SERVING YOUR PURPOSE

SERVING YOUR PURPOSECreate retail experiences that people love

2 SERVING YOUR PURPOSE: Create retail experiences that people love

StitchFix surprises consumers each month with a box of clothing styled for them. CVS Health quits tobacco and removes ‘touched-up’ photos for beauty products. IKEA acquires TaskRabbit to help consumers complete their furniture set up. All are strategic business moves. But they are also reflections of each company’s purpose, its rational and emotional role in consumers’ lives. ITS REASON FOR BEING.

Retailers today must define their purpose and execute against it flawlessly to thrive. This means evolving their offerings, how they sell and communicate to their customers, and how they operate internally. What is critical is to align the customer experience with the purpose so customers not only understand it, but they feel it every time they interact with the brand.



YESTERDAY CUSTOMERS BOUGHT FROM YOU—TODAY CUSTOMERS BUY INTO YOU Tomorrow’s retail standouts will excel at delivering customer experiences that ring true to their purpose. The goal is to create meaningful experiences—lovable moments—that capture consumers’ desire, trust and dependence to build unwavering brand affinity over time.

Consumers fall for retailers that become part of the fabric of their lives—brands that serve a distinct purpose for them. They are willing to play the field to find this love match. Accenture research that tracks how retailers execute against their purpose reveals that consumers who score retailers higher on love spend 31 percent more than consumers who score them lower. The jump in spending is even higher in the apparel (75 percent) and health and beauty (67 percent) categories.1


NEW ENTRANTS VS. TRADITIONALISTS Although it is early days when it comes to retailers that consistently do this well, Amazon and Apple are among the digital juggernauts leading the way. Not a surprise. There are also niche brands, most of them digital, with clarity of purpose and strong execution across the customer experience journey.

Take curated subscription companies like Trunk Club, Birchbox, Blue Apron and Graze as examples. Their appeal is not so much about the clothes, cosmetics and foods that they sell. It is in how they fulfill people’s desires to feel beautiful or to eat well. They offer expertise in personalized, convenient experiences that are enriched by the elements of fun and surprise. In fact, our research shows that curated subscription is the new most loved moment among today’s retail consumers.2

This is not to say that traditional bricks-and-mortar companies are not gaining momentum here. Unlike new entrants, their business models are not inherently designed with this focus on purpose. Some are breaking free from this organizational baggage. Take Kingfisher, Europe’s largest home improvement retailer. The company is developing a digital platform to help customers at every phase of their home improvement journey, including inspiration, planning and education.3 In the United States, Home Depot is making a similar shift. Through its partnership with Laurel & Wolf, Home Depot connects customers with interior designers who help them realize their vision using Home Depot products.4 This pivot from product to problem-solving is the essence of retail with purpose.

Feeling Amazon breathing down its neck, Walmart is expanding its digital ecosystem to fulfill its purpose of becoming “a technology platform with stores.” In addition to its highly-publicized acquisition of e-commerce player Jet.com in 2016 as well as apparel brands Bonobos and ModCloth in 2017, the company is investing in innovation to transform the customer experience both in-store and online. These investments include online grocery pick-up, automated self-service kiosks, voice ordering and a partnership with Google Home.5


MAKE THEM FALL FOR YOUHow can retailers transform their business, and at the same time, create more lovable moments? While every retailer will have its own journey, our work with companies across all retail sectors points to seven no-regret moves to getting results.


1Does the C-suite agree on trends, technologies and business models that could disrupt the company?

Have you identified non-traditional companies that could be disruptors?

Where is your business model most vulnerable?

ASK AND ANSWER

LIGHT THE FIRE AT THE TOP This is not about launching a few isolated experiments to improve interaction points. Infusing purpose into customer experience means making fundamental changes to the business. The effort has to start from the top, and must continue with full endorsement and energy from the C-suite. Pushing responsibility to a customer experience team in one pocket of the business will just lead to yet another siloed activity that fails to move the needle.

Senior leaders must look into the future, exploring the potential impact of emerging trends and new business models. They must confront hard truths about the company today, including whether their differentiation with consumers is sustainable over time. They must look at the competition and how consumers’ expectations are constantly being formed by new experiences within and outside of retail. In addition, inspiration can come from the startup community. Some retail leadership teams have taken Silicon Valley tours and met with industry disruptors to spark ideas.

When Walmart started feeling the burn from other box stores and Amazon, CEO Doug McMillon recognized that the fix was about strategic reinvention, not simply new ways to execute old priorities. He championed the effort, sending an email to all employees noting that at a watershed moment in the company’s history, it was time for everyone to “think critically about our business.”6 What followed was a series of strategic moves, both organic and inorganic, that have proven positive for Walmart to remain competitive.


2CREATE A “METAPHOR FOR COURAGE”With the right leadership, retailers can begin to illustrate their ambition. This often involves demonstrating the courage to truly stretch beyond the comfort zone. The ambition needs to be clear not just to customers, but to employees and shareholders as well.

