Reaching Diverse Populations across Europe with a Retail Proposition
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Drawing on thousands of data points from the immense InternetRetailing Europe Top500 study, this presentation unlocks the secrets of localisation across the continent: Which countries are most or least developed, what are their eccentricities, and how the leading retailers are trading in the Single Market.
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Reaching Diverse Populations across Europe with a Retail Proposition
- 1. internetretailing.net/ireu The InternetRetailing Europe Top500 Reaching diverse populations across Europe with a retail proposition
- 2. internetretailing.net/ireu InternetRetailing Magazine, news, research, and events twitter: @etail email: info@internetretailing.net internetretailing.net /subscribe – newsletter or magazine /iruk – UK Top500 (IRUK 500) /ireu – Europe Top500 (IREU 500) Martin Shaw, head of research twitter: @etail_martin email: martin@internetretailing.net
- 3. internetretailing.net/ireu The Question • Top500 overview • Where they operate • Language localisation • Product display and merchandising How does one reach the diverse populations across Europe with a retail proposition? • Email communication • Customer service • Omnichannel retail • Servicing the order • Innovation and the future
- 4. internetretailing.net/ireu The Europe Top500 in a Nutshell • Membership: The largest 500 • A performance index: “Retailcraft” • Six areas or “dimensions” • Seven reports (different topics) per year
- 5. internetretailing.net/ireu “Footprint” Size ❖ Retail revenue – average €2.1 billion ❖ Ecommerce revenue – average €323 million ❖ Pageviews per annum – average 700 million ❖ Physical locations (stores) – average 400
- 6. internetretailing.net/ireu The Largest 50 in Europe
- 7. internetretailing.net/ireu The Largest 100 in Europe
- 8. internetretailing.net/ireu The Largest Market Percentage of the Top500 for which this country is the largest Footprint market
- 9. internetretailing.net/ireu Where They Trade Percentage of the Top500 operating in this country
- 12. internetretailing.net/ireu The UK Top500 in the Single Market The number of UK Top500 retailers with a significant presence (> €1m revenue p.a.) in this country France 68 Germany 60 Spain 48 Italy 47 The Netherlands 46 Belgium 41
- 13. internetretailing.net/ireu Market Competitiveness Austria 1 Netherlands 2 Germany 3 United Kingdom 4 Italy 5 Belgium 6 Greece 7 Norway 8 Sweden 9 Denmark 10 Switzerland 11 France 12 Spain 13 Finland 14 Poland 15 Slovakia 16 Czech Republic 17 Ireland (Rep.) 18 Latvia 19 Hungary 20 Portugal 21 Luxembourg 22 Romania 23
- 14. internetretailing.net/ireu Distribution: Multichannel vs. Online-only Multichannel Online-only Number in the Top500 415 85 Fraction with significant* trade in five or more member states 12% 13% *Ecommerce revenue > €100,000 p.a.
- 15. internetretailing.net/ireu The Largest 50 – Online-only Emboldened Albert Heijn Deichmann JYSK Pull & Bear Amazon Douglas Kik Rossman Apple E.Leclerc Leroy Merlin Sainsbury’s Argos Eroski Lidl Screwfix Asda Euronics M&S Spar Auchan Expert Mango SportsDirect.com A.S. Adventure F&F Media Markt Tchibo Bershka George at Asda Next Tesco Boots H&M Nike TK Maxx C&A Iceland Otto United Colors of Benetton Carrefour IKEA Pandora Yves Rocher Coop IKKS Post Office Shop Zara Decathlon Intersport
- 16. internetretailing.net/ireu Most-trafficked Ecommerce Website for This Country (Online-only Emboldened) Austria amazon.de* Belgium ebay.be* Bulgaria remix.bg Switzerland zalando.ch Cyprus ikea.com.cy Czech Republic alza.cz* Germany ebay.de* Denmark ikea.com Estonia euronics.ee* Spain amazon.es* Finland hm.com France amazon.fr* United Kingdom ebay.co.uk* Greece e-shop.gr* Croatia ikea.com *marketplace retailers Hungary hm.com Republic of Ireland ebay.ie* Iceland ikea.is Italy ebay.it* Lithuania ikea.com Luxembourg zara.com Latvia avon.lv Malta lidl.com.mt Netherlands bol.com Norway komplett.no Poland allegro.pl* Portugal fnac.pt Romania emag.ro* Sweden tradera.com* Slovenia mimovrste.com* Slovakia alza.sk*
