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SMBs Developing Channel Programs: Report

In the face of difficult market conditions, including a sluggish lift in consumer spend, small to medium-size business (SMB) retailers are under pressure to address store/channel process alignment and system-upgrade related challenges, according to the Aberdeen Group report, State of SMB Retail: Top Business and Technology Strategies for ROI success. The report found 53 percent […]

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Nathan Eddy

Nov 10, 2010

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In the face of difficult market conditions, including a sluggish lift in consumer spend, small to medium-size business (SMB) retailers are under pressure to address store/channel process alignment and system-upgrade related challenges, according to the Aberdeen Group report, State of SMB Retail: Top Business and Technology Strategies for ROI success.

The report found 53 percent of these retailers are targeting enhancing integrated channel sales and operations plans, and nearly half (47 percent) are striving to improve their visibility into customer data and related insights. This strategy includes but is not limited to increasing investments towards centralized customer data collection, assembly, analysis, and reporting.

According to Aberdeen data, the impetus for SMB retailers to address store/channel process alignment comes directly from increased global competition, and a slow lift in consumer spend. Forty seven percent of these midmarket retailers identified increased shopping alternatives due to global competition as a top business pressure, and 31 percent attributed their top business pressure to a slow consumer spending recovery.

"Even as the economy and consumer spending continue to grow at a tepid pace, SMB retailers are facing a ‘customer conundrum,’" said Sahir Anand, vice president of retail research for Aberdeen. "Unlike larger retailers, the fate of SMB retailers does not depend on high-volume margin-driven selling. These retailers need to continuously nurture consistent low-to-mid-level-volume selling via strong customer engagements, repeat customer visits, and high transaction value per customer visit. SMB retailers must also maintain a highly differentiated and cost-conscious retailing model in all channels of sales and service, if they want to face the financial might of larger retailers."

Aberdeen data shows that SMB retailers are targeting enhancing integrated channel sales and operations plans. This includes more coordinated and cohesive merchandising, marketing, inventory management, customer engagement, and supply chain processes. "SMB retailers realize that if they can unify their channel processes there are potential gains to be made in customer conversion, gross margin, and average transaction value," Anand said.

Currently, a mere 39 percent of all retailers are able to ensure integration of all sources of customer data (POS, secondary, online, call center, shipping, fulfillment data, etc.) at a centralized location to conduct meaningful analysis. "The challenge in the retail industry and more so in SMB retail relates to the fact that customer data never resides in one location or in one spreadsheet. Therefore, data integration and analysis is necessary, and proves to be more tedious than it may originally be perceived," Anand noted.

SMBs Developing Channel Programs: Report

Nathan Eddy

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