It’s been a tough 12 months for Continental Europe, with economic stagnation leading to price deflation and unsettling consumer confidence. But things are looking up in 2015, as higher than expected growth in the final quarter has led policymakers to predict greater spending for the year ahead.
So how can European retailers benefit from the turning tide? Henri Seroux, Manhattan’s Managing Director, Continental Europe, shares his insights on connecting more closely with evolving consumer demands.
How is the retail landscape changing across continental Europe?
Ecommerce is definitely changing European retail, in terms of both how consumers spend their money and what they expect in return. We’re seeing a growth in internet sales, particularly as more shoppers embrace mobile, but this isn’t creating an increase in overall spending. Average basket values remain the same, which concerns some retailers.
Where ecommerce has turned the tide is customer service. Today, shoppers want to see same day delivery services or pick up items in store in just a few hours, but not all retailers can offer this. Collect in store is still a Stone Age process for many European businesses; items are picked from an ecommerce warehouse and shipped to store to collect a few days later. Store picking is currently an exception, but this is where the opportunity lies for organisations to meet customer demands more effectively.
Are you seeing any trends that are unique to European countries?
Yes – in France, we are seeing a shift in how retailers perceive online shopping. For a long time, the internet was seen by many businesses either as a separate channel or – for independent retailers and franchisees – as a threat. However, the growth of hybrid retail options such as drives are bringing online and offline activities together, and making more companies realise that all channels must work harmoniously.
Contrastingly, in other European countries we are seeing ecommerce performing really well, particularly where there are brands championing the value of online shopping. I can think of one particular retailer in the Netherlands that is going head-to-head with Amazon, and another in Italy that has created a huge market for off-price merchandise. However, companies like this still have challenges to overcome.
Managing inventory is a big one. Omni-channel retail can be successful, but businesses need to give consumers choice in every channel and deliver on that choice.
Speed of service is also an ongoing challenge for European retailers. The off-season merchandise retailer is a good example of this. Shoppers don’t want to wait until brands ship inventory to their store at the end of the season, so they are seeking ways to accelerate the process. One forward-thinking solution is linking to brand inventory in the store during sale season, so they can start offering goods as soon as they’re marked down.
Where does Europe stand within the global retail space?
There’s pressure in Europe from major U.S. businesses, who see the opportunity to expand quickly, but do not appreciate that the omni-channel market is not as mature in some European countries compared to their domestic operations.
What issues must continental European retailers address to compete with more advanced omni-channel retail markets such as the U.S?
Investment in technology is a key factor. France, Italy and Spain have some great brands, all of which should be targeting aggressive international expansion, but they don’t have the operational platform behind them to support that relationship growth.
However, this is beginning to change. Retailers are craving the ability to do things across channels – like view customers’ complete purchase history, or sell stock from another store – and recognise they need the technology to create those capabilities.
For example, Manhattan Associates is currently working with fashion brands in Spain and France currently who want to integrate online and store operations to deliver a complete customer experience. More specifically, they recognise the value of being able to fulfil ecommerce sales from the store – either as ship from store or in-store collection – to make delivery quicker and more cost effective.
This is indicative of the changing relationship we have with many of our European customers. Previously, many of them saw us as skilled partners for creating efficiency in their supply chain. Now, they see us as partners for increasing revenue and customer satisfaction.
What tips would you give European retailers wanting to evolve their business for today’s omni-channel shoppers?
Giving consumers a true omni-channel experience means breaking down siloes in your supply chain. One of the biggest opportunities to meet today’s shopper demands lies in store picking. Many fear this will disrupt fulfilment processes, but actually we’re seeing business cases in continental Europe where it’s being done with great success. Yes, it may lose you a little margin on some orders, but shoppers want merchandising fast – so it’s worth it to retain that customer.
Also, it’s important when moving towards cross-channel fulfilment to prepare your staff. Today, many retailers have systems in place but their workforce are not fully tooled, trained and focussed to make it work efficiently for their business. Your success lies in their hands.