Skip to main content

Smarter shopping

(Published in Business Mirror under the Mirror Image column, Aug 18, 2009)

NOTHING, you’d think, would be more dynamic or up-to-the-minute than how we buy and sell. From the early Greek agoras to the modern superstore, markets have always been the most sensitive barometers of economic and societal change.

However, today’s retail model is struggling. It’s still largely a system built for the realities of an earlier era—a linear, push-based process where products are manufactured in isolation and put into market en masse from factory to truck to store, for customers who do the majority of their shopping in suburban malls.

This served very well the needs of manufacturers, retailers and consumers half a century ago. But today, this system is straining to adapt to global supply chains, new ways and venues for selling—both physical and virtual—and a very different kind of consumer.

Global retail today sees lead times as long as six to 10 months, forcing vendors to make significant bets on inventory, consumer trends and distribution methods—bloating supply chains with a stockpile of $1.2 trillion in excess merchandise.

At the same time, retailers lose a staggering $93 billion in missed sales every year, simply because they don’t have the right products in stock to meet customer demand. And that demand is more demanding and immediate than ever before: in the US, over 92 percent of adults conduct research online and seek the opinions of others before they ever purchase a product from a store.

According to the February 2009 report of Euromonitor International, in the Philippines, retailing remained resilient in 2008, supported by the expansion of large retailers into provincial areas increasing incomes, as business-process outsourcing (BPO) continued to post vibrant growth.

The high inflation rate, which increased the prices of basic commodities in the first half of 2008, only slightly depressed sales of grocery products in 2008. Store-based retailing registered healthier current-value growth compared with 2007, while growth in nonstore retailing decelerated. This is relatively good news for the industry and for our economy. But we can do better.

To do business with shoppers on a smarter planet, retailers and manufacturers need a smarter system, one that bends retail’s global supply chain to these new realities. It needs to be interconnected, so the system can be fed by customer insight at every point in the process—all the way from design to distribution. It needs to be instrumented, so every item of inventory can be tracked and accounted for. And it needs to be intelligent, so vast amounts of customer data can be analyzed and turned into real value in real time.

You can see examples of this right now: 1-800-FLOWERS.COM Inc. is tearing down the walls between its 14 brands through a flexible Web platform that lets the company respond to customer needs faster and more efficiently. Outdoor retailer Moosejaw is giving its customers a seamless shopping experience across all channels (retail, Web, mobile, etc.) and is infusing customer feedback and reviews back into a system designed to continuously improve the products and customer experience.

The German Metro Group, one of the largest and most international retailing companies in the world, has introduced RFID technology throughout its entire supply chain, to help them get the products its customers want on the shelves when they want them. And top clothing designer Elie Tahari has built an inventory-reporting platform that’s helped it better match its products to customer demand.

By building intelligence into our entire retail system, retailers, manufacturers and suppliers can eliminate inefficiency and waste at every step of the chain—crucial in the current economic downturn. Even more important, retailers can better serve the new breed of empowered consumer, whose needs for high-value, individual service and low prices will only grow.

Going forward, the watchword of commerce may no longer be caveat emptor—“let the buyer beware.” In a smarter retail system, it is the seller who must be—and can be—vastly more attentive and responsive.

****

“Mirror Image” is a rotating column featuring writers from the DLSU Professional Schools Inc.

Reynaldo C. Lugtu Jr. teaches management and marketing courses in the MBA Program of the Graduate School of Business, De La Salle University. He may be e-mailed at rlugtu2002@yahoo.comThis e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit his blog at http://rlugtu.blogspot.com.

Comments

Nice article here. Very informative. Even me, I always demand for such product with high quality. As a shopper, I often scrutinize every product I wanted to buy so in the end there will be no regrets.

Popular posts from this blog

Can outsourcing be stopped?

((Published in the BusinessMirror under the Mirror Image column, Nov 11, 2008) Now that President-elect Barack Obama will be inaugurated on January 20, 2009, many are holding their breath, especially the business-process outsourcing companies in India, the Philippines and others, as to how he can turn around the outsourcing of jobs from the United States. In debates and on the road, Obama repeatedly said that if elected, he would discourage companies from “shipping jobs overseas” by taking away tax breaks, or by giving benefit to those corporations that keep jobs domestically. “We can keep giving tax breaks to companies that ship jobs overseas, or we can give tax benefits to companies that invest right here in New Hampshire,” Senator Obama said at a joint appearance with Sen. Hillary Clinton in Unity, New Hampshire. According to CIO magazine, economists and legal advisers contacted about those comments said they are unaware of any specific tax breaks aimed at offshoring or outsourcing ...

Facebook addiction

(Published in Manila Standard Today under the Greenlight Column, January 10, 2011) I was recently invited by a Communications Arts class of De La Salle University to talk about the ill effects of Facebook among the youth. “Ill effects among the youth?”, I asked. I have studied the good, the bad, and the ugly sides of Facebook in the workplace. We always see its good side because most of us are active users. But the dark side in the work place is apparently the decline of productivity based on a number of studies. But understanding the ill effects among the youth struck me because I have two teenage daughters who spend hours in the veritable social network site; and I oftentimes ask them to stop and instead concentrate on studying. So this topic interested me as I wanted to understand its potential ill effects to my kids. Surveying Facebook users To put some credence in the talk, I asked the student organizers and my daughter to help me to conduct an exploratory study through a...

Can outsourcing be stopped, really?

(Published in Business Mirror under the Free Enterprise column, January 11, 2012) IN 2008, I wrote an article in BusinessMirror titled “Can outsourcing be stopped?” where I mentioned Barack Obama’s repeated spiel in his campaigns that, if elected, he would discourage companies from “shipping jobs overseas” by taking away tax breaks, or by giving benefit to those corporations that keep jobs domestically. From then on, the US government did not have a clear policy on outsourcing; thus, the business process outsourcing industry in the Philippines and elsewhere like India still experienced spectacular double-digit growth, helping spur the economies of the two countries. But just last week, President Obama jumpstarted an effort to urge US business leaders to keep jobs at home instead of outsourcing them overseas as he rolled out a new election-year theme aimed at courting middle-class voters. This has been the long-standing campaign of the US government against outsourcing, which was...