Written by Matthew Robertson, Co-CEO, NetDespatch
Store closures, business failures, job losses and the worst Christmas for 10 years. 2018 was a tough year for UK retail, but is it really all doom and gloom on the high street? If you look beyond the dramatic headlines, it is clear to see an industry in transformation, with new channels driving growth as the old channels decline and retail is re-invented.
It is clear that keeping customers will be critical to survival. We all know that acquiring new customers is proven to be 5 times more expensive than retaining existing ones. With the word among Millennials that retail should be about the ‘experience’ as much as it is about the product, what are the best ways to retain customers and drive that much needed growth through new and existing channels?
Rethink the role of the store
Without a doubt, I recommend that retailers look to evolve the store and the store experience. Retailers should use advanced technology to serve today’s high-expectation consumers. In order to capture the attention and spend of today’s technically savvy customers who expect instant gratification, the store must focus on the customer experience – not just the products being sold. This means that retailers need to reimagine their physical space by exploiting sensory, social and digital technology to create dynamic store experiences and simplified processes.
Reinvent your supply chain
At the same time retailers must also reinvent the supply chain so that they are putting the customer first. For example, it is tempting to opt for courier services that provide cost savings and convenience, but the fundamental principle of business is that the customer comes first, so what retailers really need to do is think about a service that best fits their target customers’ lifestyles and expectations. Much will of course depend on the core market demographics, but it is worth bearing in mind that next day delivery is the expected norm. Likewise Click and Collect deliveries are now a popular option for busy consumers who can pick up their purchase while they are out and about.
Reach the consumer at each touchpoint
Retailers should use tech-driven marketing techniques to present customised messages and offers and keep consumers in the loop all the way through the process from ordering the goods to delivery.
We all know that a positive buying experience can be badly soured by a late or failed delivery. To this point, research that we did a couple of years ago showed us that what consumers really dislike about online shopping is when their parcels don’t turn up at the allotted time. Likewise having a lack of visibility and control and the ability to track their parcel is also extremely stressful for shoppers.
Reduce the risk of failed deliveries
Therefore, it is imperative that retailers look to reduce the risk of failed deliveries. Again we commissioned research last year with online retail association IMRG into the reasons for failed deliveries. You might be staggered to know that this costs the industry £1.6bn each year. Clearly if retailers are going to keep existing customers they need to look at ways that they can reduce the risk of failed deliveries.
Here are three possible focus areas in order to achieve this:
- Encourage collection over receipt
In the UK, we have a culture of home delivery; almost 80% of respondents to a survey IMRG ran in 2018 with GFS and maru/EDR said that home was their preferred delivery location. The main issue with this is that most people are not at home during the day, when their deliveries are likely to arrive.
The pressure to deliver on-time in line with expectation means a portion of parcels are fulfilled to a ‘safe space’; some are elected by the customer, but in many cases this means it has been left with a neighbour. This may technically reduce failed deliveries, but it’s also quite annoying for people to have to collect their parcels. From the perspective of customer experience, it cannot be considered a long-term solution. Connecting people to their parcel is the aim of delivery; incentivising greater use of click and collect so customers are more focused on collecting rather than receiving their orders – and hence having more control over the process will definitely enhance the experience.
- In-transit data
Another solution would be greater adoption and use of in-transit data, so customers have clear visibility of where their orders are – probably supported by text message updates at key points – to increase their chances of being available (or having someone available) to accept receipt of the parcel at the exact moment of delivery.
- Putting the customer in control of their delivery
Instead of automatically giving customers a next-day delivery option, retailers need to make the customer the centre of the delivery process. One way of doing this is allowing customers to be able to choose their own delivery window. If customers are able to choose their desired time window for their delivery, it automatically makes the delivery process more convenient for them and can potentially reduce the risk of a failed first-time delivery.
As we head towards the mid-year and summer, we can still see plenty of uncertainty where the UK consumer is concerned. The macro economic outlook looks positive with all the ingredients for increased consumer spending, however, it is difficult to say with any certainty what will happen given that so much depends on the nature of the UK’s exit from the EU. Therefore it is imperative that UK retailers do everything they can to delight and retain their existing customers.