- 17. internetretailing.net/ireu Where and When Does Language Localisation Matter? ❖ 37 official languages in the EEA ❖ 310 (67%) of the Top500 trade in just one language ❖ 100 (20%) trade in at least four languages
- 18. internetretailing.net/ireu Share of Localised Websites in a Non-Local Language Non-local Language Share Finland 38% Denmark 29% Iceland 25% Sweden 23% Norway 22% Czech Republic 20% Poland 20% Germany 12% France 11% United Kingdom 1%
- 20. internetretailing.net/ireu Email’s Role ❖ Primary communication channel with customers ❖ Mostly on mobile devices ❖ Powerful with segmentation
- 21. internetretailing.net/ireu Email Communication Study ❖ Emails from 25 retailers ❖ Panellists (consumers) in three countries ❖ Two months in early 2016 ❖ 900,000 emails measured
- 22. internetretailing.net/ireu Study was run in collaboration with ReturnPath -2.8% 29.9% 3.7% -9.3% 2.8% -5.6% -11.2% -33.9% 2.2% -17.2% 5.6% 1.7% 2.8% 1.7% 11.3% -2.3% 6.1% -4.2% 5.2% -7.5% -9.4% Sunday Monday Tuesday Wednesday Thursday Friday Saturday Email Open Rates: Day of the Week Sent (difference from the average) Germany France United Kingdom
- 23. internetretailing.net/ireu Study was run in collaboration with ReturnPath -1.9% 4.7% -3.7% 13.1%14.4% -1.7% 0.6% -10.0% 1.9% 10.8% -5.6% -6.1% Pre-dawn (00:00-06:00) Morning (06:00-12:00) Afternoon (12:00-18:00) Night (18:00-24:00) Email Open Rates: Time of the Day Sent (difference from the average) Germany France United Kingdom
- 24. internetretailing.net/ireu Study was run in collaboration with ReturnPath -6.5% 3.9% 5.6% 0.0% 2.8% 0.0%0.9% -8.3% -7.5% Germany France United Kingdom Email Open Rates: Use of Capitalisation (difference from the average) Low Medium High
- 25. internetretailing.net/ireu Study was run in collaboration with ReturnPath 4.5% 5.0% 10.3% 6.5% -3.3% -6.1% -9.3% -8.9% -26.8% Germany France United Kingdom Email Open Rates: Length of Subject Line (difference from the average) Short Medium Long
- 26. internetretailing.net/ireu Study was run in collaboration with ReturnPath 0.0% 0.0% 0.5% -5.6% 0.0% -3.3% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% Germany France United Kingdom Email Open Rates: Using a Question (difference from the average) No question Question
- 27. internetretailing.net/ireu Study was run in collaboration with ReturnPath -0.9% -5.6% 1.4% 3.7% 3.3% -4.7% -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% Germany France United Kingdom Email Open Rates: Using an Exclamation (difference from the average) No exclamation Exclamation
- 28. internetretailing.net/ireu Customer Service Response Times (Email and Facebook)
- 29. internetretailing.net/ireu Channels to the Customer Most-prevalent in this country % of IREU 500 to offer the channel Facebook Belgium 100% Twitter Netherlands 100% YouTube Poland 54% Instagram Netherlands 38% Google+ Italy 37% Pinterest Netherlands 29% Live Chat Sweden 14% Email (not including submission form) United Kingdom 11% Blog United Kingdom 8% LinkedIn Portugal 6%
- 30. internetretailing.net/ireu Omnichannel Retail ❖ 32% of multichannel retailers in the Top500 offer return- to-store for ecommerce orders ❖ 52% of the Top500 offer click and collect
- 31. internetretailing.net/ireu Knowing the Customer ❖ Personalising the shopping experience ❖ Identifying trends ❖ Predicting demand
- 32. internetretailing.net/ireu Servicing the Order ❖ Delivering what was promised ❖ Adapting to the growing share of sales from ecommerce ❖ Innovating in line with customer expectations
- 33. internetretailing.net/ireu The Fastest ‘Standard’ Delivery The Top500’s average ‘standard’ delivery time in a country, in business days. Countries where fewer than 30 operate are not listed.
