It is clear that retailers are fighting over customers. It is not surprising, because if the UK market is not showing growth, i.e. the cake is not getting bigger, retailers are having to promote to persuade customers to come to them (chase marketshare). Particularly as customers have so much choice. Never knowingly undersold is being replaced with Always knowlingly under-selling.
As one retailer said to me, the problem with retailing today is that it is not just about making sales but about making profitable sales. Profitable sales is the golden quest.
When to promote, what to promote and how much to promote? If you get these wrong, you might as well stand outside your shops and hand out cash to customers entering your store.
Sorting out good pricing and promotion strategies is the key to success. With markdowns in excess of 20% any improvement, even shaving off 1% of that is worth its weight in gold.
Doing smarter promotions is the key here. They do not have to be about a discount. In fact promotions that are not about discounts are better.
Targeting is also critical. Knowing your customer segments and sending them targeted vouchers (or voucher codes) is a good idea.
Nurturing not overwhelming customers is what is needed.
Remember that old adage, price says more about you than anything else will. It is the most important brand statement you can make. Dont devalue it.....
Sunday, May 15, 2011
Sunday, February 20, 2011
Will IT departments be the next focus for cost reductions?
2011 looks set to be another challenging year for retailers.
There’s no doubt that with increases in commodity prices, the fall in sterling, increases in labour costs, and the VAT rise, pressure will be on margins.
Retailers will be looking for ways to reduce costs. Will IT departments be the next target for cost reductions?
IT departments in the client-server world were required for the management of networks, servers, integration of disparate systems, office applications etc, which has all been labour intensive. It is a very fiddly business.
Will the move to browser based, Internet centred applications reduce the requirements for large scale IT departments? A recent set of case studies have shown that based In this world, a ten store retailer could be reaping the benefits of an end-to-end system for the ‘equivalent’ cost of one IT person, a twenty store retailer for the cost of two IT people, and a fifty store retailer for the equivalent cost of three IT staff.
This includes all software, hardware, maintenance, IT operations and 1st, 2nd and 3rd line support costs. You can call this IT on demand, managed services, outsourcing or Saas, but whatever you want to call it, the bottom line is that the case studies show that IT costs will be about 50% lower.
It is also clear that implementation of such systems is easier and faster, so the idea that you need to spend money on IT to get benefits elsewhere is no longer true, the benefits may be within the IT department itself.
So is the IT department as we have known it going to be re-engineered itself? In a cloud driven world, certainly it is hard to see the need for large IT departments going forward. Of course such challenges also create opportunities. Maybe the IT department instead of managing systems, will transform itself into helping businesses use their systems and information more effectively.
There’s no doubt that with increases in commodity prices, the fall in sterling, increases in labour costs, and the VAT rise, pressure will be on margins.
Retailers will be looking for ways to reduce costs. Will IT departments be the next target for cost reductions?
IT departments in the client-server world were required for the management of networks, servers, integration of disparate systems, office applications etc, which has all been labour intensive. It is a very fiddly business.
Will the move to browser based, Internet centred applications reduce the requirements for large scale IT departments? A recent set of case studies have shown that based In this world, a ten store retailer could be reaping the benefits of an end-to-end system for the ‘equivalent’ cost of one IT person, a twenty store retailer for the cost of two IT people, and a fifty store retailer for the equivalent cost of three IT staff.
This includes all software, hardware, maintenance, IT operations and 1st, 2nd and 3rd line support costs. You can call this IT on demand, managed services, outsourcing or Saas, but whatever you want to call it, the bottom line is that the case studies show that IT costs will be about 50% lower.
It is also clear that implementation of such systems is easier and faster, so the idea that you need to spend money on IT to get benefits elsewhere is no longer true, the benefits may be within the IT department itself.
So is the IT department as we have known it going to be re-engineered itself? In a cloud driven world, certainly it is hard to see the need for large IT departments going forward. Of course such challenges also create opportunities. Maybe the IT department instead of managing systems, will transform itself into helping businesses use their systems and information more effectively.
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