Think of this as setting a North Star that guides all aspects of customer experience transformation, a metaphor for courage. This will force prioritization, which breeds efficiency in execution. It can also help executives align the business directionally and overcome any competing priorities within divisional, operational or geographical silos. Of course, the North Star naturally aligns to the retail purpose.

Retailers should not be afraid of asserting themselves—acting with courage—to own the space and purpose that they want to occupy. CVS removing tobacco from its stores was a risk for topline revenue. At the same time, it was a bold move in the journey to becoming a wellness brand. Uniqlo’s LifeWear concept is this kind of bold move as well. It is about creating clothing that embodies the company’s commitment to simplicity, quality and longevity.7 Consumers are literally wearing the company’s purpose on their sleeves. Walmart’s recent moves to broaden the appeal of its brand by selling high-end fashion brands online is another such bold move.8

Have you set a “North Star” as a business?

Are the different parts of the company fully aligned?

Are you ready to break down traditional silos?

ASK AND ANSWER


3WALK IN CUSTOMERS’ SHOESThe customer has always been king. But the kingdom is changing. In a world where Alexa answers their questions at home, ZipCar helps them share cars, and Amazon and Jet.com reinvent transparency, consumers view ease, ownership and price differently. At the same time, experiential and perceptual competitors outside of retail like Airbnb are constantly influencing consumer demands.

This is why retailers need an outside-in perspective to develop experiences that reflect their purpose and feel authentic to customers. This demands a deep understanding of customers’ needs based on data, not assumptions. Argos introduced fast-track service into its digital concept store understanding that customers who had already ordered a product online just wanted to pick it up and go. Now they can in 60 seconds.9 Customer insight like this is the connective tissue between the outcomes people want and the experiences retailers offer. In fact, most successful start-ups are born from a deep understanding of a specific experience pain point like hailing a cab or trying on clothes.

To understand customers in this way, retailers need data connections across siloed parts of the business and fresh value metrics. Instead of focusing solely on like-for-like sales, average transaction value, conversion rates and Net Promoter Score®, retailers should measure customer lifetime value and earned traffic. The ideal is a blend of classic short-term metrics and newer long-term metrics.

Do you know your customers?

What type of customers are you winning and losing today?

Where are you best vs. worst at serving your customers of today?

ASK AND ANSWER


4DOUBLE DOWN ON CUSTOMER LIFETIME VALUEThere is not a retailer in business today that does not talk the talk of customer centricity. But too many still trade their business with a stubborn focus on products and categories. Retailers must break this habit to deliver purpose-led customer experiences.

An effective way to do this is by creating a cross-functional team with a laser focus on understanding, influencing and retaining high-value customers, an area where retailers often struggle. Consider that in one company, $75,000 worth of orders for VIP customers (frequent purchasers) were found sitting in “held order” status and were not going to make the delivery promise.10

With 80 percent of retail profits coming from 20 percent of customers, it is a no-brainer for retailers to direct resources to keeping these “whales” happy and encouraging high-value actions from them. At Amazon, for example, this is signing customers up for Amazon Prime or nudging them to purchase an Echo. Looking outside of retail, telecom companies are masters of this customer experience strategy. They offer personalized service bundles and discounts to hook consumers at the start of the relationship, curating offers with an eye to the lifetime value and loyalty of the customer.

Who are your “whales”?

What triggers/high-value actions drive whales to stay and to leave?

Can the customer trading cell make changes across silos to prove the value of this approach?

ASK AND ANSWER


5EXPERIMENT IN THE NEW In addition to developing this new customer focus, retailers should innovate new services and moments that matter across the customer journey. There are various approaches to doing this—from tapping into in-house technology innovation labs to building strategic partnerships with start-ups and universities.

Whatever the approach that works for their business, retailers need to build an agile, fail-fast innovation capability that allows them to develop, test, refine, launch and scale the best ideas fast. Because from today forward in retail, it will be better to be 80 percent right a year early than to be 100 percent right a year late.

Our research suggests several areas ripe for innovation. For one, consumers are hungry for curated subscription and auto-replenishment options. In a move to provide a new gift giving option and get to know customers very early in their lives, Gap launched a subscription box for baby called babyGap Outfit Box.11 There is also a need for innovative solutions to help consumers discover and browse new products. They cite this as their least loved moment in the journey to purchase.12 Asos is working to solve this by trialing visual recognition technology in a mobile app. Consumers can upload photos of celebrities, models and friends to see similar outfits to browse and buy.13

Have you explored ideas that will ‘move the needle’ of your business?

Are you willing to invest in these ideas at risk because you believe in the upside?

What initiatives will you stop in order to ensure focus on these new priorities?

ASK AND ANSWER


6DON’T GO IT ALONE—PUT PURPOSE INTO PARTNERSHIPSAs they define their purpose and execute it on the frontlines with customers, retailers will quickly discover that partners are often essential to extend and enhance the experience. Those that curate partner ecosystems with precision and foresight will set themselves apart in the future of retail.

