Description
Driven by rapidly changing consumer behaviour and a growing market for online retail, retailers in the UK and elsewhere in the world are embracing the concept of multi-channel retailing. Consumers now expect a seamless customer experience across multiple channels such as stores, online, mobile and catalogues. Further, research by Verdict Retail indicates that online retail spending in the UK was £8 bn in 2005, making up for 3.9% of the total retail market.
Buying and Merchandising in a
Multi-Channel Retailing World
Why retailers should consider transforming their traditional buying
and merchandising functions in the context of a multi-channel
business environment.
the way we see it Retail
Introduction
Background
Driven by rapidly changing consumer
behaviour and a growing market for
online retail, retailers in the UK and
elsewhere in the world are embracing
the concept of multi-channel retailing.
Consumers now expect a seamless
customer experience across multiple
channels such as stores, online, mobile
and catalogues. Further, research by
Verdict Retail indicates that online
retail spending in the UK was £8 bn
in 2005, making up for 3.9% of the
total retail market. By 2014, this spend
is expected to increase to £34 bn,
thereby accounting for 10.7% of the
overall market. Moreover, multi-channel
customers have been found to be
worth 5 – 10 times more than their
single channel counterparts, hence
serving such customers is in the interest
of retailers. However, in order to ful?l
the multi-channel promise to their
customers at the front-end, retailers
need to transform their buying and
merchandising functions in the back-
end.
Figure 1: Buying and Merchandising Activities
Details the trading objectives,
plans and objectives to meet the
financial and brand targets
Entails range strategy and
assortment planning
Includes the strategy for buying
from suppliers and
managing relationships with them
Involves strategy for and
managing of markdowns and
promotions
Encompasses macro
and micro space
management and display
Covers the process of
developing the business
plan at a category level
Trading
Strategy
Range
Planning
Sourcing
Markdown
and
Promotions
Space and
Display
Planning
Category
Planning
Buying
and
Merchandising
1
2
4
6
5
3
Approach
This paper analyses 6 key activities of
the buying and merchandising function
with a view to determining the scale of
change required in the operating model
to become truly multi-channel and the
potential bene?ts of doing so. Aspects
covered to assess the scale of change
are organisation design, performance
management (e.g. KPIs), processes and
data, and technology. Potential bene?t
areas include sales, gross margin,
operating expenses and working capital
requirements.
2
Activity Sales Gross Margin
Operating
Expenses
Working Capital Overall
1. Trading Strategy 2 N/A 2 N/A
2
2. Category Planning 2 4 0 N/A 2
3. Range Planning 4 N/A 4 N/A 4
4. Space and Display
Planning
4 N/A 2 N/A 2
5. Sourcing 2 4 0 2 4
6. Markdowns and
Promotions
4 2 N/A 4 4
Buying and Merchandising Activities
Trading strategy
Truly multi-channel retailers should
consider operating as a single business
with a single trading strategy, regardless
of the number of channels they use
to reach out to consumers. This is
required to minimise con?ict between
the physical and digital channel and
to ensure that channels work together
towards a common objective i.e. to
increase sales and enhance customer
experience. Doing so will also lead
to lower administrative expenses as
compared to maintaining a trading
strategy for each channel.
In order to make this happen, the
organisation design will need to be
altered in favour of having a single
team owning the trading strategy for all
channels. Also, historical data across
channels will need to be integrated
to aid planning for the single, multi-
channel business. However, no change
in performance management or
technology will be needed. Overall, with
a relatively low scale of change to the
existing operating model, considerable
bene?ts can be realised. Hence,
implementing a single trading strategy
is a “quick win” for retailers with multi-
channel aspirations.
Category planning
In a multi-channel world, retailers should
think about having a single, joined-up
category plan irrespective of the
number of channels in order to tie
back to the single trading strategy to
align channels towards a common
objective. Category roles (e.g. fresh
fruits and vegetables as a destination /
impulse category and newspapers and
magazines as a convenience / impulse
category) should be applied consistently
across channels so that they are
aligned to consumer demands.
