Evolution of the retail industry in the 21st century

The retail industry has evolved over the years, in the late 20th century retailers depended on supply chain and operational efficiency to keep ahead of the pack, but looking at the 21st century, there has been a shift towards retailers relying on the effective use of business applications and predictive technology to get back to the traditional idea of serving the customer as an individual and giving them what they want.

This was the message delivered by Alexi Sarnevitz, senior director of retail strategy for SAS' Global Retail Practice, when he spoke at the SAS Business breakfast event held in Johannesburg recently.

Coming full circle

The 21st century is now returning to the trend of the 19th century, which saw retailers focus on the customer as an individual, “back then it was all about knowing your customer and developing a relationship with them, today the difference is that we can marry technology with this process and achieve it on a much larger scale,” says Sarnevitz.

Technology plays a huge role in helping retailers adopt a customer centric approach. With the correct data and analytics in place, retailers can achieve a deeper understanding of their customers through customer segmentation and deep analysis of buying patterns and preferences. Knowing which customers want what products also helps retailers' accurately fulfill demand, and deepens customer insight.

Predictions and forecasting

Sarnevitz illustrated the benefits of SAS modelling and predictive analytics by looking at a case study conducted on Waitrose, a leading UK supermarket chain. Using SAS to enforce accurate demand forecasting that helps serve the customer better, Waitrose was able to do stock forecasting enabling more efficient stock ordering, delivery and replenishments. Waitrose also reduced its stock holding by 8% and its wastage by 4% and was able to improve customer satisfaction significantly by ensuring product availability.

“Waitrose has some 190 branches with over 15,500 product lines and an average of 30% new range each year, looking at this scale it would be very easy for things to go wrong, customers ending up with sub-standard food items, or stock replenishment issues, but with SAS, Waitrose predicts what items will be more popular on certain holidays or over weekends. Waitrose will always have the products its customers want and therefore they never have to go anywhere else,” adds Sarnevitz.

The right stuff

In the same case study published by SAS, Gail Richmond, the manager of branch ordering development at Waitrose highlighted that the critical issue for them was that “to make sure we're hitting the shelf at the right time with the right amount of stock, not holding too much stock in the back room, and helping stores be really productive.”

Competition in the retail industry has become increasingly fierce, every store has generalised its stock and now suddenly any product is available virtually everywhere, from garages to supermarkets, there is no need for the specialised store anymore.

Tailor-made approach

According to Sarnevitz, retailers can also add value to the buying experience by tailoring assortments and localising the pricing of more popular products in certain stores and areas. He says that it is through personalised marketing that retailers can identify with the individuality of their customers, in fact it is possible to achieve this on a real time basis today when interacting with customers via the web.

“This means that in the 21st century retailers have to work hard to hang onto customers. The good news is it's very possible with the types of technology and software available today, retailers can finally give their clients something different, an individual experience, a store that knows what they want and always has it in stock,” ends Sarnevitz.