How ERP Systems Are Turning Retailer Customers into Retailer Buddies

Dilip Popat, Director of Global Retail Industry Principal at Microsoft, is prioritizing a customer-centric approach to marketing and selling Microsoft Dynamics AX for retail. During his presentation at the To-Increase Worldwide Partner event in May, 2010, Popat explained: "'Connected Experiences' for retail enables a deeper relationship between the customer and supplier. In particular, the fine-tuning and adaptability of the solution is designed to move away from a solely transactional relationship with the customer and introduces opportunities to start a dialogue around their brands and preferences. This is a trend the consumer market has been seeing in general."
Since the rise of the Internet, the mass communication model, including print and television ads, has been less effective in generating sales. The model is being replaced by media channels that empower dialogue, including events, experience economy, and social media. Popat's emphasis on customer centricity plays into this trend. An ERP system for retail can manage customer information, so that real-time optimizations and local market specifications can be quickly configured and fine-tuned at any time. As a result, retailers can leverage local tastes to stock shelves with niche products that deliver high-impact sales in social media environments.
Giving Customers and Retailers with Everything They Need
Customers want to feel unique, but they also want pricing that's in line with mass products. When ‘Connected Experiences' for retail accurately map consumer preferences to retail stock, then a lean and flexible supply chain can keep prices down while maintaining robust margins.
The ability to predict and keep pace is always essential to retail success-and in the current economy, retailers need a compass that helps them navigate uncharted territory. The market is in flux as it moves from recession to recovery; challenges include large swings in currencies, volatile energy prices, and changing regulations. Equally important, retailers are struggling to predict consumer spending trends. In a May 27, 2010, Economist article, consultant Peter Leinwand, from Booz & Company Retailers, offers some key insights about "America's Shoppers":
" In some respects, it was easier for retailers to plan during the recession, provided they had accepted the gruesome reality, since plunging sales were all but assured. Now, there is great uncertainty about what consumers will do. If the recent uptick in sales proves short-lived, retailers who extrapolate from the latest numbers will spend a miserable holiday season trying to offload unwanted stock at crippling discounts. Conversely, excessive pessimism could lead to empty shelves, disappointed customers and red faces in the executive suite."
Uncertainty and volatility in the consumer market has sharply increased the need for a flexible supply chain. In his article, Leinwand notes that retailers have also tried to shorten the ordering cycle, so that manufacturers end up carrying more of the risk of managing stock: "Many [retailers] are trying to replace the standard four annual "seasonal" orders with as many as 16 orders a year. Five years ago only Zara, a Spanish clothes retailer, followed this strategy, but firms such as J.C. Penney, Saks and Macy's have since adopted it ,too."
Daily CRM updates, inventory localization, and 16 order cycles sounds like a job for a retail ERP solution that helps store managers prepare themselves for multiple scenarios and minimize losses. In addition to buffering against market volatility, investing in Microsoft Dynamics AX for retail now can equip stores to take on technology innovations that speed and simplify ordering and purchasing. With supply chain and customer details organized in the company's ERP back office, they're ready to take advantage of touch screen configurators and mobile transaction solutions such as Microsoft Surface POS.
Transforming Customer Knowledge into a Profitable, Lasting Friendship
Along with supply chain flexibility and operational efficiency, retailers need technology that lets them build deep customer relationships-with the right knowledge, they can go beyond responding quickly to customer demand and stocking shelves with the right products. Take the concept of a ‘love brand.' By using brand loyalty to foster a dialogue with consumers, retailers can transform a transactional relationship into a friendship. This an opportunity for retailers to develop customer loyalty schemes and branded experiences like festivals and parties to create a lifestyle around their products.
When customers agree to a loyalty scheme / brand program they start getting exclusive invites and links to like-minded people. An example would be an athletic brand messaging a customer to say he or she has free tickets to a local sports event and that several of their friends are planning to go. Depending on the situation, the consumer might get a sales pitch, or simply useful information with no strings attached, like where to find the vintage basketball shoes from 1985 you always wanted from a second-hand shop. The CRM technology that gives retailers this knowledge is an information filter called a brand agent, or an independent agent if it's autonomous. When a retailer's CRM database is packed with updated, actionable information, it can uncover customers' specific interests and needs and engage with them on a more personal level-without being intrusive. The "brand" becomes a friend, not just a commodity. An ERP implementation that includes rich CRM functionality can turn a global retail operation into the shopkeeper next door that people grew up with-and trusted-for years.
As one example, Microsoft Dynamics AX with To-Increase industry solution for Retail and Warehouse Management & Distribution addresses the fundamental question any retail asks day in and day out, "What do my customers want to buy?" In today's world economy with a plethora of tastes and preferences, answering that questions is as problematic as predicting the weather.
It's tough to get an accurate reading on the temperature of consumer preferences right now and therefore any miscalculation exponentially increases the error over time and hence losses. That's why increasing the ordering cycle from 4 to 16 reduces the risk of getting it wrong, since the purchase orders are smaller. Plus, you can adapt to current events and take advantage of local niches. Adapting also means you have to be connected to your burgeoning customer data base with information customers are willing to share. Your company has to create the customer value and the ERP solution will integrate customer data with the supply chain. Lucky for retailers we´re in the vertical area where industry solutions can enhance Retail operations without costly implementations and hiring a new department worth of staff. It´s time to get customer centric.