Dutch retailers still rated higher than Amazon and Alibaba

By IGH, News, Retail, Retail

Coolblue has the best customer experience in the Netherlands, according to research by consultancy firm IG&H among 2000 consumers. De Bijenkorf and Bol.com follow second and third. It is surprising that there are no foreign retail chains in the top 5. “Web shops like Amazon and Alibaba do not yet understand the Dutch consumer”, is what retail experts Joris de Bruin and Evelien Kip of IG&H tell us.

“According to the survey, web shops such as Amazon and Alibaba, which are considered the biggest competitors to Dutch shops, do not yet meet the customers’ demands. They can be experienced as confusing and making a purchase often turns out to be unnecessarily complex. This is partly due to the fact of a perceived language gap, and not meeting the high standards Dutch customers have towards user-friendliness of online stores” retail expert De Bruin says.

Previous IG&H research showed that retailers with a relentless focus on personal attention, the right ambiance and inspiring the customer, are most appreciated. “Online, this is what is meant by a user-friendly, attractive website with decision making support. This must be aimed at providing the customer with the right information in order to make the best choice quickly and carefree. Coolblue does this exceptionally well: good filters, extensive product reviews and top-10 choice lists,” says De Bruin. The top 3 is complemented by Albert Heijn and de Bijenkorf, who inspire the customer and create a good atmosphere as well.

It is also worth mentioning that highly-valued web shops outperform the others by means of surprising customers. De Bruin mentions de Bijenkorf and Coolblue as an example. “de Bijenkorf packages all ordered products in a nice box and puts a bow around it for a premium shopping experience. Coolblue has a different approach and provides the packaging with some helpful tips or a dose of humor. It is this kind of small detail that positively surprises the customer. It surpasses customer expectations and that is crucial for a web shop to stand out in the market”.

“Consumer has high expectations for daily groceries”

It is surprising that the supermarkets score just as high as the middle- and high-end retailers on expectations. “Customers do not make a distinction between ‘daily shopping’ or more ‘incidental’ purchases. In both cases, customers remain to have high expectations”, says Kip. In terms of expectations, AH.nl is number 4 and Jumbo is number 6.

On the seventh place we have welcomed a foreign player: Amazon. “Customer expectations for foreign retail chains are not high. Alibaba in particular has a rather low score. Consumers still associate the brand with long lead times and affordable products. The hilarious videos on YouTube in which curious consumers are surprised with a bad buy only confirm that image”, she says.

“Customers expect little service from discount retailers”

Action is number ten, and a retailer operating in the discount, value-for-money segment. “We see the complete opposite as with the retailers from the more expensive segments; a good customer experience is not what the customer expects. The question is whether that is bad. One customer probably gave the best answer: “Action is only about offering the lowest price.” If they continue to meet their strong price proposition, it will not harm them. However, if the general customer expectations in the area of Customer Experience increase further, the question is whether retailers such as Action can adjust in time”, warns De Bruin.

Written by: Evelien Kip (Consultant Retail) and Joris de Bruijn (Manager Retail).
Photo: CoolBlue

Artificial Intelligence… Low-code… Public Cloud… Which technology trends should retailers bet on NOW?

By News, Retail, Technology

Technology trends are rapidly changing the retail sector. Retailers looking to remain relevant in the future must primarily focus on two developments: High Productivity Platforms and Artificial Intelligence. This became clear during an analysis by IG&H.

In contrast to other technology trends such as Internet of Things, blockchain or virtual reality, High Productivity Platforms and Artificial Intelligence (AI) have been identified by Gartner as trends that have reached a mature stage, which enables them to disrupt the retail sector. Both High Productivity Platforms and AI intervene in each link of the retail chain, giving them a new dimension. That’s why IG&H believes that retailers who embrace these developments now greatly increase their chances to remain a frontrunner in their market.

 

High Productivity Platforms; react more quickly to developments

A High Productivity Platform can be based on generating code, as well as on model-driven execution. Low-code, for example, is an increasingly well known High Productivity Platform for software development based on object generated code.

The main business advantage of this technology is the ability to build new functionality quicker and at substantially lower cost, and the success of ideas can be evaluated more rapidly. One method of doing so is ‘rapid prototyping’. Retailers who adopt this trend are able to test new propositions quickly in changing market conditions and with little risk. A striking example is a leading food discounter which temporarily offers a more extensive luxury assortment through an online channel during the holidays. The technology offers countless applications; from small mobile apps to large back-end systems. Because of this, High Productivity Platforms are suitable for medium sized businesses as well as larger multinationals.

The accelerated development of applications shortens the time-to-market with 70 per cent in comparison to traditional packages. This is especially interesting when the development of applications requires customization. In comparison to traditional solutions, total cost of ownership is reduced to a third, a recent study by Gartner found. Next to development time, High Productivity Platforms offer big advantages when it comes to operational controllability in terms of ease of integration, altering applications, and the assurance that applications keep working after the update. All of this against lower maintenance costs.

