The following video will give you a holistic understanding of the end-to-end retail value chain. By the end, you should understand how each part of a retailer’s operations contributes to their overall success and customer satisfaction.
Examine the value chain of the Retail industry and how business models are evolving
Objectives
After completing this lesson, you will be able to:
- Examine the Retail Value Chain
- Identify Retail Strategies
- Analyze SAP’s Effect on the Retail Industry
Retail End-to-End Value Chain
Retail Strategies
Besides the different sectors and sub-sectors in the retail industry, there are also different strategies on how and where they operate.
Store Types and Focus
Will they sell in store or online? Or via a pop-up store or a store within a store? Are they going to focus on a specific region with multiple stores in an area, be a national chain, or more of an exclusive operation with limited stores around the country or globe?
Target Market and Pricing
Are they a luxury brand targeting high-end customers or are they targeting cost-conscious consumers? Do they have a highly promotional business or will they offer everyday low prices?
Product Selection
Will they be like a Mercadona, which is 80% private label, and only have 2 to 3 choices per item, or more like a Kroger, with many different brands and choices per item, for example, 5 to 10 different brands of potato chips?
Customer Interactions
How will they interact with their customers beyond in store? Will they have representatives helping over social media? Will there be a loyalty program?
Market Positioning
How will they position themselves in the market?
These strategies are things that retailers don't just have to decide once. Brands are constantly evolving as the market conditions change, brands grow, and disruptors enter the market.
SAP’s Effect on the Retail Industry
The following image outlines SAP’s impact in the retail industry.
- SAP S/4HANA customers produce 37% of the retail industry's total revenue.
- SAP customers in the retail industry generate a combined revenue of USD 2.1 trillion.
- SAP S/4HANA customers in the retail industry generate a combined revenue of USD 900 billion.
- 50% of the ten largest companies in the retail industry are SAP S/4HANA customers .
- SAP S/4HANA customers with a high level of digital maturity in the retail industry improved their days inventory outstanding 1% over the past five years.
Lesson Summary
Varied Retail Operating and Positioning Strategies:
Retailers need to decide on store types, target market, pricing strategies, product selection, customer interaction methods, and market positioning. These strategies are not static; they evolve with market conditions, brand growth, and the entry of disruptors.
Retail End-to-End Value Chain:
Through the retail value chain overview video, you received a comprehensive understanding of retail operations. The video provided a holistic view of the retail end-to-end value chain, emphasizing how each part contributes to overall success and customer satisfaction.
SAP's Impact on the Retail Industry:
SAP has a significant influence in the Retail sector, as you discovered through the graphic that broke down SAP’s contribution. SAP's technology contributes to the digital maturity and operational efficiency of retailers, as evidenced by improvements in metrics like days inventory outstanding.
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