~15hrs per week on analysing and customizing reports. They now spend time with Area Managers and Store Managers to drive store performance

All product names and trademarks are property of their respective owners.

Meet SkillNet at NRF 2020 booth #1334

NRF (National Retail Federation) is the biggest global industry event for retail with 40k+ attendees and 800+ exhibitors. As always, NRF2020 will be held at Jacob Jarvits NYC location from Jan 12-14, 2020. According to NRF, it is the must-attend week where retail movers and shakers from around the world come to learn, share, collaborate, network and inspire. SkillNet will be in presence again this year. Come join us, at NRF booth #1334 and learn how we are transforming retail. 

We will also host our annual customer appreciation event “Spark” on Jan 13th. Spark is an invitation only event where SkillNet’s past, current and future customers come together to network and exchange experiences in a fun, informal setting.

Visit_SkillNet_NRF_Booth_1334

For invitation reach out to us at http://www.skillnetinc.com/contact/

SkillNet exhibiting at NRF2019 : Jan 13 – 16, NYC

The world’s largest retail conference and expo is here again. NRF 2019 is expected to bring together over 38,000 attendees, including over 10,000 international attendees, to discuss the latest in retail tech, strategy, leadership, economy and many more topics.

SkillNet will be co-exhibiting at the event with its strategic partner Oracle Retail. Meet us there!

Are you ready for GDPR? We can help.

Iain Long, SkillNet’s Sales Manager for Europe and Africa, sheds light on the looming EU General Data Protection Regulation deadline and shares how SkillNet’s “2-week Rapid Assessment of GDPR Compliance” can help retailers understand how their enterprise and compliance approach stack up against these regulations in our latest Thought Leadership Blog.

Read the blog.