ABC is a privately-owned apparel and accessories retailer that was founded in 2000 by two individuals with extensive fashion and retail experience.
CASE Background
ABC is a privately-owned apparel and accessories retailer that was founded in 2000 by two individuals with extensive fashion and retail experience. ABC is headquartered in Melbourne, Australia, but it has over 250 stores across Australia and New Zealand. Its main target demographics are the economically active population and children.
ABC operates in a highly competitive environment. Over the past ten years, price-based competition intensified when new online retailers and global retail chains entered the ANZ markets, constraining industry expansion. The negative impact of the recent COVID-19 pandemic and global stagflationary pressures have further intensified the challenges to industry expansion. However, the situation nonetheless offers growth opportunities for businesses that are quick to identify market opportunities and respond to change.
Market research has revealed that the reduction in foot traffic to stores during the pandemic has caused an unexpected upsurge in e-commerce as consumers purchase options changed. In Australia, for instance, total online sales averaged an annual rise of 67.1% from March to October 20201. Although the 2020 e-commerce upsurge boomed, somewhat artificially (with brick-and-mortar retail stores closed, choice was limited and e-commerce was the only available retail option), the pandemic has undoubtedly accelerated the trend towards e-commerce. ABC hopes to capitalise on this trend and current technological advancements to expand its international footprint. ABC has been discreetly seeking out Private Equity (PE) investors to materialise its expansion strategy.
Market research has also revealed that more consumers were willing to interact with new brands during the pandemic. Consumers showed interest in browsing the internet and experiencing brands digitally. While this caused an upsurge in new customer acquisition for ABC, retention has been difficult as demand patterns change, and consumer expectation heightens. Customer retention is a key focus for ABC as it positions itself as an attractive proposition to PE investors.
At ABCs board meeting in July 2022, it was noted that while visits to ABCs website increased by 15% for June quarter-on-quarter, the conversion rate (the rate at which website visits result in a sale) over the same period fell by 18%. Data sourced from ABCs digital channels has revealed that the customer interaction rating (the degree to which the customer interacts to ABC's digital content measured on a 7-point Likert scale, ranging from 1 (not all all) to 7 (fully engaged)) has dropped from a previous average of 4.3 to 3.9. Based on experience, ABC considers a minimum average rating of 4.5 as the benchmark the company must meet to remain competitive. Feedback from an increasing number of customers has indicated that they find ABCs website somewhat static and not user-friendly, with limited bespoke content (content that is customised to the customer based on their profile).
ABCs management is concerned that a lack of bespoke content (digital content which is customised to the customer based on the customer's profile) could impact the customer interaction rating and, in turn, user experience (UX). ABC considers a minimum average UX rating of 5.0 as the benchmark to remain competitive. Based on experience, UX directly affects customers affinity to ABCs brand. It is a proxy for customer retention and a primary driver in maintaining ABCs market share.
As part of ABCs annual strategy review, its Chief Executive Officer (CEO), Bradley Chi, has requested your assistance.
The CEO has given you a Microsoft Excel dataset, including summary statistics (see the Excel workbooks third tab, Summary Statistics of Data). The CEO asks you, a recently graduated CA working in the digital transformation and strategy team, to analyse and interpret the dataset to generate insights into customers experience with ABCs website.
Task 4: Based on the dataset, the results of your numerical analysis and the summary statistics, prepare a dashboard in Excel to present to ABCs CEO. The dashboard should only provide relevant information to enhance the CEOs understanding of the business issues raised. Take a screenshot of your dashboard and include it in your report. In your report, explain why the information you have included in the dashboard is relevant to ABCs business issues.
Task 5:Based on the case study information in parts (a) and (b), identify and explain four (4) sub-problem areas in ABCs current digital marketing process by applying the computational thinking principles of decomposition and abstraction.
Task 6:Critique the comments from ABCs CEO and CIO about implementing automation solutions. As part of this critique, discuss four (4) relevant issues, of which, one (1) must be an ethical issue that ABC would need to consider.
Task 7:Based on your response to Task 6, advise what relevant automation solutions, if any, ABC could implement to improve the four (4) problem areas identified in Task 5.
Task 8:Recommend whether ABC should implement automation solutions to improve its digital marketing process. Justify your recommendation, referring to the information in your responses for tasks 1 7.