- 34. internetretailing.net/ireu Countries with Highest Average Number of Fulfilment Options United Kingdom France Norway Czech Republic Spain Belgium Greece Germany Italy Denmark
- 35. internetretailing.net/ireu Avoiding Logistics Pitfalls ❖ Keep all parts of the business aware of the others activities and capabilities, resulting in over-selling, under-delivering, and missed opportunities ❖ Market only what can be delivered ❖ Identify bottle necks
- 36. internetretailing.net/ireu Back to the Question ❖ Adaptability and experimentation ❖ Full multichannel – single view of customer and stock To reach the diverse populations across Europe with a retail proposition:
- 37. internetretailing.net/ireu Trends ❖ Expanded role for ecommerce ‘gate-keepers’ ❖ Programmatic commerce ❖ Automation
- 38. internetretailing.net/ireu Continuing Research ❖ Predictive Index ❖ Changing retail proposition ❖ Year-on-year change
- 39. internetretailing.net/ireu The InternetRetailing Europe Top500 Reaching diverse populations across Europe with a retail proposition
Editor's Notes
- Today I’ll give a brief overview of our most ambitious research project yet: a performance index of Europe’s Top500 retailers. Through primary research we’ve sought to reveal, firstly, the largest, and secondly, the best retailers – comparing their core proposition to customers. How quickly and effectively the respond to customers, the speed and flexibility of order fulfilment, the adherence to standards and responsiveness of websites and apps – plus hundreds of other metrics. Along the way we’ve discovered that few retailers are genuinely pan-European, despite the Single Market. Just seventy-eight (78) of the Top500 have stores in ten (10) or more countries. And Amazon and eBay are the destination for two fifths of the continent’s ecommerce web traffic. By addressing six different ‘dimensions’ of retailcraft, I’m going to summarise some of the key findings of our research and draw out some examples of best practice that surfaced during the analysis. At the end there’ll be a brief Q&A. During my presentation I’ll mention top-level findings without giving much detail. If you have a question about methodology, coverage, or something similar, ask me at the end during the Q&A. But first I’ll tell you a little bit about us and then we’ll return to the Europe Top500.
- We are the magazine, news portal, events, and research hub for European ecommerce. The magazine and news came first, bringing a longer-form analysis with them. Most of the action is on our website, internetretailing.net, though we still find that many professionals appreciate the hard copy – where they are free to ingest long-form analysis without the risk of notifications bursting onto the page. Next we introduced events, now managed by Clarion. Most notably Expo in April and the Conference in October, which are in Birmingham and London, respectively; and the Summit in June, which is in Berlin. Three years ago we added research to the stable, which obviously feeds into the editorial analysis, but also works well with the events. Conversations with people in the industry do feed back into the research – ultimately we’ll only attempt to answer questions that retailers are asking. The UK performance index is now almost two years old and seven reports are available to download. While you’d be forgiven for not yet knowing about the Europe Top500 as the first report was only published in July. As I referenced at the beginning today I’ll focus on our most ambitious project to date, the Europe Top500 retail performance index.
- Specifically, I want to use the research to answer a question: “How does one reach the diverse populations across Europe with a retail proposition?” In answering this question we’ll use data from the Top500 – the different practices retailers have adopted in aggregate and at the local country-level. First I’ll give an overview of the Top500; followed by a summary of where they operate and their approach to language localisation. Moving onto how retailers communicate with their customers I’ll run through some analysis on country-level differences to email open rates that arise from send time and content; and also review how retailers are doing customer service across the continent. I’ll run through some of the trends around omnichannel retail and also touch on how the best companies manage fulfilment. Finally I’ll extrapolate on a few trends when talking about innovation and the future. Although not everyone in this room is a retailer, the opportunities taken, and risks faced, by leading retailers, are common to all B2C businesses. And it’s with a focus on these leading businesses – and their best practice – that we research the Top500 project.
