How Retailers can rebound from the Corona crisis – 3) The breaktrough of online shopping as the new standard

By News, Retail

It is not the first time that the world has been shut down through the outbreak of a deadly virus. In 2003, SARS forced people in China to stay at home as well. It turned out to be the trigger for B2B start-up Alibaba to move into consumer markets. They launched consumer shopping website Taobao (similar to the Dutch “Marktplaats”). At the time, JD also was a small company with 12 electronics shops in Beijing.  Revenues plummeted due to SARS as all but one of the stores had to be closed. The founder, Richard Liu, took drastic measures and turned towards a primitive version of ecommerce. He advertised his goods in forums, had employees manually write down orders, send text messages when the order was ready and personally delivered them to customers close to the office. Ever since, both Alibaba and JD have rigorously focused on offering consumers access to products from home. Today they both rank amongst the world’s largest retailers.

Just like SARS, the Corona outbreak leads to a drastic change in consumer lifestyle & behaviour with a strong boost in e-commerce – this time on a global scale. This blog addresses the opportunities and challenges this implies for retailers, and how to respond both short-term and long-term. In short:

  • Corona accelerates the breakthrough of online shopping as ‘the new normal’
  • Retailers struggle to quickly scale up e-commerce due to staff shortages, limited stock availability and inflexible logistics operations
  • Key short-term opportunities include use of underutilized stores as ‘dark stores’, radically re-allocate the workforce and instantly optimize assortments
  • Longer term, “think digitally” to reset your business model profitably(offering, stores and capabilities)

E-commerce is flourishing: the accelerated breakthrough of online shopping as “the new normal
Due to the Corona outbreak, consumers stay at home and are looking to create safety and comfort for themselves and their families. Online shopping addresses these needs perfectly. China has seen the number of consumers shopping for online groceries almost double in February (source: South China Morning Post). In the Netherlands we see the same figures. In certain sectors online demand levels are already similar to the holiday season ( Drugstore and personal care products have grown between 50 and 100% in recent weeks. Items that make life more enjoyable, such as sports, DIY and garden items, show growth rates between 20% and 40%.

The massive switch to online is expected to (partly) be a sustainable consumer behaviour rather than just temporarily. In 2003, the SARS virus accelerated the breakthrough of digital telephony and Internet.  Similarly, the heritage of Corona will be lasting confidence in online shopping and drastically enhanced adoption. New target groups such as elderly people are discovering the convenience of online grocery shopping. Sectors where online is still in its infancy are accelerating by offering new digital services. Examples are numerous and include e-health apps to track corona-related complaints, online (home) education applications and fitness video streaming as an alternative to gyms.

This crisis is creating new consumer habits that will likely stick. This means a hard reset in consumer behaviour: online shopping becomes the new standard in many areas. Therefore, now is the time for retailers to really take a leap forward in e-commerce.

Growing pains
Scaling up an e-commerce operation is not easy and meeting customer needs can be particularly challenging these days. For instance, for many retailers delivery times in e-commerce fulfilment have increased from same or next day to multiple days or even weeks. Why is this happening?

  • Personnel shortage in warehouses and parcel depots: at present approximately 15% of own- and temporary staff have fallen out due to Corona measures. For manual operations, this often leads to a direct drop in productivity. Food retailers are getting priority for labour because of their vital function in the chain – affecting other retailers even harder
  • Low stock availability: Supply chains have been severely interrupted leading to long delays in inbound replenishment orders from a.o. the far east. In addition, consumer needs have changed instantly, making forecasts unreliable. Taken together, this has drastically deteriorated inventory availability levels for many retailers.
  • Inflexible logistic structure: existing DCs are often inflexible to switch between offline and online logistics due to fixed mechanization. In manually operated DCs it takes time to set up new picking locations with supporting IT. For many retailers, E-DCs are separate from retail DCs, resulting in additional inventory allocation and movement complexity.

Fasten your seatbelt: innovate around new customer needs 
How can retailers better deal with the abovementioned challenges? We list some immediate actions that are already successfully being pursued in the market now.

Turn stores into ‘Dark Stores
A ‘dark store’ essentially deploys an underutilized (or even closed) store as a picking and delivery point for e-commerce orders. By converting your stores into small e-commerce warehouses you open up your entire store network to online shoppers. Beside boosting product availability, this can offer a fast home-delivery alternative for instance via a bicycle courier. The effects can be significant: from improved customer satisfaction and additional revenues from an instant proposition, to lower pressure on central E-DC operations and improved working capital. Benefits that can last beyond the current crisis.