The industry has seen some great examples of mutually-beneficial partnerships over the past year. Nike formalized its relationship with Amazon, and Burberry using Farfetch, an online retail fashion platform, to drive its digital offer.14 Tesco opened Currys PC World stores-within-the-store in several locations to offer customers one-stop shopping experiences while maximizing store space.15

Retailers will need to choose their partners wisely and curate their ecosystems carefully. In addition to contractual, operational and logistical considerations, retailers must do their due diligence to ensure that a partner’s brand is well aligned with their own purpose. This is essential to delivering authentic experiences to consumers.

Have you identified the capabilities to sustain your business in the future?

Do you have a partnerships team?

Have you answered all the difficult ecosystem questions—from accountability to funding models?

ASK AND ANSWER


7GET BRILLIANT AT THE BASICSTransforming the retail customer experience is not only about creating new moments made possible by the latest digital technologies. Yes, this is important. But retailers cannot ignore the fact that the vast majority of traffic continues to be centered on the store and in the traditional moments.

This is why retailers must be fierce about the fundamentals. These are typically things that will not in themselves help retailers win. But without them, they will lose. Search, click-and-collect, and checkout count among these basics. Surprisingly, our research shows that checkout—that interaction of paying for goods either online or in the store—drives the most improvement in brand love.16

Two years ago, Tesco initiated a strategic renewal that focused on fixing some of the basics within its brand. Tesco focused on improving how consumers trust its brand as well as fundamental business objectives that lowered costs and improved margins. The results proved positive as the company recently reported its best profits and sales in three years.17

Have you defined a series of brilliant basics that will drive short-term return on investment?

Is the business case and ROI clear for each brilliant basic?

Are you optimized for speed so you can implement the brilliant basics at pace?

ASK AND ANSWER


THERE’S NO TURNING BACK It used to be that retailers all had a singular focus—to buy economic quantities of goods from manufacturers and sell them to consumers. They still do this. But those retailers that do it with a clear sense of purpose that consumers can see and feel at every touchpoint are best positioned to win in the future of retail.



REFERENCES1 2018 Accenture Love Index Research

2 Ibid

3 Kingfisher, “Driving Our Digital Capability,” retrieved on March 14, 2018 at https://www.kingfisher.com/index.asp?pageid=418

4 Laurel & Wolf, “Welcome to Your Dream Space,” retrieved on March 14, 2018 at https://www.laurelandwolf.com/welcome/home-depot

5 Planet Retail, “Ecommerce and Digital Ecosystem Management,” November 2017

6 Ken Favaro, “Why Wal-Mart Needs Strategic Innovation to Become a Great Investment Again,” November 29, 2015, retrieved on March 14, 2018 at https://www.forbes.com/sites/kenfavaro/2015/11/29/why-wal-mart-needs-strategic-innovation-to-become-a-great- investment-again/

7 Uniqlo, “LifeWear: Simple Made Better,” retrieved on March 14, 2018 at https://www.uniqlo.com/us/en/company/about-uniqlo-us.html

8 Sharon Edelson, “Walmart.com Takes Fashion Up a Notch,” April 17, 2018, retrieved on April 18, 2018 at http://wwd.com/business-news/technology/walmart-com-takes-fashion-up-a-notch-1202652849/

9 Retail Innovation, “New Argos Digital Concept Stores,” February 15, 2014, retrieved on March 14, 2018 at http://retail-innovation.com/new-argos-digital-concept-stores

10 DynamicAction retail client experience

11 April Berthene, “Gap Quietly Launches Subscription Outfit Boxes for Babies,” October 6, 2017, retrieved on March 14, 2018 at https://www.digitalcommerce360.com/2017/10/06/gap-quietly-launches-outfit-boxes-for-babies/

12 2018 Accenture Love Index Research

13 Zoe Wood, “Asos App Allows Shoppers to Snap Up Fashion,” July 15, 2017, retrieved on March 14, 2018 at https://www.theguardian.com/business/2017/jul/15/asos-app-allows-shoppers-to-snap-up-fashion

14 Mark Vanderwelde, “Burberry Targets Emerging Markets With Farfetch Tie-Up,” February 15, 2018, retrieved on March 14, 2018 at https://www.ft.com/content/f392b8f4-1270-11e8-8cb6-b9ccc4c4dbbb

15 Matt Brian, “Coming Soon to Tesco: Currys PC World Outlets,” May 31, 2017, retrieved on March 14, 2018 at https://www.engadget.com/2017/05/31/tesco-dixons-carphone-currys-pc-world-stores/ 2018 Accenture Love Index Research

16 2018 Accenture Love Index Research

17 Daniel Thomas, “Tesco Profits Rebound as Turnaround Continues,” April 11, 2018, retrieved on April 18, 2018 at http://www.bbc.com/news/business-43722494


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ABOUT THE RESEARCHIn one of the most comprehensive studies of its kind, Accenture surveyed 160,000 consumers in 12 countries to understand their experiences with 57 retail brands. The assessment analyzed customer experience across seven key retail touchpoints and examined how people feel about brand interactions across five traditional moments (discover, select-buy, get-obtain, return, and manage and use profile) as well as two new business models (curated subscription and auto replenish). Each of these moments were scored based on six dimensions (authentic, fun, relevant, engaging, social and helpful.)

ABOUT ACCENTUREAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 442,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

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SERVING YOUR PURPOSE