French retailers have under-invested in their IS for years, contenting themselves with developing e-commerce by simply creating a site, and sometimes applications. They must make up for this lost time because omnicommerce calls for a natively digital, agile and unified IS, not just a superficial retouch. It is an essential weapon in the face of the Pure Players.
"Wake up!" Pierre Gressier, Vice President of Retail & Services at Gfi Informatique, generally tries to remain positive and good-natured, but he believes that not sounding the alarm would be a serious mistake. "Retail is being hit hard by the digital revolution. Just look around us: there are plenty of examples. The 3SI Group (formerly 3 Suisses international) has virtually disappeared. Before it, Quelle and the German Neckermann closed down. Vivarte and Tati are in turmoil. In the United States, Target, one of the distribution giants, is closing half its stores. Sears and Macy’s are also selling their points of sale by the dozen."
All these companies in jeopardy have one thing in common: they are under attack from the Pure Players, starting with Amazon, the leader in its category, with an overwhelming sales revenue of more than €150 billion. "As Amazon has a strong presence across the Atlantic, the first brick and mortar Retailers to suffer are automatically the Americans", analyses Pierre Gressier. "Even a well-known brand like Abercrombie & Fitch is closing stores."
But the impact does not stop at country borders. And it's pointless to put the blame on Amazon. "The Seattle giant was born in 1996. Brick and mortar retailers have had more than 20 years to react, unfortunately very few have done so. Vivarte, for example, makes just 3% of its sales revenue online, while in France 20% of shoes are sold on the Internet."
Brick and mortar Retailers should pay particular attention to digital technology, as Pure Players are quickly moving out of the product categories they were mistakenly thought to be confined to. An emblematic example: food. The hypermarkets thought they were safe, at least for their food departments - we know that the other departments are in free fall. But last July, came the thunderclap: Amazon bought Whole Food. "Because, no, Amazon isn't going to spend years looking for land and building warehouses. They do not go around the country asking for permits here and there. They choose a shortcut, which their means easily allow them to take: they buyout."
"On the day of the buyout of Whole Foods, Amazon's stock market share price rose enough to finance the cost of the operation. In under 24 hours, it was offset and even more, since the purchase price was $13.7 billion, for a value that made a leap of $15 billion. At the same time, the cumulative stock market value of the US food giants (Walmart, Ahold, Target, Costco and Kroger) lost $24 billion."
At the time, a rumour on the stock market suggested that Amazon may buy Carrefour. Whether it proves to be true or not, that is not the key issue: what matters is that, Amazon has the means to buyout Carrefour, World N°6 with 77 billion euros in sales revenue.
The solution: fight on favourable ground
Faced with this perilous situation, what can we do? Pierre Gressier clearly advises Retailers to adopt a motto that goes far beyond the military context: "Don't fight in enemy territory, choose favourable ground."
In practice, it will be difficult to do better than a Pure Player to create a digital offer, as they invest 100% in their site. "Retailers do not have the same means. They have to manage stock, stores, dedicated staff, etc. The inequality of opportunities is undeniable. So, it is better to take advantage of what sets them apart, what they are the only ones to have: a brick and mortar network."
Amazon is constantly reducing its delivery times by constructing warehouses. But a Retailer could fight on this ground: "They already have a brick and mortar network with stock: their stores. Delivering to their Internet customers via Click & Collect in-store is much easier than for Amazon.However, no one is setting this up in France. And even in Great Britain, where Retailers are more advanced, less than 10% of retailers actually use the store's stock to allow customers to pick up their items within an hour."
Pierre Gressier believes that it is "urgent to convince Retailers that their job is no longer just to present products in the store where the stock is located, it must be saleable through any channel. Then it is up to the tools to determine which stock is the best one to use." The constraint is always the same: the lack of a suitable IT tool, if only to have stock information in real time. "But it is a matter of priorities: what do we want to invest in? For my part, I believe that it is urgent to strengthen the Information Systems."
This problem of information system weaknesses is echoed at every stage of the customer journey: "Omnichannel is, by definition, transversal, but very few Retailers have a unified information system... Purchases in stores and online often constitute separate shopping carts with non-homogeneous promotions, and sometimes even different prices! And the question of IS also affects the referencing of products: how do you want to fight against Zalando and their 25,000 women's shoe designs, if you can only offer 450? A good IS must be able to draw on partners, whether they are manufacturers or wholesalers."
Finally, the experience needs to be rethought "by placing the customer at the heart of it". "Where the web provides a wealth of navigation information, stores provide hardly any, and nobody or almost nobody uses the wealth of social networks and "Social Login". The experience of the Etam brand, as it was presented at the end of September at the 01 Business Forum, is nevertheless explicit: the affinity of its clients with a particular comic book character, measured on social networks, has enabled it to make judicious and reasoned choices of licenses for its underwear. The marketing principles must also be reinvented and enriched with all this information. We hear everywhere that the next big asset is going to be the exploitation of data via Big Data, but it requires rich, quality data to start with."