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The retail tech travel guide

The retail tech travel guide
Friday September 21 2018

Overseas expansion is playing an increasingly important part in growth strategies, but how do retailers ensure it’s done successfully? Data and analytics are key says Andy Berry, VP EMEA software solutions, at Pitney Bowes

Taking UK businesses alone, 59% of retailers and wholesalers currently sell their goods and services outside the UK, according to the Santander Trade Barometer and 55% plan to do this within the next year. 

Profitability from this investment, however, isn’t always easy to come by, and there are as many stories of business failures in overseas expansion as there are successes.

Even the most established, recognised brands have had to retreat from overseas markets. Marks and Spencer, for example, closed a flagship branch in Paris and exited ten countries in 2016, while Tesco, Sainsbury’s and Dixons also left the US markets after lack of success. 

Huge losses 

It isn’t just UK stores, of course: Target tried to enter the Canadian market but had to retreat after generating losses in the billions of dollars. Home Depot exited China, Walmart found disappointment in Germany, and Australian brand Bunnings sold Homebase in the UK for a nominal £1 after ringing up huge losses. 

1. Never underestimate local behaviours and cultural nuances

These overseas expansions were unsuccessful for a variety of reasons. Home Depot underestimated the fact that ‘do-it-yourself’ products were less important in China, as tradespeople were not as expensive as in other markets so ‘DIY’ wasn’t as necessary, or popular. 

Bunnings removed popular product lines, and couldn’t anticipate demand. They didn’t seem to know what their customers wanted. And Wal-mart, in buying Germany’s Wertkauf chain, didn’t account for German pricing regulations, limited store hours and German shoppers’ loyalty to national brands. 

Even companies extending their businesses within their own domestic markets can struggle, unless they spend time anticipating and forecasting behaviours and understanding cultural nuances. 

Digital transformation

At eTail Europe earlier this year, head of operations development for Sainsbury’s Argos, Nigel Blunt, talked about a digital trial Sainsbury’s carried out a few years ago in one of their grocery stores. Embracing digital transformation and the need to enhance convenience for shoppers, Sainsbury’s trialed its self-scan app, Smart Shop at selected stores in London. 
The app enabled customers to avoid the checkout altogether, with the intention of accelerating the shopping experience. 

It was convenient, fast and efficient, but the grocery chain had underestimated one important behavioural element: the great British conscience. Shoppers, they found, felt deceitful when they left the store without some degree of physical engagement – they felt like they were shoplifting. 

To cope with this, the supermarket had to make changes to the process, and introduce a physical scan. Once they did this, customers were happy. 

2. Build out your customer data to create a Single Customer View

Never has it been more important for retailers to know their customers and prospects – to know who they are and where they are; to carry out site analytics, to investigate a location before they make an investment; to understand and predict behaviour patterns and trends; and to capture the information they need to deliver a personalised, engaging customer experience.  

Experience is everything: in one study , 76% of consumers felt that having a positive customer experience with a company was more important than the product itself. 
One single element delivers this knowledge, and distinguishes the retail successes from the failures: data. Accurate, real-time data should inform every decision a retailer makes. Unquestionably, data delivers insight, facilitating intelligence, analytics and predictive modelling. Anything a retailer does should be informed by data. In its current state of flux, those retailers not building their business on customer data are likely to flounder. Conversely, those who integrate smart, specialist retail intelligence solutions are creating blueprints for the future success of their organisations. 

Customer data gives retailers a full contextual picture and deep understanding of consumer behaviour so they can understand when, where and how their customers shop: their preferences and influences; their spending behaviours, buying triggers and repeat purchase patterns; and their preferred channels across their customer journey. 

Social demographics

This data can be collected from a variety of sources – reviews, social media channels, surveys, email marketing responses, web browsing, subscriptions and loyalty programmes, at point-of-sale – then enriched with data on social demographics and addressing, and used to create a Single Customer View.  The Sainsbury’s example is fascinating: the business was in the middle of a digital transformation, clearly with customers at its heart. But it wasn’t until it collected customer data and studied feedback that it realised the depth of the British conscience, and how it was influencing behaviours. 

3. Get smart with site analytics

Location data provides retailers with a deeper understanding of a locality. It limits risk, removes the chance of territory conflict and ensures retailers locate themselves where their store is most likely to generate profit. Visualised on a map, location data can give retailers a clear indication of the locations with lowest risk and highest potential. 
As the Guardian reported on Tesco’s retreat from the US, “Like many British retailers before it, Tesco struggled to get the right kind of stores in the right places. Even finding properties was tricky. As an incomer, any British retailer is fighting for locations with established competitors. According to experts, Tesco got some of its locations wrong, opening aspirational grocery stores in low-income areas”. 

Detailed site location analytics would have armed the retailer with data and intelligence to avoid this issue. 

To drive successful expansion, whether domestic or overseas, retailers must take time to know and understand their customers – and demonstrate they’ve done so. 

Tagged as: Overseas expansion | data | analytics | Pitney Bowes | Marks & Spencer | Tesco | | | Walmart