Recent Posts
The Overlooked Importance of Human Capital In Retail
Jun 17 / Samantha
In 2018, Alibaba, buoyed by its retail arm, T-Mall’s e-commerce success in the Chinese Domestic Market, embarked on an ambitious venture to open various unmanned stores across China’s major cities. These retail stores are fully automated, equipped with various technologies such as electronic shelf labels, Radio-Frequency Identification (RFID), computer vision, and facial recognition, to name a few. The decision seemed to make perfect sense: lower labour costs, powerful data collection capabilities and greater operational efficiency, while offering consumers a glimpse of shopping in the future. Other tech companies soon joined the party, unmanned retail shops promptly mushroomed all over China, and the hype was real. How could anything possibly go wrong? Except it did. Fast forward to June 2020, and a large number of these unmanned stores closed down, as reported by Nikkei Asian Review: In Shenzhen’s electronics shop district, a Buy-Fresh Go store that had been heralded by the media as a model of automated retail closed after only about a year. In Guangzhou, i-Store, the first local unmanned convenience chain, closed 6 of its 9 stores. In December 2018, JD.com, China’s second-largest ecommerce company, announced the suspension of its smart shelf business — small unmanned shops the size of train station kiosks. So, what actually caused the downfall or unmanned retail? Turned out it was for exactly the same reason the business model existed – the absence of human personnel, which escalated problems such as: Technical limitations: Most unmanned stores faltered at delivering a seamless “just-walk-out” experience: some could handle only limited customers at once; others encountered glitches upon customer entry or exit. In customers’ eyes, unmanned convenience stores were simply not convenient enough. No added value: Unmanned store operators were so intent on proving their technological capabilities that they neglected the importance of creating a great customer experience. To customers, unmanned meant an impersonal and therefore unmemorable shopping journey. Dishonest customers: Research firm Trivium reports that Alibaba conducted an experiment in 2015 in which only 62% of shoppers actually paid for their goods at unmanned stores. With the absence of human personnel, cheating acts were difficult to detect. What can we learn from the failure of unmanned retail stores in China? Perhaps the biggest lesson here is that retail is essentially all about the customer experience, and adding a human element not only provides a personal touch to the customer experience, well-trained and knowledgeable sales personnel could even influence customers’ purchasing decision and drive up store revenue. Perhaps retailers could learn from this case study and start to invest more into their human capital in order to gain a competitive advantage in already saturated market. Food for thought.
Counter COVID-19: 26 Secret Strategies that you can learn from Senheng
Jun 17 / Samantha
“The COVID-19 Crisis brought an unprecedented challenge in our 30 years in the retail industry,” quipped Senheng Founder and Managing Director, Mr Lim Kim Heng. “Its impact is at least 5 times worser than any economy crisis we’ve faced, but we managed to keep calm in the face of crisis, and planned counter measures to mitigate the financial repercussions from the early stages,” He added proudly. The results? How about a five-fold increase in online sales revenue during the first month of the MCO? Impressive. Here, we shall share with you the 26 secret strategies that Senheng used as counter measures against the COVID-19 Crisis: Secret #1: Seamless Senheng launched its Seamless concept in 2017, an online to offline retail experience that allows customers to shop across various channels whenever and however they choose. The market responded positively. Revenues immediately grew 6% in the first year and swelled to 26% in 2018. Secret #2: Telemarketing Converting its Customer Service Unit into a telemarketing call-centre focusing on receiving inbound and making outbound calls. This switch alone brought in a daily revenue of RM20-30k per day. Secret #3: Customer Loyalty Program Senheng’s Customer Loyalty Program centralizes on the idea of providing added value to customers in a fair manner, effectively eliminating the practice of price negotiation at the store. Most importantly, this allows them to have 2.6 Million customers’ data at their fingertips. Secret #4: Staff Conversion Using big data, Senheng converted 1900 of their retail and supporting staff into