To set this up, a system must be installed that creates pick orders for store staff (linked with existing ERP and WMS systems). Store employees need to be trained as order pickers and a place is required where consumers or couriers can pick up orders safely. To manage this operation, it is essential to have dashboards with real-time availability information.

Re-allocate your workforce

Chinese retailers have been successfully redeploying store staff in a radically different way. Employees were used as online influencers to reach their customers. Communication platforms such as WeChat (Chinese variant of WhatsApp) and Ding Talk were used to help multiple customers simultaneously via live streams.

This setup was pursued earlier this year by a cosmetics company called Lin Qingxuan (>2.000 employees) in the Wuhan region where all stores were closed. Using store staff as online influencers, sales levels increased by 200% compared to the previous year (source: HBR). Other examples range from re-training store staff for logistics roles to expanding customer service teams.

In case of scarcity, the solution might be found at other companies. For example, Chinese tech supermarket HEMA resolved the need for temps through using employees of restaurant, hotel & cinema chains in China.

Optimize your assortment
When Corona set foot in the UK, Amazon immediately reprioritized and switched assortments online and in their DCs. Non-vital products such as spring clothing were exchanged with high-turnover products such as soap, detergents and household products. In this way, consumers were provided with essential products, while at the same time higher efficiency levels were achieved.

Beyond the crisisimprove the profitability of your business model to hit back
The big challenge in the long term is moving towards a radical digital proposition with a profitable business model. We see 3 main themes to move to an optimized omni-channel setup:

1)Re-think your e-commerce offering 
Some key questions that should be answered are:

  • Assortment: what new products or services does your target group need? What product (combinations) do you offer? How will you deal with Low-value products that are costly to deliver at home?
  • Reach: how do you reach your target group online? what is your company’s story?  what communication channels are most effective?
  • Proposition: from what order-amount is free shipping offered? what kind of service window do you offer your customers? Like Amazon and can a subscription-based proposition increase your customers loyalty?
  • Operations: a highly efficient and cost-effective fulfilment operation is an absolute pre-requisite to achieve business profitability. How can higher degrees of mechanization and automation help improve your operation? How can (partial) outsourcing and workforce flexibilization contribute to further cost optimization and service improvements?

2)Re-define the role of the store
As e-commerce continues to grow and demand shifts from offline to online, it will put more pressure on the profitability of traditional stores. In China, retailers have already made radical choices by cancelling offline campaigns & promotions and replacing them with digital marketing, chat programs and innovative O2O (online orientation and payment, offline pick-up) partnerships. Ultimately, stores are no longer just a place for inventories and transactions, but much more than this. Advice, experience, return, pick-up, introductions, consumption and promotion can be key elements of the (new) role of the store. What do your customers need and what will you offer? How will you generate value out of this offering and channel? What value can this provide for your brands and suppliers and how will they contribute (financially)?

3)Become truly digital
Retailers such as Amazon, and Alibaba have repeatedly shown the way towards a digital future. One of the most prominent capability that sets them apart is their extreme Technology focus. They deploy highly flexible systems, tooling and dashboarding that supports their way of working and ensures IT integration for seamless omni-channel experience.  Additionally, their customer propositions are highly personalized and constantly updated by deploying advanced analytics and algorithms. All is enabled by a very flat organisation to assure maximum flexibility and fast decision making.

The Coronavirus is a tremendous challenge for all retailers, but one thing is certain: online shopping will be “the new normal”. When successfully setup, this can make the difference in how successful a retailer is coming out of this Corona crisis. And it will be worth it once the next crisis arrives.

Jasper van Rijn
Partner at IG&H
E: T: +31653376760

Maarten Vaessen
Partner at IG&H
E: T: +31653571666

Author: Evelien Kip (

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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 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, 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

Ruud Schoenmakers: ‘Retailers are becoming digital businesses’

By News, Retail

The retail market is changing enormously, partially due to the growing success of digital platforms such as Amazon. At the same time, technology is developing further and further and customers are making more online purchases. How can retailers respond to this? Ruud Schoenmakers, IG&H’s new retail partner, shows us.

How will the retail sector look in 10 years?

“Developments are happening so rapidly, it’s actually impossible to look that far ahead anymore. Newcomers, sometimes industry outsiders, are making increasingly large impacts on customer expectations and ‘what it takes to win’ within retail. Until recently it was still possible to downplay these developments. However, these days are now truly behind us.

