‘Ridiculous’ customer demands are changing retail supply, distribution

The “stack it high and let it fly” days of Sam Walton are definitely retail history. The days of demand forecasting and linear paths to purchase – basic fundamentals in Retailing 101 – are being eclipsed by “ridiculous” consumer demands fueling the big data evolution, according to Mickey Mericle, vice president for global consumer insight at Wal-Mart. 

Mericle was one of a dozen logistics professionals to speak at the University of Arkansas Walton College Supply Chain Management Research Center annual conference on Wednesday (April 22) in Fayetteville. About 300 supply chain and logistics professionals attended this year’s conference that featured analytical discussions on big data applications and customer-centric retailing trends.

As good as big data is with its infinite abilities, Mericle said it can only take retailers so far. She said in a dog-eat-dog retail world the quest to gather and understand big data as it pertains to consumer insights and behaviors is key to survival. But unless that retailer is agile enough to give the consumer what they want, when they want it, at the price they want to pay, it’s likely the consumer will go somewhere else.

“One thing we have learned is that consumers don’t mind shopping at multiple stores for what they perceive are the best values. Consumers have a need to feel smart, by cherry picking values they feel they are doing the best they can for their families. We also know that consumers are willing to take advice from complete strangers via social media. … We know that a considerable amount of purchasing is done on autopilot for the consumer, it’s almost unconscious. At Walmart we are on this path to understand our customer and how they think,” Mercile said.

CHANGING THE SYSTEM
One interesting observation shared by Mericle was how the supply chain must be integrated with customer insights and then adapted into a more agile demand chain. This entails moving away from a rigid structure where manufacturers ship products to distribution centers and then they are redistributed to specific stores.

Mericle said Wal-Mart is leveraging its various supply and distribution channels to create small systems within the larger system that facilitate new customer demands. Some of those new demands include pick-up-today and ship-to-store which marries online sales with the most efficient physical delivery solutions. The store tethering concept allows supercenters to become fulfillment venues that gives assortment and local access without raising the costs to consumers. 

Mericle said for far too long the Wal-Mart supply chain logistics division was not integrated with her consumer insights division, which is typically a marketing arm.
She said once the consumer sights team was invited to the supply chain meetings something almost magical happened. It turned out that her team had already done consumer surveys and gathered data feedback on several new programs and some technology applications Wal-Mart was piloting on a small scale.

“I asked them if they knew what consumers thought about the new programs. They did not. So I reached for my notebook and showed them the results of our consumer surveys and focus groups. They immediately began scrambling. They were able to roll out some things faster than they thought and in some cases they had over shot consumer’s expectations, which allowed them to scale back on some plans,” Mericle said.

In the end, she said the people who make sure the product is on the shelf need to know what the customer expects.

SILO PROBLEMS
Keith Mercier, global retail transformation leader at IBM Watson, agreed. He added that the traditional retail model is “one to many” with large “siloed” teams around design, merchandising, marketing and operations. He said the days of retailers telling the customer what they want, are long gone, harkening back to the “Everybody in Khaki” campaign he remembered when he worked at Gap.

“Today’s consumer says, ‘Nope.’ They don’t want to be treated like a whole lot of other people. It’s about the chief executive consumer, the power of me,” Mercier said. “Consumers want to be in the middle, but retailers put them at the end of the line.”

Experience is becoming the differentiator and he said retailers are still struggling to integrate their silos. He said brand differentiation and understanding are key for retailers hoping to get a second and third date with their customers.

He used Uber as an example. The mobile application allows users to hail a cab from any street corner, pay with their phone and track the cab during the trip. So imagine a customer’s frustration when they can’t track a package from something they have ordered online.

He said he recently used an online doctor via Skype when he was crunched for time ahead of an international trip. 

“I talked with the doctor via Skpe, he diagnosed my condition and prescribed a medication which I picked up at the my local Walgreen,” Mercier said. “Now this quick diagnosis and medical consultation will set a high bar for others to follow.”

To that point, Mericle said consumer expectations today are “ridiculous,” and only those retailers nimble enough to deliver will likely be around in 20 years.