Boost business with Artificial Intelligence

Data science is a multidisciplinary domain for more effective data gathering and analysis to facilitate better business decisions. Different techniques and algorithms can be applied, such as Machine Learning and AI. Deep Learning, an AI algorithm, is an advanced follow-up technique based on neural networks. Both Machine Learning and AI algorithms are often self-learning, which improves the effectiveness of applications over time and means the complex underlying mechanisms don’t have to be fully understood.

In the current retail landscape, we are increasingly seeing applications supported by AI and Machine Learning. There are ample examples of AI being applied in the chain, from bots in customer service with active customer dialogue, to creating supply chain flow by proactively sending goods to locations even before consumers made their purchase.

Even at the heart of retail, category management, we see AI making a difference with better integral business control. AI can, in contrast to error-prone and often department-coordinated traditional ways of working, make an accurate prediction of sales based on numerous chain factors, leading to better purchasing decisions. Our experience tells us that this prediction is accepted in up to 90% of the cases, leading to higher shelf availability and lower residual stock, in combination with higher efficiency at the department concerned.

In the fashion industry, for example, algorithms are being utilized to predict trends earlier and more precise. With Machine Learning, this enables offering personal discounts to the customer. Through enhanced customer personalization higher conversion ratios can be achieved and purchasing can be done more accurately. This results in lower residual stocks. The urgency is confirmed by the expectation that by 2020 more than 85% of retail transactions will be based on AI.

Dawn of exponential technological developments

Exactly the same reality holds true for us as consultancy. We see that our customers have a need for support with a large number of technologies and trends. To meet this need, our firm has more than doubled in size the last few years in the domains of Analytics and Technology.

The current and expected trends make us realize that we are at the dawn of exponential technological developments. To remain relevant and flexible as a retailer it is crucial to make the right choices. AI… Low-code… Public Cloud… On which technology trend will you bet?

Written by: Iris Huisman (Analist Retail), Michiel van der Werf (Consultant Retail), Sjoerd Norden (Consultant Retail) and Bram Gilliam (Director Retail)

Ruud Schoenmakers new IG&H partner within retail practice

By News, Retail

IG&H expands the retail branch of the company with Ruud Schoenmakers as new partner. Schoenmakers joined IG&H as a consultant in 2005. Since then, he has served both national and international customers in the areas of retail, trade, logistics and financial services.

IG&H is a leading player in business transformations, where new platform technology plays an accelerating role. “Our approach is distinctive because sector experts and experts in the field of technology, data science and organisational transformation work together intensively. I really believe in that. That is why I’d like to join IG&H as a partner for a long time. By combining different competencies, strategy becomes reality and we can help our customers make a difference for their own customers,” Schoenmakers says.

The new partner is mainly involved in the changing digital retail market. In recent years he has developed innovative concepts in several areas, including smart pricing, last mile delivery, new business ventures and agile business transformations. As a sector expert he is also involved in converting traditional IT environments into high performance platforms, making customers more innovative, agile and keeping costs relevant.

Although the head office of IG&H is located in the Netherlands, Schoenmakers has gained a lot of experience abroad. He has worked in England, Poland, France, Belgium, Germany and America, among other countries.

“Ruud has proven to be able to complete major change processes for international customers. He has really helped leading retailers reach a higher level in times of disruption. This allowed them to innovate faster and respond better to customer demand. In recent years Ruud has proven to be a true IG&H person; he looks at the facts and at the same time knows how to create energy in the organisation”, says managing partner Jan van Hasenbroek.

Improve inventory management Wehkamp

By Casestudys, Retail

What did the customer want:

wehkamp.nl encountered challenges in reducing working capital and stock levels while the availability of products remained unchanged. The aim was to improve internal processes and prevent unnecessary investments in distribution networks.

We took into account the following context:

  • Availability on the following day is extremely important for the business model.
  • Mixed procurement NW Europe versus Eurasia.
  • Physical limitations in the network, demanding non-profitable investments if they were not averted.

What was our approach?

  • Short quick scan and design phase to determine approach and improvement potential.
  • Agile, hands-on approach that is result oriented, and in collaboration with management and employees.
  • Weekly stand-ups with direct feedback on improving the results.
  • Focus on the largest suppliers to provide (short-term) evidence for this way of working.
  • We supported teams with data analysis to improve decision making.
  • Multiple preconditions for improving the sustainability of the solution (KPIs and incentives, organisation design, management style, supplier management, etc.)

What have we achieved?

  • In just 3 months, time stocks and working capital were reduced to 25%, the stock turns improved to 60%. The lost sales and operating costs remained unchanged.
  • The incoming receiving capacity in the distribution center improved by 35%.
  • Development of supplier performance monitor.
  • Improved collaboration between sales and operations.