3
4 High 2 Medium 0 Low
Case Study - Sainsbury’s
Sainsbury’s has set up an online
merchandising team that works with
core buying teams and suppliers to
share sales data by channel, manage
online promotions and provide insights
to improve sales and customer
engagement.
Case Study – John Lewis
Partnership
In the year 2000, John Lewis
commenced its online journey when it
launched a department store website
and set up a dedicated team to
handle online operations. Following
years of successful growth, in 2011,
the retailer integrated the buying and
merchandising functions to adopt
a truly multi-channel organisational
structure for the physical and digital
channels.
Figure 2: Potential Bene?ts of becoming truly Multi-Channel
the way we see it Retail
Further, consistent metrics should be
used to measure performance of each
channel with the objective of minimising
cross-channel con?ict, eventually
leading to higher sales and margin for
the multi-channel business.
As in the case of the trading strategy,
an integrated category plan will have an
impact on the organisation design to
have a single team owning the joined-
up category plan and coordinated
data and processes to enable data
across channels to be consolidated
into the plan. In addition, performance
management will be signi?cantly
impacted as joint KPIs should be put
into place to drive the right behaviours
across channels.
Range planning
Multi-channel retailers should consider
utilising the digital channel to offer a
wider and deeper assortment as it is not
subject to the same physical constraints
as physical channels in order to increase
sales. Furthermore, the digital channel
can be used as a platform to test new
ranges as it allows more ?exibility to
change assortments in a timely fashion
and with minimal operational impact,
thereby, leading to higher sales for the
multi-channel business.
Retailers should also evaluate
adopting a single range architecture,
a single product hierarchy and a
single product master ?le, allowing for
?exibility to leverage channel-speci?c
characteristics. Doing so will not
only ensure that the foundation for
range planning is consistent across
channels, but also drive ef?ciencies by
reducing the work and costs involved
in maintaining separate ?les, along
withreducing the potential for error.
However, range planning in the multi-
channel context involves substantial
changes to retailers’ operating model.
Range planners for the physical and
digital channels should work closely
together to ensure that the principles of
range planning are applied consistently
across channels and learning is
transferred from one channel to another.
The performance management system
will need to ensure that metrics are in
place to drive the necessary behaviours
for the physical and digital teams to
work with each other.
Furthermore, the assortment planning
process is signi?cantly different for
the physical and digital channels,
relying on factors such as catchment
population, store area, category-wise
sales productivity and gross margin
etc for the former and on customer
pro?les, customer interactions with
website, online shopping behaviour etc
for the latter. In addition, the number
of SKUs in the digital channel can be
considerably higher, leading to high
a scale of change in the data that is
required to be captured. Moreover, as
SKUs handled per buyer can be much
higher in case of the digital channel,
more automated ranging systems are
required, thereby, leading to a high scale
of change in the technology required
to manage the assortment planning
process.
Space and display planning
In the multi-channel world, retailers can
apply the same principles for space
and display planning (e.g. adjacencies,
ease of navigation etc) across channels
in order to offer a consistent customer
experience, leading to higher sales.
Also, retailers can introduce digital
elements into stores (e.g. digital kiosks),
thereby, further enhancing the overall
customer experience. Retailers can
also introduce digital elements into
independent locations (e.g. Tesco’s
‘virtual fridge’ at Gatwick airport),
enabling them to not only improve the
customer experience but also lower
operating expenses (as operating
an interactive virtual store costs
considerably lower than operating a
physical store).
Space and display planning in a multi-
channel context has several implications
on a retailer’s operating model. The
organisation’s ways of working will
need to change such that physical and
digital teams work together to apply the
principles of space and display planning
consistently across channels, even
though they may perform different tasks
to get different outcomes.
As in case of range planning, the
performance management system will
need to drive the requisite behaviours
for the physical and digital teams to
work with each other.