telemarketers with highly targeted matching of customers to telemarketers. Secret #5: Mobile Apps Senheng rolled out its own mobile app in 2016. By encouraging all of its members to use the app, Senheng saved more than RM1mil in printing and mailing expenses by going fully digital and paperless. Secret #6: Voucher Redemptions From big data, Senheng found out that there were 25,000 members that had cash vouchers worth RM200 that were not redeemed. Senheng’s telemarketers reminded members to redeem their birthday vouchers and to use their PlusOne points and EZ Credit Rebates to redeem products, and this spurred buying interest from the prospects. Secret #7: Inventory Management Senheng used artificial intelligence (AI) and business intelligence (BI) analytics to manage their inventory and stock replenishment according to actual demand without affecting its operations. Secret #8: Activate e-Training Together with SH Retail Academy (SHRA), Senheng did not reduce any investment into upskilling and training by going into full e-Training. Secret #9: Rent Renegotiation Senheng renegotiated its stores’ rental with landlords to a 30-50% reduction throughout a year-long period. Secret #10: Stretch Credit Period To improve cash flow, Senheng negotiated its credit period with its suppliers to an extra 30 days from March to September 2020. Secret #11: Overdraft Facility Use overdraft facilities provided by banks to pay for expenses during MCO. Secret #12: Bonds and Refinancing Senheng obtained much needed capital by issuing callable bonds and refinancing its assets to pay for rents payable, manufacturer’s invoices and staff payroll. Secret #13: Virtual Meeting All meetings to be conducted in web conference virtually unless necessary. Secret #14: HR Digitalization Digital HR system enable all Senheng staffs to work from home while maintaining their respective KPIs. Secret #15: Sell the Future Senheng sold cash vouchers worth RM100 for half the price that consumers could redeem at a future date. They sold out 764 vouchers on a single day. Secret #16: Increase Digital Budget By increasing budget spent in digital channels, Senheng manage to increase their sales via Senheng and senQ’s online store and Lazada to RM50-60k/day from RM10k/day last year. Secret #17: Corporate Social Responsibility Senheng received requests for sponsorship of air-conditioners from 12 hospitals, and successfully obtained travel permits to transport the air-conditioners from the authorities. Secret #18: Last-mile Delivery Senheng’s participation in CSR initiatives enabled them to obtain the relevant permit to fulfil last-mile delivery that was previously halted due to the MCO. Secret #19: Merging Departments Senheng merged its retail sales unit with the telemarketing unit, which enabled its retail sales staff to use the downtime to perform telemarketing activities, improving work efficiency in the process. Secret #20: Telemarketing App Senheng launched a Telemarketing App within a short period of time to support and track telemarketing performance. Secret #21: iPET Launch Senheng’s subsidiary company, iPET Technology Sdn Bhd (iPET), the first Pets Social eCommerce platform that equipped with features like AI technology & big data analysis. Going digital helped saved cost such as rental and warehousing. Secret #22: Develop New Products Senheng used the analogy; ”selling tour packages to the moon” to describe this approach, where they believe that anything can be sold. Secret #23: Staff Assurance Senheng assured all staff that they will not have to worry about being forced to take unpaid leaves and salary reduction during this period of hardship. Secret #24: Lean & Mean Senheng adopted a lean and mean management approach to its finances, slowed its expansion plans, and scaled down on unnecessary expenses. Secret #25: Strategic Partnerships Senheng formed win-win partnerships with its business partners P1 Citi, P1 Lazada, Aeon Credit Express, AIG Rebate and MBB Free Admin fees to leverage on their customer base. Secret #26: Marketing Formulate effective marketing activities to engage with customers and encourage participation. So, there you go! All the 26 secret strategies used by Senheng compiled for you. Lastly, to sum up, here’s a summary of what we can learn from Senheng’s experience: The online cake can be bigger Data is king Digitalization allows us to become more flexible New business channel established – Telemarketing New products – Sell the future Past engagement with our “Lovers” is simply insufficient E-training is a must Lightweight lean business model National Agenda – Drive digital transformation with all Malaysians SMEs