- To begin with we choose the largest 500 retailers on the continent – and I’ll elaborate on that selection in a minute. We track fascias rather than corporate groups because all our assessments are made from the customer’s perspective. We review the retailers’ performance, tracking them on hundreds of metrics across the dimensions of Strategy and Innovation, Customer Experience, Operations and Logistics, Merchandising, Brand Engagement, and Mobile and Cross-channel. Our research is quite granular: we review the operations of a given company in every language and to every country to which they have localised. Our focus with the Europe Top500 is the European Economic Area and Switzerland. These 32 countries make up the Single Market, an area without legal or tariff barriers to trade. Shortly I’ll run through the countries where the Top500 tend to be present, but first I’ll return to the question of selecting the 500 largest companies – and the measure we call ‘Footprint’.
- We first published our Footprint, or size list, in 2015, a combination of a retailer’s revenues, online sales, web traffic and store numbers – an indication of their visibility to the European consumer. The Top500 are very different to each other size-wise; with turnover ranging from 900,000 Euros to 70 billion, with an average of 2.1 billion. Some retailers have a very significant offline presence but are only minnows online, while others only trade online; in choosing our Top500 we haven’t looked to study offline-only retailers. Retailers in our list have web traffic ranging from 545,000 page views per annum to 275 billion; with an average of 700 million. Stores range from 0 to 12,000 locations, with an average of 400.
- Here are the Largest 50, clustered by footprint size and listed alphabetically within their clusters. I’m going to click through this quickly but if there’s a name you’re looking for remember that it’s alphabetical.
- And the Largest 100. These are smaller than the Largest 50 but fall within the Largest 100 overall. If you want to search through the remaining 400 names there’ll be some print copies of the report available at the end. We find that few quibble with this size-based assessment. Unlike the performance review coming up, retailers’ size is all that counts here. Though for people who only view their competitors in a certain market or markets, it may be surprising to see this view, which is an aggregate from across the EEA. Some companies have dispersed operations in many member states; while most are only significant in one or two countries.
- In this heatmap the darker states are the largest markets for a greater number of Top500 companies. Which member states are most important to a retailer’s Footprint? At one extreme we see the UK, France, or Germany being the most important market for the majority of Top500 retailers. At the other, 10 countries aren’t the most important market for even a single Top500 retailer. Smaller markets are less likely to feature here; any retailer for whom Luxembourg is the largest market is unlikely to be in the Europe Top500. That isn’t to say that many of the Top500 don’t operate in the smaller countries – indeed some are headquartered in such places.
- This next map shows how many of the Top500 operate – to any significant degree – in a given country. A large retailer might operate in only one territory, while another might operate across many countries. Our graphic shows that some 250 of the IREU Top500 are active in the UK, while France, Germany and the Netherlands have the next-highest representation of the Top500. This graphic reflects both how a market is conducive to the activities of the Top500, and also how familiar a consumer in a given country is likely to be with our list of top retailers. Although the larger and more developed ecommerce markets still dominate this map, even Liechtenstein features here, which you probably can’t make out unless you have very good eyes. Cyprus, however, you might see faintly to the right of Greece. Up to know we’ve only looked at size. Now I’m about to add in something more contentious: –– a ranking by performance, or ‘retailcraft.’
- Here are the Elite and Leading companies in the Europe Top500 2016, alphabetical within performance cluster. Retail performance in the ‘dimensions’ of The Customer, Operations and Logistics, Merchandising, Brand Engagement, Mobile and Cross-channel, and Strategy and Innovation is blended with Footprint to create the final performance ranking. Congratulations to Apple, Bon Prix, Decathlon, H&M, and Zara, who are the Elite European retailers for 2016. Our Elite retailers are statistically ahead of all others and they represent the pinnacle of European multichannel retailing, having consistently performed across these six dimensions in the countries in which they operate.