What did the customer think:

“Refreshing, practical approach, with clear results. An advisor who does not only do what the client organisation wants to achieve, and thereby finds a whole new angle of approach.”

Step change in product availability Intertoys

By Casestudys, Retail

What did the customer want:

Intertoys had to contend with poor product availability, which led to a significant loss of sales. The aim was to increase the availability of DC stock from around 50% to over 80%. The company wanted to achieve this before the start of the high season in the autumn, without increasing the total inventory levels.

What was our approach?

  • Intertoys’ assortment, together with the category management team, validated and sorted in order to identify a regularly refillable assortment.
  • Along two tracks – data quality and merchandise planning – we developed quick wins and a sustainable improvement of tools and processes to complement the right assortment with the right stock levels.
  • Development of a commercial approach to sell surplus stocks at minimum price discounts.
  • Merchandising planners trained in their new roles.

What have we achieved?

  • Availability of the DC stock rose from around 50% to over 80% over a period of about three months.
  • Increased data quality to enable a more streamlined operation.

What did the customer think:

“In a dynamic retail context, we wanted to improve the availability of the DC stock and to develop a reliable replenishment process. The IG&H approach helped us to combine quick wins with sustainable improvements in product availability and stock levels. IG&H provided the right structure and transparency for our activities through the implementation of every step of the project “

Optimalisation of a distribution centre for a large Dutch retailer

By Casestudys, Retail

What did the customer want?

For a large Dutch retailer, the DC (distribution center) is essential. Keeping logistics costs manageable guarantees competitive prices, happy customers, and a competitive position. Our customer’s current DC is no longer sufficient, but which products will we put in the new DC, and how, and why? For the best results, we will make these decisions based on hard facts and data so that we can optimally focus on the DC.

What was our approach?

A dynamic model that determines the optimal allocation in real time, for every situation. We have built an advanced Linear Program that optimally allocates all SKUs within the DC. This optimum is determined on the basis of costs (hourly wages & productivity, return percentages, turnover rate, etc.) but also, for example, capacity and the characteristics of the SKUs. All input is fully customisable so that infinite scenarios can be compared.

What have we achieved?

On the basis of the most recent data and desired adjustments, S & OP can optimally set up the DC. S & OP not only has the tools to optimise the current situation, but can also use it for future changes. Capacity problems are already clear in advance because predictions, in combination with the tool, can determine the ideal DC of the future.

What did the customer think?

Practical logistics experts. Good balance between concepts and practical applications.

Strategic frameworks for structural renewal of the product range for non-food retailer Blokker

By Casestudys, Retail

What were the client’s needs:

Clear strategic framework for a structural implementation of a new product range:

  • Addressing the customers’ needs by a structural review of the current product ranges and by adding products that are lacking.
  • Improving the price perception of the customers by rolling out a clear price strategy based on dynamic prices.
  • Expansion of the own brand product range for an attractive margin, realising the quality promise, and giving a price signal to the market.

What was our approach?

  • Design and execution of a category briefing process for a structural review of product ranges based on reviewed category roles and a uniform structure of the customer decision tree.
  • Setting up a process for the identification, assessment, and execution of product ranges that are lacking.
  • Creating a clear and dynamic price strategy which has been further developed into price guidelines that can be implemented for every established price category.
  • Optimising the own brand policy, established at product group level with clear guidelines for the implementation of the private label product range.

What did we achieve?

  • Demonstrated and structural category briefing process in which strategy, format, category, management, and shop experience are all combined to develop a clear renewal of the product range.
  • Clear price strategy that can be implemented, structured up to SKU level
    Optimised private label policy which gives direction for the implementation of the own brand product range.

Omnichannel distribution network design Blokker

By Casestudys, Retail

What were the client’s needs:

Due to crucial organisational changes, increasing online sales volumes, and continuous developments in the commercial propositions and product range, there was an apparent need to restructure the distribution network in order to:

  • Accelerate the desired commercial proposition.
  • Support the omnichannel fulfilment ambition (for example with entirely interchangeable online/offline distribution channels, shop pick-up, shops storage).
  • Improve the efficiency, costs, and capacity of the distribution centre.

What was our approach?

  • In collaboration with the management, we established the scale of the commercial proposition in order to facilitate it by deploying the new distribution network (e.g. the number of SKUs, channel mix, product features).
  • Development of a growth model for logistic volumes
    Assessment of the current distribution structure, identification of problems/bottlenecks, and the execution of a fit-gap analysis with the growth model.
  • Development of future warehouse layout, automation options, detailed processes, and IT/WMS requirements.
  • Development of the business cases for every scenario, including the required investments and reduction of costs.
  • Facilitating boardroom decisions.

What did we achieve?

