From Multi-Channel To Any Channel

By Matt Pillar, chief editor

September 2016 Innovative Retail Technologies

How the nation’s largest specialty bicycle retailer is unifying its sales channels through a systems and operations overhaul.

Managing the transition from single-channel retail operations to multiple new sales avenues is tough work. In most cases, it requires comprehensive change to retail IT systems, which in turn demands equally comprehensive change to retail operations. The latter is often the more challenging and management-intensive effort.

Chapel Hill, NC-based specialty retailer Performance Bicycle offers up a case in point. The company was founded in 1982 as an exclusively catalog/mail order merchant of bicycles, components, apparel, and accessories. Today, it’s the nation’s largest specialty cycling retailer. In addition to its catalog and mail order business, the company now operates 106 retail stores across 21 states. It was an early adopter of e-commerce, becoming the largest cycling e-commerce site in 1996 at performancebike.com, extending the brand’s offering to recreational and competitive cyclists. Launched by the husband and wife team of Garry and Sharon Snook 34 years ago, Performance Bicycle now employs more than 2,000 associates.

Disjointed Systems Impact Customers, Associates, Inventory
Performance Bicycle’s most aggressive expansion and growth came over the course of the last decade, and it required a wholesale overhaul of its retail systems and operations. The company’s stores were largely run by a brick-and-mortar store-centric enterprise software package, while catalog and e-commerce systems were largely proprietary systems developed in-house. Mike Starkey, senior VP of information systems at the company, says the channel-specific systems disparity at Performance Bicycle resulted in silos of data and operations that didn’t provide the best customer experience possible for an increasingly multi-channel consumer. “We knew we needed integration of channel operations to meet the expectations of modern retail consumers, such as buy anywhere, pick up anywhere. In a channel-specific systems environment, enabling this is nearly impossible without throwing inventory management into disarray and risking serious customer disappointment,” he says. Equally important to the customer experience was the ability to present a complex, dynamic, and growing portfolio of merchandise to consumers in every channel. “Support of the endless aisle concept was near the top of our criteria for a new enterprise retail system,” says Starkey. “We can’t possibly stock 300 styles of bikes in two colors and five different sizes in each of our stores. We needed a means of presenting all the options, colors, and features we off er to customers in any channel, enabling those items to be purchased in a single, seamless transaction, and providing the option to have their purchases shipped to their home or to their local store.”

Of course, store associates did their best to accommodate special order and multi-item transactions in those disparate systems, but it was a cumbersome exercise for both Performance Bicycle associates and its customers. Associates could use catalogs and the internet to assist customers as they navigated the variables of the purchase, but when it came time to place a special order, the company’s store systems were not equipped to do so. “The associate would have to pick up the phone and call the contact center, where a rep would key in the order,” explains Starkey. “If the order included an item that was in-stock at the store, the customer would have to conduct two separate transactions — one at the POS and the other via the call center.” That disjointed process negatively impacted the customer experience beyond the transaction — it made it very difficult for Performance Bicycle to maintain order visibility after the sale.

Positioning For Growth Requires IT Overhaul
In 2014, after an exhaustive review of retail enterprise software providers, Performance Bicycle’s search for a channel-agnostic transaction platform that would enable enterprise selling led it to Aptos. Starkey says it was the Aptos approach to enterprise selling that sealed the deal. “The fact that associates could create any order at the POS and have that order fulfilled to the customer’s specifications was our primary interest,” he says. “That includes in-stock items, warehoused items, items to be dropshipped from the manufacturer, or any combination thereof.”

The company went live with Aptos POS in all stores in Q3 of 2014 and enabled enterprise selling early the following year. Those two moves laid the groundwork for a revolution in the way merchandise is fulfilled at Performance Bicycle. Just a year later, it’s fulfilling catalog and e-commerce orders from 87 of its stores. Starkey says that’s dramatically improved inventory velocity. “Exposing our store inventory to online customers and empowering our associates to fulfill those orders have resulted in record rates of fulfillment. When our site suffers what I call ‘broken’ product, such as an out-of-stock on a certain size jersey, our store inventory fills those gaps and presents a better in-stock position to our customers. That functionality also allows us to clear end-of-season products in stores at a much faster and more profitable rate,” he says. A single wheel set sitting in one store, for example, might have been destined for a deep season-end discount. If it’s available to sell in any channel, the odds of a full-price sale increase exponentially.