- Here are the companies that came in the Top50 and Top100 clusters, respectively. Once again I won’t show all 500 but if you’re keen to look at it in more detail collect a print copy at the end or visit the website. A note on performance: the InternetRetailing Top500 is the most extensive analysis of retailcraft but we don’t pretend that other factors, which we haven’t measured, aren’t also important. Rather, we’ve researched a selection of comparable metrics and weighted them according to How difficult a company would find them to implement, How many retailers are already doing them, and the Quantifiable effect they have on the business bottom line. Each dimension includes 40-100 metrics, which I won’t detail here. First we’ll look at a few graphics showing the heterogeneous nature of retail in Europe. Then I’ll use a few examples of best practice and describe the top-level findings revealed by the research.
- To illustrate the lack of pan-European retailers, we’ve calculated which other countries the largest 500 retailers in the UK are present in. This table showing the number of IRUK 500 with significant sales – that is, greater than one (1) million Euros per annum – in a given country. Sixty-eight (68) of the UK Top500 trade in France at or above this threshold for significance, with a similar number in each of the major markets and just four (4) in Iceland. Pan-European retail is not yet common for traditional retailers. Only manufacturing brands and clothing labels, along with marketplaces, have saturated the common market. Remembering that the maximum here is sixty-eight (68) out of five hundred (500,) one might conclude that whatever benefits there are in the common market, few retail companies have successfully taken advantage of them to a significant degree. But where is the low-hanging fruit?
- As we covered earlier, there aren’t any legal or tariff barriers to selling within the single market, but where is the low-hanging fruit – that is, the markets where the average retail service is lowest? Obviously that’s a sector-specific and company-specific question, taking into account many nuanced facts about the company and its circumstance. But as a starting point in that discussion, we’ve configured the Top500 Index to provide country-specific averages, showing the typical retail ‘performance’ of a company operating there after accounting for hundreds of different metrics, cataloguing both online and offline retailcraft. Here are the 23 most-competitive member states by this measure. This list feels mostly correct but as with anything based on facts it throws up a few surprises that don’t fit with the normal narrative of ecommerce success stories. As an example of a retailer that took advantage of a market difference: AO.com, an appliances retailer that services its own fulfilment without the use of third parties, expanded into Germany and began leading the market. Stephen Richards, director of logistics at AO.de recently said: “[in Germany] we are following the same model scaled to the current demands of the business.” In the UK, their customers nominate a time to receive their new dishwasher, fridge, or other appliance. The driver and assistant both install the appliance and remove the old one. Straight away that proposition made AO fairly unique when they started in Germany. They had a Net Promoter Score of 83% in the UK but 94% in Germany with the same service, reflecting a different standard of customer expectation. That’s an example of how a company has seized the opportunity to enter a country where its existing expertise was enough to turn it into a market leader.
- Another way to view is multichannel vs online-only retailers. I put up these figures not because they show a difference between the two categories but actually because they don’t. When running this analysis our hypothesis was that we would find that online-only retailers tend to be more distributed. To establish a physical retail operation generally requires considerably more capital expenditure than ecommerce, and the theory also seemed to explain why ecommerce-heavy brands and online-only marketplaces had been the first to take advantage of the single market in retail. But facts are facts and, among the Top500 we’ve found roughly the same level of dispersal for these two groups; though I will qualify that by singling out the largest ecommerce-only merchants.
- These are the largest multichannel and ecommerce retailers in Europe – the same list I showed you before, but with all the online-only retailers highlighted. Here we have retail titans such as Carrefour and Tesco, but only a single pureplay online trader. This is merely a reflection of the way most retail revenue is still generated offline. But this next table shows a different side of the story.
- It becomes apparent that ecommerce giants, who remain significant in any given country, are dominant overall, when it comes to the most popular destinations for ecommerce web traffic. In half of the member states we find that an online-only retailer is present. When researching web traffic across Europe in collaboration with SimilarWeb, we found that over the entire trading bloc, Amazon and eBay collectively received two-fifths of ecommerce web traffic in 2015. With ecommerce and especially mobile commerce taking larger and larger shares of the market year-by-year, what does this bode for the future of retailers? There’s no reason to suspect that traditional retailers are going to disappear; on the contrary, there’s an increasing respect for the combined, omnichannel commerce approach. Even Amazon only manages to be as popular as it is because it has a quasi-physical presence with many physical and timely touchpoints from hourly delivery to holding parcels at your local corner store. But there’s no doubt that traditional retailers need to be malleable to be as successful in the future as their online-only peers. Starting with language, I’ll run through six (6) areas of retailcraft where we have witnessed a big difference between the best and the rest. The areas are Language localisation, product display and merchandising, email communication, customer service, omnichannel retail, and servicing the order.
