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 Denise Holland CRM Software Retail Trends in Western Europe

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 By Denise Holland

Western European Retailers Integrate CRM Software with ERP Systems and Social CRM

Whether they are bricks-and-mortar boutiques, large chain stores, or online e-tailers, retailers in Western Europe are attracting shoppers through smart inventory choices and competitive pricing, coupled with sophisticated customer relationship management (CRM) software technologies often tied into social media strategies.

Perhaps never before have consumers faced so many choices. And so retailers, no matter whether they use a storefront, a website or a mix of the two mediums, actively are courting shoppers, looking to convert casual consumers into repeat buyers and loyal buyers. Online retail across 17 of the largest European Union markets in Western Europe is expected to reach €114 billion by 2014, with 190 million Europeans shopping online in that year, up from 141 million today, according to Forrester Research. In fact, e-commerce in Western Europe will grow at about 11% a year, slightly ahead of the United Kingdom and the United States, two mature markets, the research firm said.

"Much of the overall retail sector's growth in both the U.S. and the EU over the next five years will come from the Internet," said Sucharita Mulpuru, vice president and principal analyst at Forrester. "To maximize that growth, e-business professionals will have to help enable a multichannel strategy that responds to consumers' increased desire to hop between the offline and online worlds and their increasing mobile and social behaviors. The retail innovators over the next five years will demonstrate customer enablement across all touchpoints, not just via a PC-based Web browser."

In the U.K., online retail will reach €40 billion by 2014, with 40 million online shoppers, up from 31 million in 2010, the researcher said. Today, 48% of British consumers go online to make a monthly e-commerce purchase—the highest percentage in Europe—compared with 32% across the rest of the continent, according to Forrester.

CRM Integration with POS and ERP Systems

Leading British retailers such as Argos and Next Retail have integrated their channels in search of a seamless cross-channel customer experience to help drive substantial sales growth, Forrester said.

To truly accomplish this cross-channel customer experience, however, retailers also must address—and conquer—the back-office, integrating multiple technologies such as point-of-sale, accounting, inventory, human resources, and marketing, with mobile and social media, among others. "In addition, CRM systems are very popular in the retail industry: every successful company in the sector uses this type of system to analyse customer behavior and predict sales," said Jan Ondrus and Yves Pigneur, both of the University of Lausanne in Switzerland, in their report, titled Coupling Mobile Payments and CRM in the Retail Industry. "Consequently, with the collected data, retailers can offer personalized offers and coupons to consumers who are members of their loyalty programs."

CRM systems -- along with enterprise resource planning (ERP) applications, content-management systems and collaborative technologies -- are some of the hottest areas of software technology investment focus for Western European retailers, said Ivano Ortis, EMEA research director for IDC Retail Insights. Western European retailers' modernization road maps are expected to encompass the IT infrastructure, back-office systems, and front-end applications, including store systems and multi-channel selling platforms, IDC predicts.

These retail operations do not, however, plan to create these new infrastructures themselves. Rather, they increasingly are turning to outsourcing providers for hosted enterprise IT systems and Software as a Service (SaaS) CRM delivery options, IDC said.

BLUW--a product designer and manufacturer that sells its novelty gadgets through its online store--operates on three continents through its offices in London, New York and Hong Kong. The company needed a globally-accessible, real-time financials and CRM solution that would provide e-commerce, inventory management, CRM and marketing on one platform, said Ian Harkin, financial director. In addition, the software had to handle and consolidate multiple currencies and multiple locations, and distribution-chain management, he said.

The company opted for NetSuite's OneWorld solution, implemented by British solution provider First Hosted Ltd., which installed the hosted ERP and CRM solution in all three company locations. "With NetSuite, we must have saved in excess of £50,000 in computer hardware and infrastructure alone and at least as much again in salaries and fees for IT maintenance and support," said Harkin. "It makes no commercial sense for BLUW to own computer equipment."

Using Business Software Technology to Meet Customer Demands

Retailers are using software technology to keep customers front and center.

Keeping the right products in inventory -- and not wasting unnecessary resources on unwanted items -- is critical to the success of any retailer or distributor, and was a challenge also facing CV Vooruit, a major Belgian pharmaceutical distributor and retailer. The company, which has headquarters in the Ghent area in western Belgium, owns 36 drugstores and its central warehouse, which stores about 10,000 products from more than 200 suppliers, ships inventory to the stores each day.

"Optimizing the quantities and types of products kept in stock is a continuous challenge," says André Devos, CEO. "We were faced with the typical difficulties related to inventory management. We had excess stocks of certain inventory, while our levels for others were running too low. In addition, our manual stock forecasting methods were taking up too much time. And our average storage costs per item were too high."

CV Vooruit knew it needed a dose of the right technology. The cure? An SAS forecasting application. Today, the SAS application handles the entire forecasting process, from data collection to reporting, combining data from multiple sources, including sales, stock levels, and prices. The system forecasts weekly demand and recommends optimal stock levels.

As a result, CV Vooruit improved its service-level performance by 3%, reaching 97% of its target while increasing its inventory turns by five times, the retailer said. As a result, earnings and working capital increased and stock-outs declined, according to the company.

Retailers also are tapping CRM software systems to improve customer communications via social CRM tools and methods. Social media adoption in Europe continues to grow, with 68% of online Europeans now using social technologies each month, up from 61% in 2009, according to Forrester. Earlier this year, Attensity Group acquired Biz360, a provider of social media monitoring and market intelligence solutions, and integrated the solution's capabilities with Attensity's CRM technologies—Attensity Analyze and Attensity Service Suite.

"Retailers today face a multitude of challenges: a tough economic climate, channel blurring, consolidation, need for differentiation, multi-channel growth, and of course, increasingly empowered social consumers," according to the British company. "Consumers today have more shopping choices than ever and they don't hesitate to share opinions about their shopping experiences with others on blogs, Twitter, forums, and more."

Retail CRM Solutions Become More Specialised

Retail and distribution is such a broad, huge market that some CRM software developers have drilled further down, specialising in specific niches within the broader category.

Raymark, which recently opened a new office in Spain and its second branch in France, offers CRM solutions targeted at apparel, footwear, jewelry, cosmetics, sporting goods, specialty, and hard goods sellers.

With niche oriented CRM retail systems, deep functionality and integration can become more complex. Retail CRM systems often include complex pricing and promotions capabilities, as well as sophisticated discounting scenarios, loyalty programs and RFID and bar-code scanning to augment order-management procedures. In addition, retailers want CRM solutions that support real-time integration with point of sale (POS) systems, either legacy or new, as well as supply chain management (SCM) systems. On the distribution side, CRM systems should interact seamlessly with ERP applications, SCM and warehouse systems to enable consistent, accurate and real-time inventory information, organization-wide.

It may be more difficult to separate consumers from their money, but at no time has it been more important for retailers to enter shoppers' living rooms. Using e-commerce with integrated CRM systems, that knowledge of buyers' habits and preferences, plus up-to-date information about inventory, pricing and availability, will help keep online and offline aisles buzzing and registers ringing. End

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Much of the overall retail sector's growth in both the US and the EU over the next five years will come from the Internet. To maximize that growth, e-business professionals will have to help enable a multichannel strategy that responds to consumers' increased desire to hop between the offline and online worlds and their increasing mobile and social CRM behaviors. The retail innovators over the next five years will demonstrate customer enablement across all touchpoints, not just via a PC-based Web browser."

Sucharita Mulpuru, VP, Forrester


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