Space and display planning relies on
store clustering, planograms, signage
etc for the physical channel and
website design and layout, search-
and-merchandising etc for the digital
channel. As the processes in the two
channels are signi?cantly different, the
scale of change required to become
truly multi-channel from a process
perspective is high.
4
Case Study – Tesco’s
‘virtual fridge’
In the year 2012, Tesco introduced
a ‘virtual fridge’ at Gatwick airport.
The fridge allowed travellers to scroll
through the touch interactive digital
displays, scan the barcodes with
their smartphones to add products
to their online baskets, book a home
delivery time slot and check out. Their
shopping would then be delivered
when they returned from their trip.
Sourcing
For sourcing in a multi-channel business
environment, retailers should consider
having a single lead buyer engaging
with suppliers, taking into account the
requirements of all channels where the
range is shared. In this manner, they can
drive sourcing ef?ciencies by leveraging
buying power across channels,
thereby enhancing gross margin. In
addition, higher buying volumes and
the associated bargaining power allows
them to obtain better credit terms from
suppliers, thereby, improving working
capital management. Furthermore,
collaborating with suppliers to share
sales data from the online channel can
positively impact future sales.
To make this happen, the organisation
structure will need to change to ensure
that a single lead buyer is accountable
for buying for the single multi-channel
business. The physical and digital teams
will need to work closely with each other
in order to have a single lead buyer.
Joint KPIs will need to be established
across different channels to avoid cross-
channel con?icts. Finally, processes will
need to be aligned to make sure that a
joint business plan is prepared to buy
for the multi-channel business and a
single sign-off process with suppliers
is put into place.
Markdowns and promotions
In the multi-channel world, retailers
should consider moving to a single
view of inventory across all channels,
which would allow them to transfer
slow moving stock from one channel
into another in order to meet sales
demand. Promotions in one channel
can also be used to drive sales in
another (e.g. sending push noti?cations
to consumers’ mobile phones for
promotions available in nearby stores).
Apart from increasing sales, these
practices can lead to improved net
margin as well as lower working capital
requirements as fewer inventories will be
marked down.
5
Activity
Organisation
Design
Performance
Management
Processes / Data Technology Overall
1. Trading Strategy 4 N/A 2 N/A 0
2. Category Planning 4 4 2 N/A 2
3. Range Planning 2 2 4 4 4
4. Space and Display
Planning
2 2 4 N/A 2
5. Sourcing 2 4 2 N/A 2
6. Markdowns and
Promotions
2 4 2 4 4
4 High 2 Medium 0 Low
Figure 3: Scale of Change required to become truly Multi-Channel
Case Study – Argos
In the year 2001, Argos invested in
modernising its inventory management
processes and information system.
This enabled the retailer to have a
single view of inventory of 18,000
product lines released biannually with
a footprint of over 700 physical stores,
ultimately leading to lower inventory
costs.
the way we see it Retail
Low High Medium
Category Planning
Trading Strategy
“Quick win”
Range Planning
Space and Display Planning
Sourcing
Markdowns and Promotions
Potential Benefit
Low
High
Medium
S
c
a
l
e
o
f
c
h
a
n
g
e
1
2
3
4
5
6
6
However, in order to make this
happen, sophisticated inventory
management systems are required
to ensure full visibility of inventory for
transferring slower moving stock from
one channel to another. Teams should
be accountable for markdowns and
inventory across channels via joint KPIs.
Finally, as promotions can be integrated
across channels, consumer and sales
data for one channel should be easily
accessible in another.
Putting it all together
Based on Figures 2 and 3 on pages
3 and 5 respectively, each of the 6
buying and merchandising activities
are represented in Figure 4 below. The
chart compares each activity relative to
the other 5 activities based on the scale
of change that is required to become
truly multi-channel with respect to
that activity and the potential bene?ts
thereof.
For example, becoming truly multi-
channel with respect to trading strategy
leads to a lower potential bene?t for
retailers albeit with a lower scale of
change. Hence, trading strategy has
been identi?ed as a “quick win”. At the
other end of the spectrum, becoming
truly multi-channel with respect to
markdowns and promotions will result
in relatively higher potential bene?ts
for retailers, but will also entail a higher
scale of change and should hence, be
pursued at a later stage.
