Retailers in Crisis: Here’s What’s Damaging the Bottom Line
Nothing drives home how ‘digital’ the modern world of retail has become more than the domino-like toppling effect of household retail brands.
A quick glance at the daily headlines reveals the ongoing struggles of once-proud high street stores announcing financial woes and shop closures. According to Kevin Murray, Managing Director of Greenlight Commerce, brands should focus on getting the basics of customer experience absolutely right first before implementing the latest and greatest technology.
As digital continues to revolutionise the way in which we shop, it’s safe to say that online sales are healthier than ever following recent years of incremental decline of in-store shopping. The current competitive climate presents a wealth of challenges, and it has become imperative that retailers adapt in order to survive and thrive.
However, it’s not all doom and gloom. Retailers are quickly recognising the importance of keeping pace and have begun responding accordingly to technological innovations and customer trends. As brands look to bridge the gap between the online/offline world, many retailers are choosing to invest in eCommerce projects to move their businesses forward and grow the bottom line.
Whilst retailers are right to invest in eCommerce capabilities to remain relevant and strengthen their position in the market, many projects are failing because they’re not implemented correctly, leading to wasted time, wasted resources and failure to meet business objectives. These impacts can have a devastating knock-on effect to the competitiveness of a business.
Worryingly, a recent study by Greenlight Commerce found that UK retailers expect 30% of their eCommerce work to give them back no value. The study, which harvested the opinions of 100 UK eCommerce decision-makers, found 99% of retailers are facing some sort of eCommerce challenge, with the top worries being customer retention (41%), customer experience (39%) and measuring metrics (33%).
The research further highlighted several reasons why eCommerce projects are not living up to expectations, with nearly half (48%) of retailers stating that projects have been rushed. Other factors include budgets and costs (47%) and a lack of expertise within the business (37%).
These statistics paint a rather gloomy picture of the current state of eCommerce in the UK retail sector. Time and time again, projects are stalling because there isn’t a clear and defined strategy set out from the beginning. This can lead to failure as senior management are unable to see any tangible benefits and therefore do not understand what return the investment will provide.
Defining value and measuring the right metrics is a key factor in whether a project succeeds or fails, and as the old business adage goes – what cannot be measured, cannot be improved. However, the study revealed many key metrics are in fact being neglected by project managers, with over seven in ten (71%) failing to measure the return on investment, almost half (48%) are not measuring customer retention, and 47% are failing to measure the impact upon revenue. It is crucial for teams to demonstrate what is driving the business forward in order to get future buy-in from the C-suite, and budget for other projects further down the pipeline. Yet, troublingly, 87% of respondents believe they need to improve when measuring the success of a project. Senior management needs to step in and ensure that the metrics that matter are agreed and then measured. This will guarantee the project achieves what it set out to accomplish for the business.
For starters, no projection should be sanctioned that doesn’t have a convincing and defined business case attached to it. Such a business case should detail what the transformed state of the business or process will look like and include metrics for how such promises will add value (‘Sales of x will be y% higher/ We will improve our Net Promoter Score among this problem demographic by 1-2 points’ etc).
Maximise results, minimise risk
The C-suite should not tolerate a situation where so much of their time, effort and investment is failing to improve the bottom line. Each project is as different and complex as the next, bringing with it its very own unique set of challenges. There is no way to foresee every delay, or control every situation that may occur, but risk can be minimised if a measured and due diligent approach is taken.
The retail industry is going through a time of unprecedented change, with customer expectations and demands at an all-time high. Rather than focusing on the competition and comparing themselves, retailers should take a step back and ask themselves ‘what are the core needs of my customer?’ and ‘what will make my business stand out?’ In addressing these questions and adopting a more vision-centric, hard metrics, project management approach – The C-suite can end this unacceptable situation where 30% of their eCommerce work is essentially being thrown away.