- Firstly, to language. There are thirty-seven (37) official languages among the Common Market’s 32 member states. Just two hundred (200) of the Top500 sell in two or more languages. And four (4) or more languages were offered by just over one hundred (100) retailers – again highlighting that few retailers have expanded beyond their home markets, or at least home-language markets.
- What languages does a company need to localise to, and which language groups are comfortable with shopping in a non-native dialect? We’ve measured the languages offered by the Top500 and, based on that dataset, it’s a question of degrees. Forty (40) per cent of the Top500’s Finland landing pages – that is, websites or sub-websites with an offering for Finland alone – are in a language other than Finnish. However, in the UK that figure drops to less than one (1) per cent for languages other than English. Presumably many retailers’ use of English is less to do with the UK and Ireland, and more to do with the popularity of English as a second language – approximately half of the English-language landing pages used by the Top500 are localised to non-English speaking countries, with the remainder for the UK and Republic of Ireland.
- Display techniques such as the use of banners, search filters, rotating images, and up-selling are commonly used on retail websites. For example, basic personalisation based on browsing history is used by three quarters of the Top500. Some of these features constitute best practice. While others can’t readily be placed on a performance scale. An example of the latter is at what stage of the purchase process the potential customer has to sign up for an account. We’ve also measured how the same companies, in some cases, use a different mix of merchandising techniques when presenting to a different audience, on a country-localised basis. Drop-down search suggestions are more are most widely used in Austria, Hungary, Germany and Belgium. The most easy-to-navigate websites, on average, were those localised to the UK, followed by Spain and Germany. Product information was more likely to be complete and comprehensive in Denmark, Ireland, Sweden and Finland. Presentation on websites is important, though arguably communication with customers is even more important. Over the next two sections we’ll look at how retailers are communicating with customers.
- Email remains the primary means of communication with ecommerce customers. I’m not just referring to newsletters here. Consider that even when collecting a parcel from a locker or other third-party location, it is an email on a mobile phone that glues that transaction together. Notwithstanding email’s importance, how companies communicate with consumers via this medium varies across countries. On the one hand, there are consumer differences for cultural reasons; on the other, there are countries where the average email campaign is less or more sophisticated. Most of us would accept that companies experience different results when attempting to use email the same way across different cultures. To test the extent of these differences we conducted a study earlier this year to find the content of retailers’ emails and the interaction the content received in different countries.
- Over a two-month period earlier this year we tracked read rate, delete-without-opening rate, user-marked-as-spam rate, and server-marked-as-spam rate for almost a million emails to consumers in France, Germany, and the UK. Thanks to Knowledge Partner ReturnPath, who helped collect and analyse the data.
- Comparing days of the week it’s obvious that there are significant differences. French consumers are a third less likely to read an email that was sent on a Sunday than the average email they receive. While British consumers are ten (10) per cent more likely to read emails sent on a Sunday than the average email they receive. We’re showing deviation from the country mean open rate here. So we’re comparing the open rate for emails sent to customers in the given country on sundays, for example, to the open rate for every email sent to that country over the two-month period.
- Pre-dawn emails will give a ten (10) per cent higher open rate in France but receive a muted response in the other markets we measured. Morning and Night tend to provide better open rates in the UK and Germany, respectively. And perhaps send fewer night emails to your French customers. These figures invite us to indulge in national stereotyping but, more seriously, they help to quantify – using dozens of retailers and a million emails – what, exactly, those cultural differences are. When to send is one aspect of difference, what to send varies to some degree as well.
- I’ll pass through these slides a little more quickly because I’m conscious of time but remember you can get a copy of the slide deck afterward or pick up a copy of the full report. Firstly we have Capitalisation in the subject line. Germans are the least-likely to have their interest piqued by this strategy while UK consumers are the most.