Figure 4: Potential Bene?ts and Scale of Change Matrix
7
In order to deliver a cohesive customer experience across different channels, retailers can transform their operating model with respect
to the buying and merchandising function in terms of organisation design, performance management, processes and data, and
technology.
Whilst activities such as sourcing, markdowns and promotions and range planning can provide substantial ?nancial bene?ts in terms
of improved sales and gross margin and lower operating expenses and working capital requirements, these activities also require a
signi?cant scale of change in order to be managed successfully. Hence, as a starting point, retailers should look to begin the journey
by establishing a single trading strategy for the multi-channel business as a “quick win”, pursuing the remaining activities as a result.
Doing so will enable them to not only realise signi?cant bene?ts over the medium term, but also meet their customers’ ever-increasing
expectations successfully.
Conclusion
the way we see it Retail
For more information, please contact:
Lena Holton
Principal Consultant, Capgemini UK
Tel: +44 (0) 870 904 4773
[email protected]
Sachiv Mehta
Senior Consultant, Capgemini UK
Tel: +44 (0) 870 904 3539
[email protected]
With more than 125,000 people in 44 countries,
Capgemini is one of the world’s foremost providers of
consulting, technology and outsourcing services. The
Group reported 2012 global revenues of EUR 10.3 billion.
Together with its clients, Capgemini creates and delivers
business and technology solutions that f t their needs
and drive the results they want. A deeply multicultural
organisation, Capgemini has developed its own way of
working, the Collaborative Business Experience
TM
, and
draws on Rightshore
®
, its worldwide delivery model.
Learn more about us at
www.uk.capgemini.com
About Capgemini’s Consumer Products and Retail
Practice
Capgemini’s global Consumer Products and
Retail practice works with a majority of the world’s
largest retail and consumer products companies
plus hundreds more. A team of more than 10,000
consultants and technologists throughout the world
helps these clients reap the benefts of industry-
specifc solutions such as Demand-Driven Supply
Chain, All-Channel Experience, Business Information
Management and Global ERP Integration.
The information contained in this document is proprietary. ©2013 Capgemini. All rights reserved.
Rightshore
®
is a trademark belonging to Capgemini.
About Capgemini and the
Collaborative Business Experience
doc_894537007.pdf
Driven by rapidly changing consumer behaviour and a growing market for online retail, retailers in the UK and elsewhere in the world are embracing the concept of multi-channel retailing. Consumers now expect a seamless customer experience across multiple channels such as stores, online, mobile and catalogues. Further, research by Verdict Retail indicates that online retail spending in the UK was £8 bn in 2005, making up for 3.9% of the total retail market.
Buying and Merchandising in a
Multi-Channel Retailing World
Why retailers should consider transforming their traditional buying
and merchandising functions in the context of a multi-channel
business environment.
the way we see it Retail
Introduction
Background
Driven by rapidly changing consumer
behaviour and a growing market for
online retail, retailers in the UK and
elsewhere in the world are embracing
the concept of multi-channel retailing.
Consumers now expect a seamless
customer experience across multiple
channels such as stores, online, mobile
and catalogues. Further, research by
Verdict Retail indicates that online
retail spending in the UK was £8 bn
in 2005, making up for 3.9% of the
total retail market. By 2014, this spend
is expected to increase to £34 bn,
thereby accounting for 10.7% of the
overall market. Moreover, multi-channel
customers have been found to be
worth 5 – 10 times more than their
single channel counterparts, hence
serving such customers is in the interest
of retailers. However, in order to ful?l
the multi-channel promise to their
customers at the front-end, retailers
need to transform their buying and
merchandising functions in the back-
end.
