Business Technology

The challenges of being a new kid on the block in the age-old retail industry

12 min read

18 February 2016

Former deputy editor

The way in which retailers take consumers to the point of sale continues to evolve. As such, Real Business spoke with the rising UK SMEs with innovative ideas to discuss the challenges of entering an age-old industry with a new proposition and how they were dealt with.

As a customer, the general pathway to purchase is: see it, like it, buy it.

Of course, it’s nowhere near as straightforward for the businesses eager to take shoppers to that point of sale – the arrival and explosion of ecommerce saw to that.

Indeed, as pretty and eye-catching as the merchandising in high street shops may be, there’s truly no way of knowing what’s going through a customer’s mind. Are they window shopping? What’s their budget? And how do you get them into the store when they could go online for their goods?

Of course, while online can offer more insights with the help of data, there are still multiple factors to consider for each customer because a one-size-fits-all approach won’t fly as consumers become more demanding.

Lucy Larkin, the MD of the UK retail practice at professional services firm Accenture, told Real Business that the retail sector must collaborate with disruptive newcomers in order to thrive and used the sharing economy as an example to learn from.

“Everybody in every industry needs to think about working with startups. If you look at the market and the level of disruption that’s gone on in recent times – Uber, Airbnb – no one could have imagined this a few years ago, so we can’t afford to isolate ourselves from this type of thinking that makes these companies,” she said.

Indeed, Larkin has spoken from experience. Accenture has partnered with retail startup investor TrueStart to secure access to new players, connecting them to clients as a result.

She added: “It is great to see so many fantastic startups here in Britain and by connecting them with the more traditional retailers, together their innovations can help to transform the future of the retail industry and more importantly the consumer experience.”

Ometria is one such retail innovation out to change the industry. A customer insight and marketing platform for retailers, the service was built to help clients build profiles of shoppers and personalise promotional messages as a result.

Offering more insight to us, Ivan Mazour, CEO and founder, explained: “Consumers now expect to be treated as individuals, not as just another generic customer. As time progresses, and as we traverse the online and offline worlds, each of us leaves a detailed trail of actions and affinities.

“By collating and interpreting this trail, Ometria is able to predict what people will be interested in, and when they will be interested in it. Using those predictions, Ometria then creates and delivers personalised messages through channels like email or Facebook in order to encourage those individuals to purchase.”

The debut product from the company was a data feature that created the profiles, which retailers could use to tailor and improve marketing strategies. However, three key problems arose immediately, Mazour revealed.

“Retailers had no time to do anything, they had no data experience since the shift to data-driven marketing was such a new trend, and the technologies they had in place for acting on the data were so outdated that it was impossible for them to create genuinely beneficial outcomes for their business on the basis of what we provided them,” he said.

As a result, Ometria revamped its offering to climb the unexpected obstacle and now offers complete support. It saw the appointment of in-house data scientists and marketing professionals, who are able to manage and personalise campaigns.

Read more on the changing retail sector:

Mazour detailed: “This means that with only a minimal time requirement on the part of the retailers we are able to put in place a full personalised customer lifecycle marketing strategy which drives measurable increases in revenue, conversion, repeat purchase rate and overall customer engagement.”

For Grabble, the mobile commerce app that facilitates discovery and sale of fashion, lifestyle and beauty goods, raising capital was the biggest issue for the emerging platform at launch as it sought to win over investors.

Recalling the events, co-founder Daniel Murray said: “You hear all sorts of valuable advice, from only take ‘smart money’ to ‘take whatever you can get’ to ‘never work with a VC’ to ‘you’ll never get scale without VC money’, and so on and so forth.

“So whilst one great challenge is how to get money, and who to raise from, one of the other major related challenges is generally finding people who buy into your vision, can follow on further financing rounds, open door and support you – rather than just stop you from running your business smoothly.”

Content on the app, which is downloadable from the App Store, is new and hand-picked on a daily basis by the company’s stylists. It means material varies from high street to luxury, but all products are carefully chosen from quality brands such as Zara, Mango and Topshop, in addition to rising independent designers.

Perseverance was paramount for Murray as he was determined his venture would eventually succeed.

“The fact we didn’t know any angels didn’t stop us, we went to every single early stage funding-related startup event you could find in London. We pitched at any that would accept us and ended up, slowly but surely, raising over £2m from angel investors,” he told Real Business.

“You learn a lot on the way and you can receive great advice – but just like an investor does due diligence on you, you should always do it on them. There are a lot of angels with bad reputations, and they are easy to call out as they are known, around London especially.”

Continue reading on the next page to hear from the business helping UK firms including Skyscanner, Eurostar, Sony, Wrigley and the Regent Street Association tap into the rich Chinese commerce market.

Qumin is on a quest to help retailers and businesses profit from wealthy Chinese shoppers with an Anglo-Chinese marketing service that delivered campaigns for Skyscanner, Eurostar, Sony, Wrigley and the Regent Street Association last year.

“We recognised that Chinese global travellers are the driving force of many major city’s retail centres – 30 per cent of global luxury sales come from the Chinese, 80 per cent outside of the mainland,” said Tom Nixon, Qumin’s head of social and analytics.

“Despite this huge potential, we also found that many global brands have experienced difficulties in marketing products successfully to the Chinese mainly due to a lack of understanding of the very different market place.

“Qumin was born out of this realisation and was the first agency to provide full-service digital marketing services outside of China. It delivers strategic marketing campaigns centred on the touch points of a Chinese consumer, combined with world-class technical expertise in SEO, PPC, social media and ecommerce.”

The main challenge of being a pioneer in this particular field was education and informing people about the raft of platforms in China for both online and offline commerce.

Social networks including Facebook, Twitter, Instagram, which are often taken for granted for both casual browsing and marketing benefits, are banned in China, for example.

Chinese New Year to generate golden sales spike for UK’s designer outlets

He continued: “The way in which the Chinese interact with social media and the types of platforms available vary wildly from those in the UK, Europe and US. What works over here in terms of digital marketing, won’t work in China and it has been a challenge to get people to understand these differences.

“We developed Dao, a community for western digital marketers that helps them understand how to market more effectively to Chinese consumers. Its focus is to help English-speaking marketers understand Chinese consumers and run effective Chinese digital marketing campaigns for international brands.”

The community includes things such as workshops that stress the need to understand the marketplace for maximum results around campaign.

“Most recently we conducted a workshop on how to successfully market to the new Chinese consumer looking at how spending habits have changed and are likely to change in the future and how brands can appeal to this new demographic,” added Nixon.

“We had a fantastic turn out with companies including Eurostar, Cath Kidston, Selfridges, The Body Shop, Gordon Ramsay Group and the Regent Street Association all attending.”

As Accenture’s Larkin said, “think about working with startups”. On the other side of the coin, seven UK retailers were given “elite” status for ecommerce and multichannel services in February and these are the forward-thinking firms that should also be looked to for lessons.

You might want to steer clear of any strategies from House of Fraser, however. The luxury department store introduced a Valentine’s Day campaign on Twitter which was so bizarre that many followers though the company had been hacked.

Image: Shutterstock

These companies and more can be found at the Millennial 20/20 Summit, a gathering of brands, businesses and industry leaders who target the millennial generation  on 13-14 April.