– the SAS Magazine about
leadership, strategy and technology

Peter Hedberg, Senior Account Executive, Retail, SAS Institute
Jan Nyström, Nordic Business Development manager, Retail at SAS

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Opinion

Retail racing against the clock

This is exciting times for Nordic retail. The Nordic markets in the food sector are consolidated, and in each country, we see a handful of big distribution players competing fiercely. Margins are low, which means that volume, efficiency and optimisation are the driving competitive parameters for the big retail chains. But somehow, these kinds of initiatives do not seem to provide the full competitive edge anymore. Everyone is looking into the future for customer loyalty, higher margins and long-term growth potential. Will the future for retail emerge through the erosion of industry barriers − or from attracting customers to the stores? Or will it be through customer loyalty?

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Retail goes banking

Coop in Denmark recently announced the birth of Coop Bank, which is just the latest example of industry sliding and barriers eroding. Will the retailers eventually include banking services? S-Bank from the very successful S Group in Finland may very well have inspired Coop in Denmark. Both of them are cooperatives of origin. And from the UK, retail giant Tesco is another example with its bank starting in 1997.

In addition, it is trendy to use industry convergence as a way to attract more consumers to the stores. Walmart in the US paved the way with pharmacists, opticians and hairdressers as part of its in-store offering. Dansk Supermarked in Denmark has converged by including Starbucks Coffee shops in its mega stores, and Coop is hosting post offices. S Group in Finland is far ahead by owning chains of restaurants and travel agencies and truly leaving the sole focus on retail and food by joining other industries.

Looking for loyalty

Another way of making a better future is to create a preference from the customer and create loyalty. Tesco – the leader of the pack in the UK − being among the world’s largest retailers is also a role model when it comes to customer loyalty programmes. Sending 12 million emails to unique consumers every week with 70 % being opened and 50 % leading to a purchase is a huge success. In the Nordics, the same dialogue and loyalty mechanisms are in play. Loyalty cards and bonus programmes are no news to the Nordic consumers. Just recently, Statoil made it possible to get a discount on the customer’s debit card and thereby reducing the number of loyalty cards in your wallet. This is a convenient step, but it is not a giant step.

Huge data potential

What is truly new to retail these days and years is the digitisation, and we believe the Nordics may be in the front row to see big changes occur. Consumers already use Google search for prices and availability before and during shopping, and the smartphone looks more and more like a new channel being necessary to integrate to get the consumers’ attention, loyalty and feedback. This creates new streams of data offering huge potential for retailers. It may very well fuel all the trends that we have described in this article: It may speed up industry sliding. Moreover, it may certainly affect both entry of new customers and loss of existing customers in the stores.

Even more, this online, time-sensitive and geographic-sensitive communication to the individual client will earn the core customer loyalty.

The race against the clock in retail is about being the first to exploit the Big Data potential as a strategic move and to realise the innovative potential!

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