Retailers who do not offer their customers a free and easy returns process are likely to lose sales and customer loyalty, according to myriad pieces of research, which rather states the obvious.
Research from payments company Klarna found 75% of customers say easy returns are an essential factor in their choice of retailer, 78% say free returns mean they would buy more with a retailer over time, and 86% say the option of free returns will make them more loyal and more likely to keep coming back to a brand.
But at what cost to the retailer? Such are the levels of returns at clothing retailers – particularly at the fast fashion end of the market – that solutions are being sought to mitigate this margin-killer within their businesses.
Read the full article from the Retail Insider here
Younger consumers are increasingly aware of environmental and sustainability issues and the idea of buying second-hand and pre-used goods is becoming much more acceptable and is indeed a preferable option for a growing number of people.
This arguably places charity shops in a strong position as they are established traders in used goods and could potentially be on the cusp of something of a renaissance if they can capitalise on these fundamental changes in shopping behaviour.
Technology for Good
At RetailEXPO Mike Taylor, commercial director at British Heart Foundation (BHF), made it clear he was fully aware of the developing opportunity for charity shops and that in order to take better advantage of the situation BHF is in the midst of an overhaul of its technology infrastructure.
“Youngsters do not see the differentiation between pre-loved and new. In fact pre-loved is seen as cool, unique and sustainable. We are called a charity retailer but this is simply where the money ends up. We’re really a re-use retailer. Our side bit is that we fund research into a killer around the world,” he explains.
It has certainly been successful since formation in 1961 with the key aim of funding research into cardiovascular disease: “We fund or co-fund 4,000 of the leading specialists in 50 research locations across the UK at any one time. It’s been a success story as the number of deaths have halved.”
Helping this fundraising has been the retail operation that in 1989 consisted of a mere nine stores and which had grown to 738 by 2018. These consist of 552 standard high street shops and 186 large Home stores that collectively help the charity to sell the 90-100 million donated items it receives each year and which drove revenues of £200 million in 2018.
Maximising revenues through the most relevant channel
As well as the stores Taylor has been driving BHF to sell an increasing amount of items through a variety of alternative routes in order to fulfill the key objective of “selling through the most optimal channel in order to maximise revenues” for the charity. These include the BHF online store, via eBay and also placing listings on Gumtree.
With this added complexity and desire for growth Taylor says: “We had system challenges. We had a Point-of-Sale suite that had been used for the last 12 years and we did a review of it and it was clear we’d outgrown it. It did not meet our needs. We chose to work with K3 and implement Microsoft Dynamics because of their scale, experience, and customer base, which we knew would meet our needs for the future.”
The desire to further build the eBay opportunity was clear. By selecting rare and unique items from donations at its stores the use of eBay to drive significantly higher prices has been a great success. This was evident recently when a Beatles single was sold for nearly £10,000 on eBay.
“We originally had two guys doing it in Halifax above a shop and they were generating £90,000 of revenues. It was the most profitable part of the business and we needed to take it seriously. We now have a 10,000 sq ft facility and 90 people who are specialists. It’s like a mini Antiques Roadshow. We can take advantage of discounts at eBay, which supports charities. It’s a huge opportunity to use these other technologies,” explains Taylor.
Using Technology as an enabler
There are other added complexities in the BHF model that will further benefit from the new technology system. These include the fact that each store is effectively its own central warehouse – dealing with donated goods. More problematic though is the issue at the Home stores where there are two stock files in use. One is for the furniture items – including beds, mattresses and chairs – that are donated and the other is for the new goods, which represent 10% of items sold by BHF and are given by retail partners.
“At the moment there are two stock files but with the new system we can simplify this into one file and be able to run promotional activity too because we can better manage the stock in the business,” says Taylor, adding that there is also a requirement to produce inventory information for the retail partners including DFS and Bensons For Beds.
As well as dealing with these new products from retailers, BHF also handles the complex task of collecting unwanted goods from their customers. “One of the problems for people buying big items is getting rid of the old one. We send a two-man crew to them and do one million furniture collections per year. We’ve sold 1.1 million donated sofas so far. Integrating these 24,000 collections per week [into our new system] is being worked on at the moment,” says Taylor.
User friendly approach to Gift Aid
One further element that is unique to charity shops and which the new technology infrastructure will provide a massive boon is with the collection and management of Gift Aid: “It has been a huge revenue generator for us, with £100 million raised on stock sold since it started 12 years ago. But it’s critical that we monitor it and have compliance around it. Our new technology innovations in-store means we can have hand-held tablets with printers that can help [in-store employees] with Gift Aid compliance.”
Such devices, along with the PoS, have to be especially user-friendly, according to Taylor, because of the high level of volunteers in the BHF stores. There are 19,000 volunteers alongside the 3,200 paid employees. “User friendliness is needed even more than with other retailers where all the employees can be trained.”
