How to get closer to the customer? Increase supply chain efficiency, say retailers — and that’s what many will focus on this year, according to a new study. “Retail Horizons: Benchmarks for 2004, Forecasts for 2005,” reveals that the majority of retailers cite supply chain optimization as a priority initiative for getting closer to the customer. This third annual study by the NRF Foundation, the research and education arm of the National Retail Federation, and BearingPoint Inc., a business consulting, systems integration and managed services firm based in McLean, VA, surveyed more than 300 retailers from a wide assortment of department, specialty, apparel, grocery, and home center stores. Retailers with as few as a single store to more than 2,000 were asked questions in nine functional areas, including store and field operations, supply chain, customer relationship management, merchandising, advertising and marketing, human capital, information technology, and online.
Among the key findings:
– In the next 12 months, more than half of retailers (57%) plan to replace or upgrade their point-of-sale systems. But, perhaps more significant for the supply chain, more than a third (35%) plan to deploy RFID during the same time period.
— Customer Relationship Management was the company-wide strategic initiative with the largest gain over last year, with 47% of retailers saying it is a “top” strategic initiative, up from 42% in 2004. But the number of retailers citing customer satisfaction/retention as their top initiative actually dropped, from 55% to 51%. And while CRM gained as a top priority, that doesn’t mean an increase in technology spending; the percentage citing it as a top IT strategic initiative dropped from 23 to 21, and it has fallen to 4th place from its 2003 perch at 2nd.
— In “customer-centricity,” multi-channel is predominant, but integration is still a challenge.
Other survey results show:
– While 38% of retailers will focus on domestic expansion, 17% will focus on international expansion.
— This year, 33% of retailers will focus on redesign and relocation of stores. However, better is now more important than bigger: The percentage of retailers with store expansion as a top priority fell precipitously, from 41% to 35%.
— More than one in five retailers (21%) list outsourcing as a priority for 2005.
— Almost 25% of retailers plan for half of their merchandise assortments to be private label.
The Bearing Point/NRF Foundation study makes suggestions for several approaches retailers can use to provide competitive advantage and generate robust prospects for profitability:
– Create true supply chain visibility, with a “synchronized demand network” that eases inventory pain by providing trading partners with optimal flow through of product and near-real time sharing of forecasts and demand signal.
— Link disparate systems for common connectivity to aid in retailers’ streamlining of operations.
— Target and segregate high-value customers from low-and no-value customers and provide the right combination of products and services to earn loyalty.
The full study may be purchased via the online NRF Bookstore at www.nrf.com/bookstore. For more information, visit www.nrf.com or www.BearingPoint.com.