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The Future for Supply Chains: Shifting the Value Chain for Today’s Empowered Consumer

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If one trend has been apparent at NRF’s Big Show this year, it’s that consumer behavior has changed for good and the way forward for retailers is to rally around them.

Consumers drive commerce today—they don’t buy products just because they are there, from brands that happen to be available. They want something that’s for them. They want brands to scratch an itch they may or may not know they have.

“We are witnessing seismic shifts in our consumer landscapes and marketplaces, and it is vital for retailers to be part of this shift rather than being disrupted,” Kees Jacobs, global consumer engagement and value network lead for retail and consumer products at Capgemini consultancy, said at NRF Monday.

He added, “Traditional stores have been repurposed, distribution models are massively transformed and manufacturing and sourcing has shifted. Our current value chains are to be profoundly disrupted.

Organizations are moving away from linear value chains and instead organizing themselves as an industry around consumers, with new and dynamic flows of information on products and transactions.

“Consumers pull the strings in these networks,” Jacobs said. “This not only impacts retail sales and dialogue, but manufacturing and sourcing and distribution. This is about new value creation. It is about the quality of living for individual consumers in their local communities.”

There are three keys to success with this new model, Jacobs said: companies need to provide relevant experiences to consumers; remove constraints in their operations; and leverage the value of new business models.

But there are three key areas the industry has consistently underperformed in: consumer engagement; transparency; and the last mile of distribution.

At Marks & Spencer, the business model has changed in response to the shift in consumer behavior.

As executive director of marketing and international Patrick Bousquet-Chavanne put it, “The consumers are no longer king, they are omnipotent gods.”

We have entered the age of the digital High Street, localization has been transformed and the consumer is increasingly empowered.

And in answer, brands have to create a new type of collaborative relationship with consumers. They have to reward their customers—and not just for monetary spend, but for the total relationship. They also have to foster a strong sense of community and create a friction-free way for the consumer to interact with them.

One way Marks & Spencer went about creating that brand-consumer relationship was with its Sparks rewards program. With it, members are recognized for more than spend.

Spark rewards members get 10 sparks for every 1 pound they spend at the UK-based retailer, they get 10 sparks for every purchase (a reward for frequency) and they earn anywhere from 25 sparks and up for engagement in the form of product comments or reviews. They also get sparks anytime they bring used clothing into the store to recycle.

Tailored offers come in weekly based on an algorithm, and the consumer sees other offers based on interests they have declared. They are also the first to preview new collections and the first to have access to sales.

“Our new members club idea is to convert customers into members,” Bousquet-Chavanne said. “We ought to know you much better than our other customers.”

Peter Sheahan, founder and CEO of ChangeLabs, which consults brands on how to better their businesses, said the reason most brands are underperforming in consumer engagement is because organizations aren’t inherently designed to change.

“When we think about transformation, we have to intentionally disrupt the way the system works,” Sheahan said. “And the earlier you move, the smaller the risks you need to take are—if things are already burning, you don’t have time for compartmentalized risk.”

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