Managing Experience And Costs On Retail's 2020 To-Do List

Elizabeth Maffei

Apparently, in the early 1900s, the various products of the earth could be ordered quite easily, if one were “of above-average capacity or character,” middle class, and happened to live in London. For recipients of my 2019 Christmas presents, the good news is that I could choose gifts originating far beyond the shores of the UK without a capacity, character, or class test.

Although this was good for my nearest and dearest (otherwise they might not have got so much as a tangerine), it’s not clear it was good for the UK’s retail sector. I haven’t seen any figures that go up to December 25, but it seems the Black Friday figures were pretty good – even for the High Street, at least in terms of volume. However, the travails of the UK retail sector are not demand but margin driven; demand remains reasonably buoyant. In October 2019, ONS reported that year-on-year growth in the quantity bought increased by 3.1%, with growth across all sectors except household goods stores.

However, McKinsey research has already shown that UK consumers are twice as likely to trade down – i.e., to buy a cheaper product – than trade up. Cost-cutting is just one weapon in the retailer’s armory in their fight for their share of consumer spending. The research suggests that savings from indirect procurement are an important source of margin improvement for retailers. In particular, marketing, private label packaging, and supplier managed costs are all identified as categories that can deliver double-digit savings. The strategy house also recommends retailers look to clean sheeting, consumer insights, and design to value combined with digital analytics to unlock value.

Retail products and product mix are also undergoing rapid change. Nielsen’s 2018 report the Rise and Rise Again of Private Label showcases an important component of that change. Getting private label right helped Tesco make the top 10 of Deloitte’s 2019 Global Powers of Retailing. In 2018, with the aim of cutting its own-label costs, the company announced a strategic partnership with Carrefour.

Innovation at pace and being able to scale what works also at a pace are, as Deloitte has highlighted, crucial for retailers. With this frenetic pace of activity, it is important not to evaluate products in a binary “ditch” / “scale” manner. Tracking a customer’s product experience journey can reap huge dividends helping organizations make changes to realize value without having to go back to the drawing board.

Learn how Belkin uses the Qualtrics XM Platform to track product insights in real-time across all stages of the customer journey, which enabled its product teams to intervene post-product launch and successfully close an $80 million gap against sales targets.

For more on how SAP Ariba supports retail, read my colleague Florian’s post, and see my colleague James’ post on the importance of being able to combine experience data with operational data.


Elizabeth Maffei

About Elizabeth Maffei

Elizabeth Maffei is the Spend Value Advisory Director, for the Nordics, United Kingdom, and Ireland regions, at SAP. Often analytical and creative, she is curious about tech, procurement and supply chain operations, and the world around them. Prior to SAP, Elizabeth earned a master of science degree in Logistics and Supply Chain Management at Cranfield School of Management and spent 10 years as a procurement practitioner and best practice researcher at organizations such as Procurement Leaders and the London Olympics.