Creating a retail destination
Other initiatives in-store will involve a move away from paper posters to digital screens and the launch of BHF Radio as well as the installation of Wi-Fi. “It’s part of a whole layer of tools for communicating. It’s about making it easy. The big change will be about the [connected] end-to-end experience.”
“Customers want nice shops along with good merchandise and the technology is the driver of sustaining what is a fantastic business,” he says, adding that this is being enhanced by the fact sustainability is now on people’s minds.
The reality is that charity retailers find themselves in something of a sweet spot in what is a very challenging retail environment and it is clear that BHF is putting itself firmly in a position to maximise value from this evolving scenario.
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Automation, machine learning, and artificial intelligence have been driving the narrative around the retail industry in recent years whereas the people element has been somewhat sidelined. It has certainly not been seen as a central plank of the future for the sector.
But we are seeing evidence of a growing realisation that it is people that are the real differentiators for retailers and that they are the most valuable component in generating loyalty among shoppers for retail businesses and brand owners.
This reappraisal of the value of people is taking place across entire organisations – from stores to call centres, and from senior management to those lower down the ranks. In the store environment their value is clear, according to recent research from Reflexis, which found 78% of people say good service drives loyalty and 87% find the ability of store associates to guide and advise them during the purchasing journey as important.
Pure-play retailers opening physical stores is a growing feature of the industry’s landscape and is a trend that has taken hold in the US where there are around 600 such stores at present and the forecast is for around 1,500 of these digital-first brand outlets to be operating within the next five years.
These retailers recognise the advantages of adopting this old school route to market. But the decision to open up on high streets and shopping malls is not specifically grounded on old ways of thinking. The drivers behind such moves are based very much on the digital world.
One factor is the increasing cost of customer acquisition through online-only channels and this is making it very hard for the pure plays to grow their businesses. According to a report from Bernstein the e-commerce pure-plays spend around nine per cent of sales on advertising whereas for store-based retailers this falls to only four per cent.
Everybody knows the story of how Kodak failed to switch from photographic film to digital images and how Blockbuster made the mistake of failing to move out of physical videos and into digital downloads and streaming.
There are many other examples of such calamities and there will no doubt be many more because one of the toughest things in business is for managements to disrupt their successful businesses by introducing a new way of working. It was the worry of many retailers that opening online stores would suck sales from their physical outlets and so they delayed making the shift online. It was a serious mistake because it let other – pure online players – move in and steal their trade.
Big food and drink brands have ruled the roost for many years on supermarket shelves but an increasing number of people have lost their appetite for the established global products. Nowhere has the shift – let’s call it a revolution – been more noticeable than at the global giant Kraft Heinz.
The company’s share price has collapsed in recent weeks as it has dawned on investors that the strategy of believing that big brands are impenetrable is flawed and it has potentially run its course. Kraft Heinz management has previously fuelled share price growth by cutting costs and thereby boosting the profitability of its core brands. This coincided with too little investment in new product development (NPD) and innovation.
Where the company – and others in its league – finds itself is with little opportunity to cut more costs, withering interest in the core product range, and too little of appeal on the NPD runway to entice consumers. What also afflicts large companies is the inability to really think innovatively. The divide between young companies and the massive incumbents is growing and it’s the smaller players that are moving into the driving seat.
Read the full article from the Retail Insider here
Hear from Jim Buckle, COO of FeelUnique, in our latest Movers & Shakers Q&A. In this Q&A Jim explains the biggest challenges and opportunities for his business, his technology-related plans for the next 12 months and what other retail business he admires.
Not long ago it was only at small independent coffee shops located in places like London’s Soho and trendy Shoreditch, towards the capital’s eastern end, where cash was regarded as a little bit of an unwelcome commodity. After ordering your flat white you would immediately be presented with a card payment device with the expectation that you would be paying by contactless.
To then pull out a note or some coins was almost a faux pas in these stylish, too-cool-for-cash establishments. Over time I have fallen in-line when in such places and now automatically pull out my card for payment.
This move towards paying by contactless has gone on a real tear of late with exponential growth experienced to the point that an evening out will now invariably involve me not requiring cash for the entire evening. In particularly busy places it is clear that attempting to pay by cash is something of an annoyance to the rushed-off-their-feet employees.
Read the full article from the Retail Insider here.
It is clear that technology is changing the way customers use stores and that this in turn is driving retailers to adapt their physical outlets to better service these new requirements of shoppers. The latest example of this came from Tesco that announced the implementation of some major changes at many of its stores.
The headline change as far as the media was concerned was that Tesco would be removing fresh food counters from around 90 stores while the remaining 700 will continue to trade with either a full or flexible counter offer (read that as a bit of a winding down). The company argues that demand for the counters has declined because most customers now prefer to opt for a quicker shopping trip and instead choose pre-packaged goods.
Read the full article from the Retail Insider here
Hear from Nick Thomas, Founder of Built, in our latest Movers & Shakers Q&A. In this Q&A Nick explains the biggest challenges and opportunities for his business, his technology-related plans for the next 12 months and how he controls his growing digital landscape.