Harnessing SAP for competitive advantage in retail
31 August 2016
In order to create a truly connected Total Retail experience, the retail industry needs to evaluate how to best leverage the SAP solutions to unlock competitive advantage, including exploiting the SAP S/4HANA real-time capability for more sophisticated analytics and insights across channels to create a 360-degree view of customers and how their needs can better be served. It doesn’t matter whether customers are online or in-store, SAP S/4HANA offers retailers a 360-degree view of the customer across channels and devices, integrating online and offline into a seamless, dynamic experience, exploiting the integrated data model, analytics capabilities, and allowing supply chain integration. This is not just about the front end but the whole value chain.
The ability to respond to the challenges and demands of increasingly connected consumers requires a fully integrated, digitized, and connected value chain enabled by a simplified, customer centric business model and organization, one that uses customer data and sophisticated analytics to drive dynamic consumer and market insights. Key tenets of an optimized value chain include the following:
- Integrating physical and digital store operations: Under a single management team with shared incentives and key performance indicators (KPIs) that are agnostic of channel
- Creating a flexible data infrastructure: To build a single view of customers across channels and interactions in order to deliver real-time insights and personalized experiences
- Building a responsive supply chain: That senses and responds to demand across channels, using sophisticated analytics to deliver a personalized experience
- Creating the “Digital Boardroom”: To deliver real-time financial and sales performance metrics that enable views of profitability by category, channel, product, and consumer segments to enable proactive decision making and focus on the most profitable products and channels.
Companies have previously focused on integrating the back office, but there is a need to integrate the digital front office and supply chain to create responsive and optimized operations that meet consumer needs. For businesses relying on SAP solutions, this means looking at exploiting the SAP S/4HANA capabilities and the SAP Hybris suite for real-time reporting to improve demand forecasting, adapt pricing, and understand profitability and cost-to-serve by product/channel. By configuring the end-to-end value chain to customer centric principles, companies can deliver the Total Retail experience and meet consumer demands.
Ultimately, the Total Retail experience stems from a new and improved operating model that embraces innovation and fosters connectivity at every level of the business. Fast forward a few years and Total Retailers will embrace this model by offering a truly connected experience where they use digital capabilities embedded in all parts of the business to ensure real-time innovation and integrate customer data and insights into the customer experience. This will create a greatly enhanced customer experience by using technology to personalize interactions, integrating experiences seamlessly across all channels including in-store, online, and mobile, and ensuring store and online employees can best service customer needs.
Total Retailers will also be able to develop better connections within their store networks and among networks of other businesses or retail organizations. Consumer goods companies will look more like connected retailers with the advantage of designing their connected network from scratch. They will have direct relationships with consumers (B2C) through a direct-to-consumer channel as well as with through customer B2B channels to enable them to better understand and engage consumers in the brand, innovation, and product development.
Tomorrow’s operating model, I believe, will need to be enabled by new organizational capabilities and underpinned by the following characteristics and trends:
- Innovation: Tomorrow’s operating model must allow business transformation through innovative models that may not exist today. Key trends that will drive innovation are disruptive models, co-creation, and ecosystem collaboration.
- Enhanced customer experience: The operating model must deliver a fully integrated and connected consumer experience, regardless of channel. Key trends that will shape retail around the customer experience include social media engagement, consumer-centricity, and omni-channel experiences.
- Simplicity: To respond to a rapidly changing marketplace, simplicity is the answer. The operating model must be agile and truly customer-centric. Key trends driving simplicity are cross-channel integration, loyalty management, sales and service management, and a dynamic supply chain.
- Trust in the brand: In an environment where brand is key, trust has never been more important. Consumers expect a two-way, rewarding relationship. Key trends shaping retail around building brand trust involve business information and analytics, data security and compliance, and cyber security.
Anthoula Madden is a Partner in PwC’s Retail and Consumer practice and leads PwC’s Digital Front Office initiative across EMEA. She has over 20 years of experience delivering SAP-enabled business transformation programs for clients, from strategy to execution on a global scale, with a focus on unlocking business value for clients.