Saturday, August 16, 2014

Tricks & Tragedies of the Conventional Retail Industry

Retail sector is one of the oldest forms of business where the business directly interacts with the end customers in a big way. However, with time, it has also lost some of its gloss and with the entry of so many competitors the going in the sector has gone from tough to tougher. Nevertheless, as the saying goes- "When the going gets tough, the tough get going". Let us take a closer look at how the retail sector will move through the year.

With the advent of technology and ecommerce, modern day customers have become more informed than the consumers of the yester-years, and know more than the sales representatives at the counter. If we take a helicopter view of the retail sector we will be able to locate a distinct war between the online retailers offering cheaper price tags with beefed up service and the traditional retailers trying everything they could to fill the dent in their market share being created by online shopping. To understand how the conventional retailers are leaving no stone unturned to cope up with their online peers, let us look at their moves and the impact of those measures by peeping into the management strategies of the world famous retail giant, Walmart (WMT).

Source: Retailwire

Scan & Go

To keep pace with the tech ace of the online retailers, Walmart tied up with a Silicon Valley startup and created an app for the customers, Scan & Go. With this app in place, customers could scan the items they wanted to buy while they walked through the product aisles and at the end of their shopping simply pay up the total amount through their smart phone. This considerably reduced their invoicing wait time by successfully giving them the flexibility to move out through self-checkout.

But when a test was conducted on the viability of this app at 200 Walmart stores, customers showed utter confusion in understanding the working of the app. Hence, Walmart was forced to scrap the usage of the app at its outlets.

The inference drawn from this strategic move of WALMART is that the so-called traditional retailers are gradually moving more and more towards technology up-gradation to serve the tech savvy customers. Also instead of launching a technology after perfecting it for the customers, they are interested in launching the technology and getting it perfected on the go through real time customer usage. And after that if the strategy works out well, they prefer to roll it out nationwide.

Such moves are becoming vital for the conventional retailers facing huge cash dent resulting from lowered footfalls per day. They are not only trying to lure customers back but are also trying to offset the threat posed by online retailers such as Amazon (AMZN).

Door Step Service

Walmart also introduced the door step delivery facility on a test basis. During this test-drive, they started providing the customers with home delivery of products they ordered for in San Jose and San Francisco stores of California and Denver. The customers were given the flexibility of selecting a time slot of delivery, and if the order booking was done by 8 a.m. delivery was done on same day. The product range for this service covered groceries, fresh produce and other products. And the delivery charges ranged from $3 to $10Walmart also tested delivery of consumer durables ranging from toys to television sets which if ordered before afternoon in their Northern Virginia, Philadelphia, and Minneapolis stores were delivered the same day. In this case, the delivery charge was fixed at $10 for an unlimited number of items.

In January this year Walmart's Denver store gave the facility of ordering items online and getting them either delivered at home or picking them up by walking into the store at some point of the day.

The same day delivery schedule opened at the San Jose, San Francisco, North Virginia, Philadelphia and Minneapolis stores received a lot of customer appreciation. Also the store pickup facility at Denver was well received by the Walmart patrons. But the home delivery plan did not work well in certain quarters. Walmart observers explained the failure in the home delivery program taking cue from customer trends seen in the U.S. where customers do not want to be held up at home waiting for their products to be delivered.

WALMART Subscription

Towards the later part of 2012, Walmart had launched the Goodies Company, a mail snacker subscription facility in which the subscribers were offered five to eight surprise snacks not available over the counter for a monthly subscription of $7. Through this experiment Walmart expected to identify the food habits and customer patterns in respective areas. This would aid in maintaining proper stock of items on their store shelves to optimize the stock and inventory management at the respective stores.

However, the surprise element backfired within a year of its launch and was shunned by customers resulting in Walmart's shutdown of the Goodies Company section. External analysts stated that customers were not interested to pay for surprise elements. Scott Shamberg, a managing director at a Chicago retail marketing agency quoted- ''I think any subscription service Walmart puts forth has to be aimed at the sweet spot of their shopper — straight up groceries and toiletries."


In November last year, Walmart's U.K. wing ASDA launched the 3D printing technology that allowed the customers to get their own 8-inch figurines at a cost of $100. This service was offered from time to time at different stores across U.K. but was officially launched at the Manchester store in the month of June this year. According to Russell Craig, ASDA spokesman, the test has been so popular that the retailer is considering rolling it out to other stores.

Some of the stores of Walmart under Sam's Club in Montgomery, Ill., and another outside Fort Worth also launched this service in which they scanned the face of the customers and created resin figurines with the customer's face and the body of action heroes of one of the three Marvel characters.


In the race to compete with the online peers, Walmart introduced a number of innovative tactics to allure customers back to its stores from the online retail gamut. But none of the experiments were a 100% scorer, though all of them did do well in certain quarters. This strongly advocates the fact that more and more customers are moving towards the tech savvy online format of purchasing and the days of counter-sales are just getting duller. Online stores have already started eating into the market share of conventional retailers who are trying out from all aspects to keep their top-line secure, and in that list Walmart does feature on the top. Hence, Walmart is also pulling up its socks as it is thinking big on online sales and reducing its dependency on conventional shopping techniques which would in some time become a relic of the past.

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