  • We developed a solid omnichannel concept for the distribution centre where inbound, storage, and picking activities for online and offline flows are integrated and supported by automated processes.
  • Substantial cost reduction of 18-20% on the total distribution costs.
  • The distribution centre has been structured in such a way that it will not just facilitate the current commercial ambitions but also those in the future.

What was the client’s experience:

“IG&H pools thorough logistic expertise and combines this with a pragmatic approach for an effective decision forming process based on facts.”

When does technology enhance customer experience?

By News, Retail

Using in-store technology to inspire customers is not as important as may be expected, IG&H concludes from a survey conducted among 2000 Dutch consumers. “Technology can further enhance customer experience but the right ambiance and personal attention are still decisive”, say retail consultants Joris de Bruin and Evelien Kip.

It is key to understand how great or poor customer experience influences your consumer’s behavior and your success as a retailer”, De Bruin explains. To provide retailers with more in-depth insights about the latest trends in retail, IG&H is going to publish regular updates. This research about customer experience is the sum of all online and offline interactions with a retailer’s products, services and brands.

“We see a lot of buzz around augmented reality, AI and mobile payment, but the effect of these advanced technologies on customer experience is (still) very limited if it does not contribute to ambiance and personal attention. Don’t bother to start using advanced in-store technology or social interaction experiments to improve customer experience, unless you have these basics right”, he says.

 

Personal attention is most appreciated

70 percent of the customers surveyed said to value personal attention most in an offline store. A good in-store ambiance is appreciated by 60 percent. Almost half of the respondents enjoy an element of surprise. “Think about ‘tokens of appreciation’ such as free demo products, gifts, additional services or just a sincere compliment or thank you from the staff”, Kip says.

Getting the basics right is key in creating a great customer experience

This does not mean that retailers can ignore technology completely, she explains. “Contactless payments, apps and self-scanning definitely contribute to the customer experience, but should further improve personal attention, design and ambiance. Retailers often forget about further educating and developing well-trained employees with a relentless focus on the customer.”

As a good example in this field, she names Coolblue with their XL stores. “A warm welcome awaits from a dedicated employee once you enter the store. Based on your needs, you are guided directly into the right customer journey”.

To create an excellent in-store ambiance, Kip advises on creating a multi-sensory experience, like the smell of fresh bread in the supermarket. “A great example is the Jumbo Foodmarket concept: extra wide and clearly classified isles, decorated with culinary elements speak to the imagination during your journey to the counter.”

A tailored approach to the online customer experience is required

In the online world, ambiance (or design) is most important, according to the respondents. “This can be translated into providing a user-friendly website with an appealing design aligned with the brand’s image. Contrary to the offline world, personal attention is not a must-have for a great online customer experience. We believe this is heavily linked to a shopper’s mindset and goal. Online shoppers often want a quick, easy and more anonymous journey”, Kip says.

Great customer experience transforms customers into brand ambassadors

IG&H Retail consultants focus on helping retailers to remain relevant. “Being relevant to your customers should be the key objective”, De Bruin observes. “Relevance can be achieved through successfully aligning your organization’s purpose and proposition with your customer’s expectations. It requires a connection with your customers on an intrinsic level, they need to be able to identify themselves with your brand. Key to this is providing them with a great customer experience that exceeds expectations.”

Loyal customers will act as true brands ambassadors

If a retailer succeeds, customers return more often, tell their friends and family about their experiences, and tend to buy more, leading to an increased revenue. Margins are not that easy to improve, as customers are not willing to pay more for the same products or services while having a great experience.

“A poor customer experience impacts everything, from the bottom line, to loyalty and reputation. It will make your brand less relevant and eventually lead to ending up in the retail graveyard. Retailers who put their time and effort into providing personal customer attention at the highest level possible and constantly create a pleasant ambiance, will create loyal customers who act as true brands ambassadors”, he advises.

Curious about how Dutch retailers score on customer experience? We will announce which retailers are the winners and which ones need to pay more attention to it soon.

Last-mile delivery model under pressure; paradigm shift inevitable

By News, Retail

Rising e-commerce sales are driving up demand for parcel deliveries. Good times for logistics carriers, you might think. However, the parcel delivery sector has been under pressure for some time now: PostNL saw its operating results drop in the third quarter. In Germany, DHL made a significant (downwards) revision to its profit forecast for 2018. Where have things gone wrong, and is there a way up?

Currently, most parcel carriers are facing major operational challenges. For example, delivery personnel (mostly freelancers and subcontractors) regularly complain about high working pressure and underpayment. Yearly events such as Black Friday and Singles Day cause enormous spikes in delivery volume, which are in turn difficult to process on time. In Chinese postal depots, we saw parcels literally flying around. The danger of strikes always lurks. Recently, in the Netherlands, there were threats of strike action by delivery personnel around the time of the Dutch Sinterklaas festivities. Read More