The Price of Transparency in Modern Retail
Transparency of price and cost, and the somewhat related trend towards supply chain transparency, has the capacity to better inform customers, at the point of purchase, about the distribution of payment that goes back through the chain; something I would welcome in my weekly grocery shop!
Exposing the right information to customers, and hitting the sweet spot on price the first time, has a lot of benefits for retailers too; less spent on markdowns, inventory stagnating and greater awareness of when and at what price to introduce new products.
We are watching the big end of town where Nike are striving to turn around their reputation on sustainability; Adidas are looking to create new product options through the collaboration with Parley for the Oceans.
We see the introduction of greater transparency of supply, through businesses like Everlane and Honestby gaining attention and following.
We’ve moved beyond enjoying a poke behind the scenes of an organisation for the vicarious pleasure it brings us of being on the inside, and that warm, fuzzy feeling it gives us in understanding where a product has come from.
Once one organisation brings down the veil on pricing and costs through the supply chain, the writing feels like it’s on the wall for good.
Are You Ready to Show Behind the Curtain to Your Customers?
It’s hard to predict the future, but there are some examples of current practices in transparency that might point to ways that this will develop:
There is speculation that Amazon is using algorithms to predict pricing, which is an interesting evolution in the use of machines supporting human decisions and processes.
Greater accuracy and improved ability in the prediction of inventory needs and product cycles can only reduce waste and maintain margins.
Transparency has application for not-for-profits too; FSHD, a local charity, have created an app that allows those who donate to track exactly where their money is spent.
Facts, and just the offer of transparency give reassurance to those who are gifting funds. Those articles on how much of your charitable donation ends up going on admin fees give anyone who has wanted to help pause.
Or maybe the transparency concept could develop into a reversed customer relationship management flip, where the customer finds a way to express their needs and wants, and suppliers respond to that desire.
I like this idea, but it requires some elegant technology solution to have it work well for both partie,s I think.
Just as we have sacrificed privacy on social media so that we can stay in touch with a broader network of people in our increasingly time-poor lives, so too we may be about to sacrifice that ‘curtain’ that stays between the face we present to customers and what goes on behind the scenes in retail. What steps can retailers take to prepare for transparency?
Transparency in Price and Supply Is Closer Than It Looks
What can be done to think ahead and prepare? Some suggestions:
What information do your customers want transparent access to? How could it solve a problem? Like my supermarket experience, I would love to be able to TELL without a doubt, how much of my purchase goes back to an Australian farmer or manufacturer when I buy the local item.
Do you capture the right data in your systems? If your data were exposed to customers, would it be in an understandable format?
How would you present information to customers in an easy-to-digest and contextually helpful way?
I don’t know that these are questions you can solve in an afternoon or even a couple of weeks – it will take some considered thinking to make it valuable, but it could be the difference in grabbing the attention of our increasingly distracted customers.
If you have any experience with this or have your own views, I would love to hear.
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