- When it comes to length, the main thing to say is to focus on pithy subject lines when emailing UK consumers.
- It’s a small variation in open rates but for the average consumer in Germany and the UK there’s a slightly lower chance that they’ll open an email with a question in the subject line.
- And it seems exclamations have a moderately positive effect in Germany and France but not in the UK. That’s our results from a comprehensive study into email. But expanding to customer communication in general, across all channels, we notice that there are differences in retail sectors in how rapidly they respond to a customer.
- Focussing in on the UK, we’ve observed that customer service tends to vary from one sector to the next. This graphic aggregates response times to email and Facebook service request by all 500 retailers. It’s worth mentioning that none of these sectors does outstandingly well, on average. But during our testing we found quite a few retailers that would respond within a few minutes, on Twitter, Facebook, and email; and most would respond within 24 hours. In addition to the varying response times illustrated in this graphic, we also found, in some cases, different levels of helpfulness.
- This table shows the prevalence of communication channels used by the Top500 to engage with their customers. In the central column, the country where a media type is the most prevalent among the Top500 and, in the right column with the percentage, the fraction of the Top500 retailers who use the channel in any member state. Facebook and Twitter are at saturation, whereas other networks are much more patch-work. Social media seems especially popular among retailers trading in the Netherlands, as Twitter, Instagram, and Pinterest are more common in that market than anywhere else. We’ve looked at communicating with customers through language, through merchandising, through email, and cross-channel customer service. Now I’ll talk about combining these views of the customer – providing an omnichannel experience and maintaining a single view of the customer.
- Five hundred (500) is a lot, and below the largest one hundred and fifty (150) or so we find less evidence of multichannel proficiency. For example: Return-to-store for ecommerce orders isn’t offered by 68% of multichannel retailers, and Just 52% offer click and collect Interflora deserves a call-out because they’re a ‘pre-internet internet company’. They’ve done standardisation, joint-marketing and are the most over-indexed (that is, highest performance relative to footprint) of any retailer in the Operations and Logistics Dimension of our analysis. A broad and truly continental (even global) formula that sees Interflora, a pure ecommerce retailer, fulfil its orders quickly and even with a personal touch, in collaboration with thousands of local florists. It’s an example of how operations-agnostic the Top500 index is: we’ve measured retailers’ capabilities rather than how they achieve them, which elevates best practice. Even though some of these examples can’t be emulated by all retailers, these elite performers are setting the standards in the minds of customers that the rest of the industry must contend with.
- Leading retailers pay close attention to the habits, likes, and dislikes of their customers; when they choose to shop and whom they are buying for. Of course, it’s all done by machines, but the effect of personalisation is to improve the customer experience. While leading companies are doing this, it’s easier said than done. Waitrose is a good example of tying channels together – with an in-store app, the same account/membership system online as off, and customised choose-your-own offers available to customers, it is one of the companies setting the standard in this space. A computer-based knowledge of customers also helps companies to spot trends, predict demand, pre-position stock, and make more informed purchase decisions.
- Servicing the order or, phrased another way, delivering what was promised, is core to any retail proposition. We’ve found that it’s certainly true that expectations and preferences vary across the continent. Moreover, with the strain that ecommerce places on in-house logistics and the external supply chain, it’s more important than ever for the different parts of a business to clearly communicate plans, opportunities, risks, and limitations. According to one study, half of young customers check return policies when considering a purchase. And Just yesterday, B2C Europe said that 54 per cent of respondents to their recent consumer survey think about returning an item before they have completed the purchase. Companies have the unenviable challenge to strike a realistic balance between minimising costs and winning a sale. Logistics in retail is also a hot-bed for innovation at the moment. I’ll elaborate on innovation in general later, but the speed, flexibility, and cost of the order process are, I would suggest, one of the most demanding areas of modern retail. For three reasons: Fulfilment and returns is a key selling point to win and keep customers Delivery is the core of most paid-membership schemes, from Asos to Amazon It requires a whole-of-business approach, with everyone from Marketing to Stock Visibility; and from Delivery Drivers to In-store Staff – all parts of the same machine that has to have, for example, an item ready for pick-up, in a store, within an hour of the sale through a mobile app. So in this competitive, innovative area, what are retailers offering? And how consistent is it across the common market?