Figure 1: Buying and Merchandising Activities
Details the trading objectives,
plans and objectives to meet the
financial and brand targets
Entails range strategy and
assortment planning
Includes the strategy for buying
from suppliers and
managing relationships with them
Involves strategy for and
managing of markdowns and
promotions
Encompasses macro
and micro space
management and display
Covers the process of
developing the business
plan at a category level
Trading
Strategy
Range
Planning
Sourcing
Markdown
and
Promotions
Space and
Display
Planning
Category
Planning
Buying
and
Merchandising
1
2
4
6
5
3
Approach
This paper analyses 6 key activities of
the buying and merchandising function
with a view to determining the scale of
change required in the operating model
to become truly multi-channel and the
potential bene?ts of doing so. Aspects
covered to assess the scale of change
are organisation design, performance
management (e.g. KPIs), processes and
data, and technology. Potential bene?t
areas include sales, gross margin,
operating expenses and working capital
requirements.
2
Activity Sales Gross Margin
Operating
Expenses
Working Capital Overall
1. Trading Strategy 2 N/A 2 N/A
2
2. Category Planning 2 4 0 N/A 2
3. Range Planning 4 N/A 4 N/A 4
4. Space and Display
Planning
4 N/A 2 N/A 2
5. Sourcing 2 4 0 2 4
6. Markdowns and
Promotions
4 2 N/A 4 4
Buying and Merchandising Activities
Trading strategy
Truly multi-channel retailers should
consider operating as a single business
with a single trading strategy, regardless
of the number of channels they use
to reach out to consumers. This is
required to minimise con?ict between
the physical and digital channel and
to ensure that channels work together
towards a common objective i.e. to
increase sales and enhance customer
experience. Doing so will also lead
to lower administrative expenses as
compared to maintaining a trading
strategy for each channel.
In order to make this happen, the
organisation design will need to be
altered in favour of having a single
team owning the trading strategy for all
channels. Also, historical data across
channels will need to be integrated
to aid planning for the single, multi-
channel business. However, no change
in performance management or
technology will be needed. Overall, with
a relatively low scale of change to the
existing operating model, considerable
bene?ts can be realised. Hence,
implementing a single trading strategy
is a “quick win” for retailers with multi-
channel aspirations.
Category planning
In a multi-channel world, retailers should
think about having a single, joined-up
category plan irrespective of the
number of channels in order to tie
back to the single trading strategy to
align channels towards a common
objective. Category roles (e.g. fresh
fruits and vegetables as a destination /
impulse category and newspapers and
magazines as a convenience / impulse
category) should be applied consistently
across channels so that they are
aligned to consumer demands.
3
4 High 2 Medium 0 Low
Case Study - Sainsbury’s
Sainsbury’s has set up an online
merchandising team that works with
core buying teams and suppliers to
share sales data by channel, manage
online promotions and provide insights
to improve sales and customer
engagement.
Case Study – John Lewis
Partnership
In the year 2000, John Lewis
commenced its online journey when it
launched a department store website
and set up a dedicated team to
handle online operations. Following
years of successful growth, in 2011,
the retailer integrated the buying and
merchandising functions to adopt
a truly multi-channel organisational
structure for the physical and digital
channels.
Figure 2: Potential Bene?ts of becoming truly Multi-Channel
the way we see it Retail
Further, consistent metrics should be
used to measure performance of each
channel with the objective of minimising
cross-channel con?ict, eventually
leading to higher sales and margin for
the multi-channel business.
As in the case of the trading strategy,
an integrated category plan will have an
impact on the organisation design to
have a single team owning the joined-
up category plan and coordinated
data and processes to enable data
across channels to be consolidated
into the plan. In addition, performance
management will be signi?cantly
impacted as joint KPIs should be put
into place to drive the right behaviours
across channels.
Range planning
Multi-channel retailers should consider
utilising the digital channel to offer a
wider and deeper assortment as it is not
subject to the same physical constraints
as physical channels in order to increase
sales. Furthermore, the digital channel
can be used as a platform to test new
ranges as it allows more ?exibility to
change assortments in a timely fashion
and with minimal operational impact,
thereby, leading to higher sales for the
multi-channel business.
