Demand chain management and consumer insight - keys to success in retailing

Abstract

In retailing, high performance in logistics has been one of the most important competitive advantages for a long time. But in today’s highly competitive environment that does not seem to be enough. In this paper we argue that deeper knowledge about the why, how, and when of consumer buying behavior is a main ingredient in logistics, and the starting point in designing and developing segmented demand chains in retailing. These chains are built on partnership and trust oriented relationships. The game of power is increasingly replaced by the game of trust. This is a necessity when the competition shifts from rivalry between companies to rivalry between chains. The modern consumer of today is often well educated and the awareness of sustainability and environmental effects of too much consumption has led to a search for other kinds of added value than just another product to buy. The decline in economy also leads to a lower demand and a more selective and fastidious taste for new things. We see a clear change in the contemporary retail market. On one side, competition is increasing on almost all markets around the world. On the other side, globalization and new tools and techniques for transportation and physical movements make it possible to build new and more efficient distribution channels. And from a consumer perspective, communication technology, such as the use of smart phones and applications, have become a natural part of everyday life. These two facts could be seen both as threats and opportunities and they lead to an interesting challenge for the retail sector. A new way of looking at supply chain management is an absolute condition to success, and complementary, an holistic approach in the whole distribution chain involving the consumer and consumer insights, are the key words for winning the future battle of consumers. The purpose of the paper is to highlight the need for consumer insight and how to develop innovative concepts, in order to deliver added value to the consumer. The “old school” of distribution economy, and the concept of convenience together with information communication technology (ICT), are the basic theoretical grounds.