- The markets with the most-competitive ‘standard’ delivery. Here we refer to the default selection when ordering. I was personally surprised when the UK failed to appear near the top here but we found that offering a fast standard delivery didn’t have much bearing on the speed of the fastest, premium fulfilment option.
- And Top500 retailers in the UK offer more delivery options, on average, than their peers in any other market. In addition to fulfilment options it’s also necessary to be competitive with returns. It’s now standard for apparel products to ship with pre-paid return labels. This illustrates how quickly a feature moves from being avant-garde to being thoroughly mundane. It’s really only a few years from first-adopter to saturation.
- Over the past few years we’ve flagged Internal Comms as a common area of concern for retailers trying to get logistics right. The issue is that an ecommerce order takes a lot more back-end warehouse work than selling through stock at stores. If the marketing team isn’t aware of the limitations or if the business as a whole fails to anticipate demand, customers do not receive the level of service they expect. When ecommerce was 5% of sales, comms wasn’t so important, but for the Top500 today it’s commonly 40% or more of their total sales. An uptick in orders to fulfil can be more than the business capacity. Black Friday before last saw a delivery glut. Many retailers failed to deliver on promised delivery times. But retailers last year were more likely to run an extended sales period and to offer a free ‘no rush’ delivery option, which appealed to those customers who were making early purchases for Christmas. What was being sold matched much better with company capacity. Tracking thousands of companies in dozens of markets has given us an overall view of this sort of adaptability and change.
- Bringing it back to the question I stated at the beginning: “How does one reach diverse populations across Europe with a retail proposition?” Nimble, adaptable companies that find ways to minimise the costs of experimentation will be competitive. They will own the future by using a wait-and-see approach that acts whenever it becomes apparent that a particular innovation is customer-approved. Nimbleness shouldn’t imply a particular size of company – we’ve noticed this trait in companies of all sizes. Retailers of small physical goods, for example, have found that a significant minority of consumers prefer to use click and collect from shops or lockers near their home. To ignore their preference isn’t an option long-term, but up until a few years ago it wasn’t clear if consumers would like it at all. Multichannel retailers can capitalise on the future by having a single view of stock and a single view of customers. They will be able to fulfil online orders from-store, bring ecommerce technologies into the store, and be comfortable with a showroom model for the high street. The leading retailers have already embraced all of these things. This is what gives the Elite retailers I named before – Apple, Bon Prix, Decathlon, H&M, Next, and Zara – their edge. Moving beyond what the leaders are doing, to the industry as a whole, it becomes increasingly difficult to make predictions. But it is possible to extrapolate trends.
- On current trends, ecommerce gatekeepers, be they search engines, marketplaces, or social media platforms, will become more important and introduce new ways to monetise referrals. Fast-moving consumer goods will be exposed to programmatic commerce – for example, you’ll tell your phone to get some milk delivered and, based on its pre-programmed parameters it will choose the retailer or wholesaler to purchase from. This will fundamentally change the relationship between the brands that market FMCG goods and the end consumer. The drone delivery question obscures the larger reality of automation: the costs of labour continue to rise; and the costs of capital continue to fall – increasingly capable machines will affect all areas of business. How this will play out is unpredictable but that it will happen is merely the continuation of a 200 year trend. But to extrapolate on a trend is to speculate, however long the trend has existed. Touching on a recurring theme, it doesn’t take long for a market-leading innovation to become the bare-minimum expectation. We already plan to increase our research efforts over the coming years, tracking which trends continue and which fizzle out.
- As we track the financials and retail performance metrics of thousands of companies we’ll begin to test the predictive value of the Index by estimating the value a company would derive from introducing certain features. For example, helping to answer some of the unknowns in a cost-benefit analysis of local-language customer service in a given country. More metrics, and year-on-year change will be revealed next year. With a view to gaining an even better picture of how the biggest and best retailers offer a retail proposition across Europe’s diverse populations. That concludes my presentation. I apologise for the break-neck pace – I was trying to summarise a lot of information.
- View the report.