Things to know about selling Tech Services to Retail

photo-1416339698674-4f118dd3388bWelcome to this week’s post about our series “What you need to know about selling to your target sector“. For those who haven’t read previous posts, a reminder; this is part of a series of blogs where we look at how to sell a particular set of services into particular industries – what to consider, the language to use, how competitive it is, how large it is, and so on. Today we look at how to sell digital services or products to large retailers.

The goal here is to help give some direction on good entry points for retailers, highlight some of the challenges and potential pitfalls to consider before you start, and provide enough background information so that you can have a good conversation.

Retail is vast: large chains, small chains, department stores, independent stores, online pure plays, catalogue companies. Furthermore, it’s diverse – travel retail, shopping centres, airports, high street, fashion, supermarkets, fashion brands with stores, even automotive retail…

It’s also a huge sector. 10% of the UK workforce are in retail and makes up over 5% of the UK economy. Retail performance figures are a key measure of consumer confidence and the health of the economy.

They spend a lot of money on technology products and services and most retailers are (increasingly) ahead of the curve on technology adoption. So, although it is a market that is sensitive to the impact economic downturns, it’s a good place to be.

If you target retail, it can easily fill a new business person’s time for 6 months or longer.

What is a ‘big’ retailer

That depends on you. BIG retailers, like Tesco, Asda, M&S, etc – those ones are obvious, but even still it’s a good idea to establish the upper and lower limits of the range of retailers you want to target based on who you think you are likely to be successful with. If you are a small digital agency of 25 people, you’re unlikely to win M&S, although project wins are possible.

Bear in mind too that most of the big retailers will have significant in house resource.

At the lower end, anything over 20 stores would probably spend on something like a website. But, again there are lots of factors that figure. Price point and mark up affect margins, which to an extent dictates budget and the retailer’s expectations around how much they need to invest. A small retail chain selling luxury fashion but with a good online business might be a better prospect than a 150 store bargain basement chain.

Christmas…well peak trading… is King

As a kid I spent a lot of time in my Dad’s shop and I can still remember him coming home every Saturday, his biggest day of the week and reporting his ‘takings’. Saturday was make or break day. Some retailers make up to 90% of their turnover in their biggest period of the year, which for most means Christmas. It’s not the only peak – e.g. Easter is big for DIY, and there’s Valentine’s/Mother’s/Father’s day. For fashion retailers their Spring/Summer and Autumn/Winter range launches are important, and of course there are sale periods to consider.

The point is, you will not get the time of day from them when they’re in the middle of peak trading and particularly at Christmas, retailers will not implement anything new. Most of them go into complete lockdown from November onwards so you need to time your approach. Depending on your services, think about when they plan your activity and hit them at the right time. If what you do is strategic you need to start speaking to them in the first Quarter, whereas September/October is the time for a tactical proposition.

Oh, and a tip – never call a retailer on a Friday evening or a Monday morning – they’re busy with promotions/reporting so leave them to it.

The new British Empire?

The UK retail sector is now international and it is responsible for a whopping 11% of Global internet retail sales. The Germans won’t like it but the UK’s online retailers, 228,000 of them, export more than those from the rest of Europe put together, and per head we spend more on ecommerce than any other country. The government has been supporting international expansion by UK retailers as part of a stated policy aim (see here: http://goo.gl/zvDhw5) both for international sales and to encourage direct foreign investment. Regions such as the Far East, Middle East, South America, Russia are important markets for UK retailers, particularly luxury and fashion, and those markets do like to buy British. And there are challenges in serving those markets – language, culture, logistics, regulatory, market environment, etc.

Experience of helping retailers sell international is therefore an opportunity. It’s a great angle to get in front of people and if you have it you should make the most of it.

A Dynamic industry, with highly competitive supplier landscape

The UK is an international leader in producing technology and ecommerce solutions, which make UK retailers pretty savvy buyers borne from a wealth of choice.

Plus the fast moving nature of retail technology means there’s a lot of innovation. In the early days of ecommerce the was slower than industries like travel & banking to adopt online selling, despite the early successes of Amazon and eBay and some high profile early innovators (anybody remember Boo.com?). At that time, these were new entrants while traditional retailers sat on their hands. However, once the industry got its act together it didn’t look back and for some time it has led all other industries in multichannel.

Retail is served with some really good technology shows such as Retail Business Technology Expo (http://www.retailbusinesstechnologyexpo.com/) on the 10th/11th March or Internet Retailing (http://internetretailingexpo.com/) 25th/26th March. Both are worth a visit.

Unfortunately for suppliers, this means there’s a lot of competition too, as all of the suppliers have the same idea and rush to build the first/best solution.

For you as an agency, this means that if you do something new for one client and want to sell it to others, the competitive edge that gives you won’t last long. The rate of innovation is increasing too, so you have a window of about 6 months to establish a position and win some clients.

Omnichannel Retailing: interrupting the customer journey

The web in the store, in the sales rep’s hands, and in the customer’s hands. Location aware apps with the ability to recognise the customer, track their activity and reward/incentivise their behaviour. Contactless payments. Multi-device (18000+ Android devices and counting). Always on. Social. Web, with 90% of screen based interactions with a brand including more than one screen. Real world, real-time big data driven analytics.

The possibilities are incredible but the complexity is immense and there are many obstacles to overcome. Many retailers have been very good at trialling new innovations in an agile manner but they’re biting off bits of it. One or two have trialled fundamental changes to their retail proposition; take Argos as an example – their new in store experience is a huge step forward and has modernised the brand. But at present no retailer has done the full omnichannel re-write of the retail model I’ve described and I don’t think very many are going to in the short term because it simply requires too much of  the organisation to change too quickly for it to happen and there are too many unsolved problems to overcome.

That means that big holistic propositions around this stuff will be hard to sell. They’ll have a long lead time and you’ll need to get in front of the most senior people, which is inherently difficult. Getting through the door with more tactical and tangible solutions with lower-level department heads is more likely to deliver the revenue and new clients you need.

Retention and Loyalty

Everybody from the CIM to Gartner has a figure for the cost of customer acquisition vs customer retention and the general consensus, statistically speaking, is that it costs a lot more to acquire a new customer.

Retail loyalty programmes make great targets. Some of them are huge, with databases of millions and millions of customers. Their aims are usually to increase recruitment, adoption or participation, and they spend significant amounts of money serving and communicating with members.

So where is the opportunity?

Store cards. Loyalty portals. Campaigns. Shop assistant apps.  Gift guides. Catalogue apps.UK & International ecommerce sites. Strategy. Content.

One fact of the retail market that you should never forget is that they are extremely focused on return on investment – especially in digital. They are used to seeing the return on what they spend. Although the industry as a whole is innovating, retailers are pretty rigorous about evaluating risk and you will find it far easier to get a project to move forward (particularly something new) if there is a clear ROI case.

But the point is that big retailers have lots of entry points and if the big retailers are not for you then there are hundreds of others to choose from in the UK alone.  It pays to define a really clear and focused proposition and spend time identifying the department heads and the types of retailer it’s most applicable to. Retail is a great sector to work in – people working in the industry are open to learning about new ideas which means if you’ve got the right offer you’ve got a good chance of winning new clients, but it’s important to approach them in the right way.

If you’re planning to target retail we hope the article was helpful. If you want, get in touch if you want to know more about this area and we can tell you more about what we’ve done. The next article will focus on selling to the travel industry.

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