Retailers should also evaluate
adopting a single range architecture,
a single product hierarchy and a
single product master ?le, allowing for
?exibility to leverage channel-speci?c
characteristics. Doing so will not
only ensure that the foundation for
range planning is consistent across
channels, but also drive ef?ciencies by
reducing the work and costs involved
in maintaining separate ?les, along
withreducing the potential for error.
However, range planning in the multi-
channel context involves substantial
changes to retailers’ operating model.
Range planners for the physical and
digital channels should work closely
together to ensure that the principles of
range planning are applied consistently
across channels and learning is
transferred from one channel to another.
The performance management system
will need to ensure that metrics are in
place to drive the necessary behaviours
for the physical and digital teams to
work with each other.
Furthermore, the assortment planning
process is signi?cantly different for
the physical and digital channels,
relying on factors such as catchment
population, store area, category-wise
sales productivity and gross margin
etc for the former and on customer
pro?les, customer interactions with
website, online shopping behaviour etc
for the latter. In addition, the number
of SKUs in the digital channel can be
considerably higher, leading to high
a scale of change in the data that is
required to be captured. Moreover, as
SKUs handled per buyer can be much
higher in case of the digital channel,
more automated ranging systems are
required, thereby, leading to a high scale
of change in the technology required
to manage the assortment planning
process.
Space and display planning
In the multi-channel world, retailers can
apply the same principles for space
and display planning (e.g. adjacencies,
ease of navigation etc) across channels
in order to offer a consistent customer
experience, leading to higher sales.
Also, retailers can introduce digital
elements into stores (e.g. digital kiosks),
thereby, further enhancing the overall
customer experience. Retailers can
also introduce digital elements into
independent locations (e.g. Tesco’s
‘virtual fridge’ at Gatwick airport),
enabling them to not only improve the
customer experience but also lower
operating expenses (as operating
an interactive virtual store costs
considerably lower than operating a
physical store).
Space and display planning in a multi-
channel context has several implications
on a retailer’s operating model. The
organisation’s ways of working will
need to change such that physical and
digital teams work together to apply the
principles of space and display planning
consistently across channels, even
though they may perform different tasks
to get different outcomes.
As in case of range planning, the
performance management system will
need to drive the requisite behaviours
for the physical and digital teams to
work with each other.
Space and display planning relies on
store clustering, planograms, signage
etc for the physical channel and
website design and layout, search-
and-merchandising etc for the digital
channel. As the processes in the two
channels are signi?cantly different, the
scale of change required to become
truly multi-channel from a process
perspective is high.
4
Case Study – Tesco’s
‘virtual fridge’
In the year 2012, Tesco introduced
a ‘virtual fridge’ at Gatwick airport.
The fridge allowed travellers to scroll
through the touch interactive digital
displays, scan the barcodes with
their smartphones to add products
to their online baskets, book a home
delivery time slot and check out. Their
shopping would then be delivered
when they returned from their trip.
Sourcing
For sourcing in a multi-channel business
environment, retailers should consider
having a single lead buyer engaging
with suppliers, taking into account the
requirements of all channels where the
range is shared. In this manner, they can
drive sourcing ef?ciencies by leveraging
buying power across channels,
thereby enhancing gross margin. In
addition, higher buying volumes and
the associated bargaining power allows
them to obtain better credit terms from
suppliers, thereby, improving working
capital management. Furthermore,
collaborating with suppliers to share
sales data from the online channel can
positively impact future sales.
To make this happen, the organisation
structure will need to change to ensure
that a single lead buyer is accountable
for buying for the single multi-channel
business. The physical and digital teams
will need to work closely with each other
in order to have a single lead buyer.
Joint KPIs will need to be established
across different channels to avoid cross-
channel con?icts. Finally, processes will
need to be aligned to make sure that a
joint business plan is prepared to buy
for the multi-channel business and a
single sign-off process with suppliers
is put into place.
