Posted by Martin Gill on April 9, 2014
Digital disruption is both an opportunity and a threat.
In the age of the customer, firms that assume that what made them successful in the past will continue to drive competitive advantage in the future are doomed to failure. But as a counterpoint, those firms that embrace the opportunity digital technologies bring to get closer to their customers by creating contextually relevant, personalized customer experiences will thrive. That’s the theory, but what does it look like in practice?
This week, two major UK grocery firms paint opposite ends of the digital spectrum.
- First there’s Asda. Walmart owned Asda goes from strength to strength. This week, Doug McMillon, President and CEO of Walmart met with Prime Minister David Cameron to reaffirm Walmart’s commitment to Asda and the UK. In his speech he acknowledged that “A seismic shift in the structure of the retail market is underway – not just in the UK – but right across the world.” A seismic shift driven by digital technologies, both in the hands of consumers, and retail employees as they drive operational efficiencies. In fact, Asda expects to generate more than £3bn from eCommerce by 2018.
- But then there’s Morrisons. Latecomer to the digital world, Morrisons has struggled to plot a course to digital mastery. Its acquisition of Kiddicare in 2011 seemed like a bold and strategic move, but Morrisons failed to leverage the IP that it acquired. So much so that when Morrison’s decided to launch online grocery, it did so in partnership with Occado. Morrisons still lack a non-food offer. The recent decision to divest itself of Kiddicare is questionable at best, and has driven Morrison’s digital leader Simon Harrow to leave.
So what is Asda getting right that Morrison’s isn’t?
Retail basics remain largely unchanged. Product, price and promotion are still critical. The best website in the world won’t sell rubbish, overpriced tat. Both retailers sell similar products at a similar price point. But Asda understands its customers. It has a clear cross-touchpoint strategy. In fact, it reported a massive uplift in mobile and tablet sales and is pinning much of it’s eCommerce growth plans on click and collect. And why not? Both Sainsburys and Tesco have already proven that business case.
The moral of this story is that you need to be where your customers are. And that means understanding the increasingly cross-touchpoint, multi-device nature of modern shoppers. Forrester’s Global Retail Segmentation can help here. New Analyst Michelle Beeson has just published a European deep dive of the segmentation in the first of a series of documents that will examine the shopping behaviours of particular demographics and regions. For more insight, also read the blog post by Michelle on her new report.
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