For example, supermarkets in major cities never used to view restaurants as competition. However, with the current growing success of platforms such as and UberEats, it’s becoming apparent that traditional parties are being affected and need to adjust their business models.”

What is the central challenge facing existing retailers?

“It requires a lot of attention and energy to ensure that the current operation runs smoothly. At the same time, it is becoming increasingly important to change rapidly and to innovate in order to remain relevant to the market.

It is extremely difficult to do two things at once. The question of how to combine these issues in a controllable manner without being hampered by the enormous complexity is causing headaches for many executives.”

What do retailers need to focus on?

“Just like in other industries, such as financial services, there needs to be a realization that the transition towards becoming a digital business is both essential and existential. The moment that you lose clients to new competitors, technology and data science capabilities become your best friend.

At the moment, I would dare to estimate that most retailers currently allocate 90% of their budget to simply keeping the current systems up and running. A mere fraction is used for exceptional, let alone innovative, solutions.

This is not a sustainable state of affairs. It is essential that retailers set up their organizations to be flexible in order to respond to the changing customer demands. Software that supports them in this can lead to a breakthrough, including the high performance, low code platform OutSystems as well as the use of cloud solutions.”

How important will data science become for ‘physical stores’?

“Shop assortments are currently quite static and homogeneous. Data science allows retailers to frequently check what the optimal assortment is for individual locations, leading to optimal turnover and profit margins.

Moreover, data science combined with technology allows retailers to make the switch to real one-on-one interaction with individual consumers via all channels. This is a totally different ballgame to the impersonal and primarily product-based mass communication. Isn’t it a shame that I, a man, keep seeing handbag commercials? It’s a total waste of marketing money!”

How much will organizations have to change internally?

“Successful transformation into a digital business requires different skills, leadership, governance, attitudes, and behaviour. This transition is substantial, impactful, and requires care.

I am very proud of the fact that we at IG&H, as sector insiders, not only can sharpen strategies, but also implement them. A new way of working also requires different behaviour. Our organization’s transformation professionals help executives and employees sustainably adjust their daily work methodology. What’s more, our technology experts can implement the required software so that it stays fast and flexible in the future.”

IG&H and GroupLife combine forces

By Banking, Health, Insurance, News, Pensions, Retail

Consultancy firms IG&H and GroupLife are moving forward together under the name IG&H, resulting in a specialized consulting group that is able to help realize business and technology transformations from start to finish.

Both companies have in-depth sectoral knowledge, close customer relationships, high quality people and service. By combining their expertise in strategy, organizational transformation, data analytics and technology, they will be able to more effectively help organizations with transformative matters. The new consortium includes more than 220 specialized professionals.

Execution of strategy requires integral approach

Jan van Hasenbroek, managing partner IG&H: “The rapid developments in the technology sector have an enormous impact on the business models of our clients. In order to remain successful in the future, our vision must include addressing organization and technology together. This will lead to corporate strategies being immediately operable, providing concrete results and sustainable organizational transformation. GroupLife has an impressive track record and a proven methodology in business modelling, implementation of technological platforms, and data management. That’s why a collaboration fits well within IG&H’s strategy to continually strengthen its technological ecosystem.”

Wim Groenen and Tom Bottinga, co-founders of GroupLife: “In previous projects with joint clients, we discovered that we had similar ideas about how to address complex business transformations. IG&H knows how to combine its expertise in strategy, data analytics, technology and organizational transformation with sector knowledge. We are delighted with the collaboration and together with IG&H we can make an even greater contribution to the success of our clients.”

About IG&H

IG&H is committed to help leading organisations in the financial services, retail and healthcare sectors. With 160 involved and enterprising professionals, the consultancy and implementation firm, based in Utrecht, helps organizations take steps towards radical customer centricity. They set high standards for themselves and their way of working. With in-depth knowledge and a personal approach, they aid their clients to help them improve the sector. IG&H is recognized as a ‘Great Place to Work’ and puts a lot of emphasis on a high net promotor score.

New innovations are rapidly changing the game of omnichannel business

By News, Retail, Retail

Looking at the retail innovations and trends in Asia and the US, we see a breakthrough in the retailers-customer dialogue; it will change radically in the next few years! Most disruptive innovations are 100% technology driven and we see some are about to become mature enough to be adopted by mainstream retailers.

How to embrace and take advantage of these innovations to increase customer service, while reducing the inefficiencies of current omnichannel commerce?

[Click here to read the article]