Markdowns and promotions
In the multi-channel world, retailers
should consider moving to a single
view of inventory across all channels,
which would allow them to transfer
slow moving stock from one channel
into another in order to meet sales
demand. Promotions in one channel
can also be used to drive sales in
another (e.g. sending push noti?cations
to consumers’ mobile phones for
promotions available in nearby stores).
Apart from increasing sales, these
practices can lead to improved net
margin as well as lower working capital
requirements as fewer inventories will be
marked down.
5
Activity
Organisation
Design
Performance
Management
Processes / Data Technology Overall
1. Trading Strategy 4 N/A 2 N/A 0
2. Category Planning 4 4 2 N/A 2
3. Range Planning 2 2 4 4 4
4. Space and Display
Planning
2 2 4 N/A 2
5. Sourcing 2 4 2 N/A 2
6. Markdowns and
Promotions
2 4 2 4 4
4 High 2 Medium 0 Low
Figure 3: Scale of Change required to become truly Multi-Channel
Case Study – Argos
In the year 2001, Argos invested in
modernising its inventory management
processes and information system.
This enabled the retailer to have a
single view of inventory of 18,000
product lines released biannually with
a footprint of over 700 physical stores,
ultimately leading to lower inventory
costs.
the way we see it Retail
Low High Medium
Category Planning
Trading Strategy
“Quick win”
Range Planning
Space and Display Planning
Sourcing
Markdowns and Promotions
Potential Benefit
Low
High
Medium
S
c
a
l
e
o
f
c
h
a
n
g
e
1
2
3
4
5
6
6
However, in order to make this
happen, sophisticated inventory
management systems are required
to ensure full visibility of inventory for
transferring slower moving stock from
one channel to another. Teams should
be accountable for markdowns and
inventory across channels via joint KPIs.
Finally, as promotions can be integrated
across channels, consumer and sales
data for one channel should be easily
accessible in another.
Putting it all together
Based on Figures 2 and 3 on pages
3 and 5 respectively, each of the 6
buying and merchandising activities
are represented in Figure 4 below. The
chart compares each activity relative to
the other 5 activities based on the scale
of change that is required to become
truly multi-channel with respect to
that activity and the potential bene?ts
thereof.
For example, becoming truly multi-
channel with respect to trading strategy
leads to a lower potential bene?t for
retailers albeit with a lower scale of
change. Hence, trading strategy has
been identi?ed as a “quick win”. At the
other end of the spectrum, becoming
truly multi-channel with respect to
markdowns and promotions will result
in relatively higher potential bene?ts
for retailers, but will also entail a higher
scale of change and should hence, be
pursued at a later stage.
Figure 4: Potential Bene?ts and Scale of Change Matrix
7
In order to deliver a cohesive customer experience across different channels, retailers can transform their operating model with respect
to the buying and merchandising function in terms of organisation design, performance management, processes and data, and
technology.
Whilst activities such as sourcing, markdowns and promotions and range planning can provide substantial ?nancial bene?ts in terms
of improved sales and gross margin and lower operating expenses and working capital requirements, these activities also require a
signi?cant scale of change in order to be managed successfully. Hence, as a starting point, retailers should look to begin the journey
by establishing a single trading strategy for the multi-channel business as a “quick win”, pursuing the remaining activities as a result.
Doing so will enable them to not only realise signi?cant bene?ts over the medium term, but also meet their customers’ ever-increasing
expectations successfully.
Conclusion
the way we see it Retail
For more information, please contact:
Lena Holton
Principal Consultant, Capgemini UK
Tel: +44 (0) 870 904 4773
[email protected]
Sachiv Mehta
Senior Consultant, Capgemini UK
Tel: +44 (0) 870 904 3539
[email protected]
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About Capgemini’s Consumer Products and Retail
Practice
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Retail practice works with a majority of the world’s
largest retail and consumer products companies
plus hundreds more. A team of more than 10,000
consultants and technologists throughout the world
helps these clients reap the benefts of industry-
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Chain, All-Channel Experience, Business Information
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