Progressive Grocer

DEC 2016

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cies, performance or verification. Consumers want to know what companies are actually doing in these areas, as well as to have the ability to engage by asking questions via a company website. And they expect straight answers in a timely fashion. Transparency isn't the only reason to be custom- er-centric today. Take omnichannel, for instance, an incredibly hot topic in a world where Amazon.com is planning physical grocery stores, while services such as Instacart and Shipt are allowing more grocers nationwide to move into home delivery. NRF even reported in 2015 that the nation's larg- est retailers at the time — including such grocery sellers as Walmart, Target, Costco and Amazon. com, all in the top 10 — were continuing to grow because of their "keen ability to connect with their savvy customers," and that omnichannel strategies such as click-and-collect, direct-to-consumer fulfill- ment, same-day shipping and mobile shopping have "transformed the shopping experience and boosted sales in both physical and e-commerce spaces." Customer-centricity is critical to developing a suc- cessful omnichannel strategy. Making the Move Many retailers today, including grocers, still don't have such a business approach in place, however. For example, in the merchandising process, seven out of 10 retailers surveyed didn't use in-depth consumer demographics and psychographics in the merchan- dise- and assortment-planning process, according to EKG Research, a division of Chicago-based EnsembleIQ and a Progressive Grocer sister company, in its 2015 "State of the Industry Research Series." Meanwhile, the lack of customer insights in the merchandising process emerged as the foremost chal- lenge for four in 10 retailers surveyed. Moving to a customer-centric model requires several steps: In the planning phase, grocers must move from channel-specific merchandise teams and plans to a unified merchandising team and integrated merchandising plans. In the assortment process, grocers must move from low variability of as- sortment across stores and low levels of personalization and localization to highly localized and personal- ized assortments based on micro customer segments. In the allocation and replenish- ment process, grocers need to go from limited flexibility with fixed alloca- tion for distribution centers, warehouses, stores and online to high flexibility and response time based on real-time allocation. In the pricing process, grocers need to change from pricing based largely on historical data and intuition to price optimization based on ad- vanced analytics on data integrated from across enterprise and customer data sources. In the promotion process, grocers must go from heavy use of mass promotions and markdowns to personalized promotions integrated with overall merchandising plans and customer profiles. Tear Down Those Walls It's not enough to focus solely on consumer-focused operations for success in retail, of course; grocers also need to scrutinize operations on the inside. Far too much disconnect occurs within many grocers' organizations due to barriers and distractions that hinder communication. On most occasions, silos encourage behaviors that are beneficial to their occupants, but often are not in the best interest of an overall business or its customers. In fact, according to the New York-based American Management Association (AMA), 83 percent of executives say their compa- nies have silos, and 97 percent believe they have a negative effect. ere are many ways to "break down" silo walls. In its April 2015 "Why Silos Damage Customer Experi- ence" whitepaper, however, U.K.-based cloud service company NewVoiceMedia suggests three elementary ones that grocers should consider: Focus on the customer, as learning how they're missing, meeting or exceeding their expectations is paramount to success. Freely share information across the enterprise and deliver it into the hands of those who impact the customer. is discourages information hoard- ing and improves collaboration. Create an atmosphere in which collabora- tion, teamwork, trust and open communi- cation are encouraged. is can be done by developing cross-functional teams with people from all relevant points of view, levels, divisions and locations. Additionally, AMA suggests re- warding cooperative behavior, being straightforward in communications, encouraging innovation and even holding employee retreats. NRF's 2017 Retail's BIG Show will take place Jan. 15-17, 2017, at the Jacob K. Javits Convention Center in New York. PG December 2016 | progressivegrocer.com | 23 high flyer Sir r ichard Branson will tout consumer- centricity.

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