Goto your account
Search Stories by: 
and/or
 

Tips on Selling














What happens to Point Of Sale in an online world?

Customers are evolving and retail metrics must evolve with them if retailers are to leverage the information they need in an omni-channel marketplace. CHRIS PETERSEN reports.

At the most basic level, retail is the simple business of selling products to consumers who need them.

Historically, retailing was based on shoppers visiting stores to buy product, and even when retailers opened online stores, the core metrics didn’t change – they remained focused on sales, revenue, margin, growth, and market share.

In today’s omni-channel marketplace, the customers are now the new Point of Sale (POS). Customers determine where they purchase, how they pay and where they collect their goods.

Traditional POS systems are no longer enough when trends shift to ‘click and collect’ arrangements.

Retailer systems and metrics were not designed to track ‘flow’ to the consumer, which means today’s retailers are facing new business questions that will require new data, metrics and benchmarking.

This is important because one cannot manage what one doesn’t measure. Retailers have always measured sales at their location, yet how the purchases of today’s customers occur is just as important as any final sales receipt.

Core metrics still traditional

Bricks and mortar stores have evolved from being just places that sell things.

Historically, stores had a ‘till’ and most still have cash registers where the purpose is to collect payment, give change and record the transactions and data required to run their business.

"Traditional POS systems are no longer enough when trends shift to ‘click and collect’ arrangements"

Today’s stores have much more sophisticated POS systems that enable electronic payment. These POS systems track data all the way down to the SKU level to enable inventory replenishment and a detailed analysis of what is sold.

Through e-commerce and the concept of the virtual store, retail has evolved further. While the online shopping experience is digital, it is interesting that websites still use the term ‘shopping cart’.

Online, the term ‘checkout’ also still reflects the experience of waiting in a queue to pay at the cash register in a physical store.

In many ways, the POS system for online is not all that different from bricks-and-mortar stores; however, the new dimension is variety in shipment methods.

Finance reports should be broad

POS systems have been integrated into larger enterprise systems for managing retail operations, inventory and financials.

Yet, it is interesting to note how much of a retailer’s core metrics are still focused on stores selling products.

Whether it be physical stores or online, financial reports are heavily focused on sales, revenue, returns and net profit.

To benchmark performance, retailers use their metrics to analyse trends and growth:

year-on-year (YOY) growth, same-store sales and comparisons to same-week sales as in the previous year.

If retailers only track their own performance, however, they can be blindsided by the market and competition. So larger retailers subscribe to third-party sources that track total volumes of goods and market consumption.

They also use this data to analyse distributor data to map shipments through various channels.

The end result is that retailers can quickly benchmark their growth against competitive indices, and track their market share at the national and local levels.

This is all good and still very important but what are they missing?

The consumer is the new POS

By definition, omni-channel customers shop in more than one place across time.

Not only do they determine where and how they shop but also where and how they will pay for the goods.

Even more importantly, today’s consumers are expecting – and receiving – many choice of purchase and delivery options:

  • Buy online, ship to home

  • Buy online, collect in store

  • Buy online, collect at locker or another location

  • Buy in store, take home

  • Buy in store, delivery at home

  • Buy in store, delivery at commuter station or other location

Over a very short period of time, this has caused confusion or complicated how a sale should be recorded.

For example, if a customer buys online and collects in store, is that an online sale or a physical store sale?

If a customer searches online, finds a product in-store, views the product in the store then buys on a mobile phone and ships a home delivery, how should that sale be recorded, and in how much detail?

In most cases the retailer’s own systems and the third-party sources only report online versus store sales – none of the purchase dynamics or point of receipt are measured. Much valuable data is lost.

Omni-channel metrics essential

POS systems are necessary but not sufficient for providing omni-channel retailing success.

Without being able to effectively measure consumer purchase and delivery flow, retailers can’t see the critical paths or measure return on investment (ROI) on omni-channel investments.

For example, if a retailer sees double-digit YOY sales growth for online, they need to know if that’s good and why.

"A retailer needs to know if the online sales growth is due to the investments to improve the online experience, or is it part of the new click and collect capabilities available at stores?"

A retailer needs to know if the online sales growth is due to the investments to improve the online experience, or is it part of the new click and collect capabilities available at stores?

Does it matter where a sale happens? One could argue that a sale is a sale.

However, the costs associated with a given sale can be quite different. Compare a transaction completed entirely on the web with an online purchase that uses collect in store.

The latter has different costs for stock, staff and store operations.

Beyond the costs of different flows, research has consistently shown major positive gains for businesses using omni-channel sales activity.

Omni-channel customers shop more often, buy more and can be as much as 47 per cent more profitable than consumers who just shop one channel.

While the complexity can be more operationally expensive, the multiple paths creating consumer choice can be much more profitable and create more loyalty, which leads to repeat purchases.

Critical questions for retailers

Tracking retail sales will always be important, because sales are the final outcome in every business.

However, the number of individual purchases does not provide insights into the paths and factors that culminated in any particular sale or return.

In order to know where to invest and how to best leverage omni-channel factors to optimise growth, retailers need to know and measure much more.

Today, every retailer is competing in a digital world whether they acknowledge it or not. Consumers are driving their own experiences and purchases, which means retailers should be able to answer the following business questions:

  • How many consumers search your business on their mobile device?

  • How many mobile searches result in sales for your stores/online?

  • How many customers search your online website from within your store?

  • How many customers purchase online and collect in store or at a locker?

  • How many customers purchase at a store but chose to have it delivered?

  • How many customers purchase with free or same-day delivery?

  • Are omni-channel customers more or less profitable and by how much?

Store evolution

The store has evolved to become more than a shopping destination. It’s also an avenue of customer experience, and a point of goods distribution.

To strategically leverage the omni-channel consumer experience and increase sales, retailers need to know much more than the percentage of sales they make online and in their bricks-and-mortar stores.

We now live in an age where the customer is the store.

Retailers now need the data and metrics to track the paths and core metrics for maximum success.












ABOUT THE AUTHOR
Chris Petersen

Contributor • Integrated Marketing Solutions (IMS)


Chris Petersen is founder and CEO of retail consultancy Integrated Marketing Solutions (IMS). Learn more: imsresultscount.com









Wednesday, 19 September, 2018 02:44pm
login to my account
Username: Password:
Display ad Delux
advertisement
Display ad Delux
advertisement
(c) 2018 Gunnamatta Media