Tim Koshinsky, VP solutions at retail system integration services provider OLR, shares his insights on keeping customers happy across a growing number of geographical locations.
Internationalisation is high on the retail agenda in 2015, as retailers look to expand their geographical reach whilst avoiding risk where possible. Many businesses are turning to a wholesale and franchise strategy, but what ingredients are required to make this model work effectively?
In 2015, more retailers are going to grow their own way, regardless of the path their competitors choose. Why do I think this? Well, to begin with, one striking observation from this year’s NRF Big Show was the lack of cohesion across the retail industry when it comes to embracing new territories.
In addition, the route to international success has moved from a single track to a complex network of possibilities – none of which are necessarily right or wrong. Rather than being led by the BRIC or MINT countries, retailers are choosing new markets based on the individual opportunities available to their business, defined by their own criteria.
This evolution, combined with the compelling need to go global or face falling behind the competition, has created a situation in which retail organisations are seeking a flexible market entry strategy, which minimises risk. For many, the solution lies in adopting a wholesale and franchise model.
Why a wholesale and franchise model?
The major benefit of a wholesale and franchise strategy is that retailers who license products through these channels avoid the risks of opening new store operations in unknown territories. Not only that, but the process is quicker, and franchisees have greater local knowledge and connections, to facilitate greater market penetration.
However, the success of a franchise model depends not only on what’s happening in new territories, but how retailers adapt their business infrastructure – and this can often be where processes fall down. With greater geographical presence comes additional strain on resources, and therefore efficiency and agility becomes paramount.
The foundations for international triumph
Customer-facing success begins with back-end investment. For example, it is critical for retailers to integrate end-to-end wholesale and franchise processes across their business, from merchandising to inventory management and distribution. By doing this, it ensures that both the organisation and the customer can see complete product availability, and there is clear, connected data reporting throughout the shopper journey.
Another important factor for retail organisations to consider is the management of core processes that extend beyond the wholesale and franchise model. Pricing, orders and fulfilment will all have their specific requirements within new markets, but those must be managed as part of wider business activities to maximise customer response times in all territories.
Bringing management of these elements into the same solution set enables control of customer relationships and profit margins across product lifecycles, to offer the same high standards of service regardless of location.
It’s important to ensure this approach is also applied to financial management, so that elements such as exchange rates, invoicing, profitability reporting and customer account maintenance can be controlled centrally as well.
How to achieve end-to-end integration
Creating complete integration and centralisation of core processes is easier said than done, even when retailers have the right platform in places. We work with a number of organisations that are already using solutions such as Oracle’s retail, commerce and finance suites, but are currently not using their capabilities to full effect.
Introducing a new growth model does not mean starting from scratch with supporting systems. Rather than introducing customised systems in place of existing technology, we often find that retail businesses can leverage their existing solutions to deliver an integrated, end-to-end process for managing wholesale and franchise operations.
This approach requires less time and expense, which therefore can accelerate entry to new markets in a much more affordable manner than implementing bespoke systems.
Powering better customer experiences
At the end of the day, whatever the expansion route, international success rests on customer service. Enhancing existing systems to provide greater centralised control ensures that retailers can not only deliver a smoother shopper experience through their franchise model for new territories, but do so without compromising encounters with consumers in existing markets. It’s this consistency that separates global giants from the rest of the field.