August 9, 2016
Shopping as a way to spend leisure time has been built into cultures around the world for decades and it is doubtful that retailers will ever be out of business. The industry, however, does not remain the same over the years; it transforms under the influence of modern tech-enabled trends (like VR, M2M communication, etc.) and changing customer preferences (like shopping online).
In 2016, the shopping experience is an important part of success in the retail business. Top retailers provide the most wholesome, easy and smooth purchasing experience across channels and follow a customer-centric approach in building a sustainable business. But what does that approach include? What are the secret ingredients used by the top retailers that allowed them to build their international empires and gain customer loyalty? The most recent report on Europe’s Top500 retailers by InternetRetailing attempts to answer the questions by assessing the most successful retail businesses in Europe.
As basic as it may sound, the speed of the retailer’s website can significantly affect the customer satisfaction with online shopping channel and with the company overall. The research suggests that the Top500 retail websites fully loaded in an average of 7.7 seconds with becoming visually complete in 8.7 seconds. Retailers in Norway, Netherlands and Denmark are reported to have the best average speed index.
Localized approach comes up twice in the report, which indicates the importance of the factor in overall success. UK fashion retailer Next, for example, allows shoppers in its 31 EEA websites to use their local currency when buying.
Moreover, Next supports 11 European languages, answering customer queries through local language call center staff who are available 24/7. As for the speed, Next's country-specific websites are reported to be loading in an average of 2.7 seconds, 185% faster than the average for Top500 retailers. Another successful retailer that has adopted a localized approach is Swedish furniture manufacturer IKEA, which operates 26 country-specific websites in 21 European languages. Fashion retailer Mango operates its e-commerce websites for 31 EEA countries in their local currencies.
In the retail industry, efficient logistics and operations are crucial to survival. However, expectations may largely vary from country to country, leading to a localized approach in building logistics and operations in local markets.
The report suggests that UK retailers offer the widest average choice of delivery options – an average of 2.64 choices – followed by France, Spain, the Czech Republic and Norway. Retailers in Germany, however, offer the fastest standard delivery service, at an average of close to four hours.
In addition, Germany is the most competitive market for returns, with most retailers operating in the country offering prepaid returns. Moreover, German traders are also charged a lower fee for returns (along with Luxembourg, Finland and Ireland).
Personalization has become one of the biggest drivers in online-focused businesses. The ability to deliver relevant information at the right time is not a novelty, but a basic requirement for anyone who wants to build a successful online venture. In retail, leaders enable shoppers to find items quickly and accurately.
Those at the cutting edge offer auto-suggest search, navigational filters, product images and detailed information. Social sharing is common and checkout is often just one click, the report suggests.
The study found that across top retailers in Europe, 62% offer drop-down search suggestions, while 95% have at least one navigational filter. The ‘filter by product type’ is reported to be the most popular one offered by 69% of retailers.
British retailer Sally is a notable example of product search engine, which suggests products while the customer is typing and triggers alternative product suggestions in case the desired product is not found. Bol.com is an example of a top-quality product search engine that enables customers to filter by price and product in addition to an extra navigational filter for electronic allowing customer to search by model, while reviews encourage user interaction.
In the diverse European market, localization is one of the most important parts of success. Local currency acceptance, support in local language through local channels, local website, social media offerings tailored to specific territories and different languages not only enable customer success but provide retailers with an opportunity to gather richer and more detailed information about customers’ needs.
Social media channels are becoming particularly important due to the increased use and importance of them for the customer; social media is also used for providing an opportunity for effective engagement and two-way conversation and feedback collection. Among successful examples of companies leveraging the power of social media networks is Media Markt Germany, which has enabled the 'Shop Now' button on its Facebook page and has nearly 1.8 million Likes. Moreover, the company operates 12 country-specific domains with 10 country-specific Facebook handles.
Top retailers are able to link their channels to create a consistent and seamless customer experience. Fast mobile experience is an important part of it. The most successful retailers are reported to be offering an average of four country-specific apps, both Android and iOS. Among the top 500 retailers, 55% offered iOS apps, 49% had Android apps and 30% had transactional iOS apps. About 19% of retailers offered native shopping through iOS apps, enabling browsing in the app rather than the website, which enhances overall performance.
As for particular countries, the Nordic markets (Sweden, Denmark, Norway and Finland) were ranked highly in app development. One of the most interesting examples brought up in recognition of advanced app experience is tech retailer Fnac with highly rated iOS and Android apps experiences. The transactional app includes daily deals, wishlist, barcode and QR code readers. The app also allows users to leave reviews.
As for cross-channel integration leaders, UK department store House of Fraser is reported to be at the top of the game offering delivery to all 32 countries in the market; it also enables cross-channel services including next-day in-store collection and return of online purchases at a convenient store location.
In measuring the innovativeness of a particular business, researchers consolidated all the pieces mentioned before: the speed of online service, enabled shopping in local currency and customer support in the local language, the ability to offer something when ‘no results’ comes out, smooth mobile app experience and more.
Among the top retailers, IKEA was one of the companies distinguished as having the most innovative approach to merchandising. IKEA has turned to VR in its apps to allow consumers to see how the furniture would look like in their home setting. The manufacturer also developed a new kind of customer experience with its small format stores to demonstrate new products, allow customers to place orders and pick them up.
Zara has been distinguished for superior standards of pan-European customer service, which is consistent across 28 EEA countries and available in 23 languages. In addition, the company has a global system of shoppers feedback collection in order to adjust to the needs.
Amazon has its place among the top players for advanced dynamic pricing strategy and sophisticated recommendations algorithms across EEA websites.
The bottom line is that the most successful retailers in the European region are the ones able to tailor their businesses to local setting – they offer relevance to the customer and have a large footprint across the region. Top retailers serve customers in their languages and allow them to pay in local currencies. Moreover, the most successful retailers would not be able to hold that position if it wasn't for the innovative approach to merchandising, pricing models, fulfillment, corporate responsibility and more.