The Aptos platform also enables direct integration with the retailer’s “Team Performance” loyalty and CRM program, which offers members a free upgrade to secondday shipments and 10 percent back on every purchase. “The fact that we can expose more shoppers to our products and services in every channel has really improved the customer’s experience,” says Starkey. That’s not just an anecdotal assumption, it’s something Performance Bicycle has measured through climbing Net Promoter scores and significantly improved sales and efficiency figures. Since enabling enterprise selling, the company has realized daily comp store sales improvements between 3 percent and more than 10 percent, while simultaneously achieving a 96.5 percent reduction in call center volume.

Managing Revolutionary Store Operations Change
From a systems perspective, Performance Bicycle effectively became a brand new company in little more than a dozen months. With a new enterprise-enabling POS, it has quickly migrated from disparate multi-channel operations to the adoption of an omni-channel culture that’s seeing stores fulfilling web and catalog orders and allowing consistent consumer access to the full breadth and depth of its inventory via the channel(s) of their choosing. That’s empowering to customers, and it’s driving big gains for the merchant, but it begs a question. How did the company manage its associates — the front-line operators of the new systems — through such fast and comprehensive change?

Tom Cross, VP of store operations at Performance Bicycle, says a tightly orchestrated announcement of the coming changes, a well-planned rollout, and thorough training were key to ensuring acceptance and adoption of the new systems. “We kicked off the rollout at our annual district manager’s meeting. Sam Felts, our director of training, was accountable for training our district managers. From there, the training duties trickled down; district managers trained store managers, and store managers handled associate training,” Cross says. But that formal training was just one element of ensuring the platform’s success. Cross says a multimedia approach was deployed, including:

• Webinars conducted through the register system at all stores.
• In-person market-specific training conducted by Felts in key markets, where store managers were brought together in one place.
• Basic training video housed on the company’s intranet.
• Distribution of an interactive quick-reference training manual to every store, which Cross says enabled the head office to monitor each associate’s training program completion rate.
• Continuous two-way communication through Performance Bicycle’s Cat 1 corner, a weekly communications piece produced by the store operations group that comes out every Friday afternoon. “As a part of our ‘Extraordinary Service’ initiative, we created an e-mail program called “Enterprise Issue E-mail,” explains Cross. “We’ve asked our associates to share if there’s anything enterprise- or POS-related that hinders them from delivering extraordinary customer service, and this tool gives them the opportunity to do that.”

Where this collaborative process did uncover struggles, Cross says, most instances were resolved through reeducation or additional training. “The Aptos system is intuitive, but some of our seasoned managers needed a bit more time to adjust to it after using our previous system for so many years. Now, as I visit stores, I receive nothing but positive feedback,” says Cross. He says associates are most excited about the consolidation of steps necessary to complete transactions. The six-month rollout was managed in stages, eliminating the “red phone” to the call center, layering on ship-to-store, ship-from-store, and buy online/pick up in-store incrementally.

Overcoming Sales Attribution Arguments
For many merchants with a history of running sales channels as separate — and sometimes competitive — businesses, sales attribution becomes a major point of contention that has sunk more than a few omni-channel initiatives. The company made a strategic decision to attribute sales to the associate team that would have the biggest impact on the ultimate customer interaction. In most cases that was the store where the order originated, was fulfilled, or was picked up. Cross says overcoming that dilemma is part cultural, part operational. “Retailers love sales, regardless of the channel from which they originate,” he says. That’s the cultural part, and it requires aligning the omni-channel sales mentality with the omni-channel systems functionality that enables those sales. “Store managers love sales too, so when you tell them they’re going to get attribution for more sales — the ones they help facilitate through enterprise selling and store-level fulfillment — there’s immediate acceptance.”

In fact, Cross shares that his original plan entailed limiting store-level fulfillment of online and catalog orders to the stores he felt had enough inventory and a large enough footprint to facilitate it. “I didn’t plan on allowing some of our smaller stores to fulfill those orders because of their limited size and personnel. But as we rolled out ship-from-store, I found that store managers were clamoring to be moved up the list. They could see that brick-and-mortar retail was changing, and they could see the sales that resulted from enabling ship-from-store, so I’ve since changed my thinking on that and have made plans to allow every store to fulfill web and catalog orders.”

Store-Level Fulfillment Process Change
The paradigm shift created by enterprise selling is not lost on Cross. “Our brick-and-mortar associates used to be consumed with the in-store customer experience. Enterprise selling expands that obsession to every customer in any channel, and they all deserve an equally great experience,” he says. To keep that customer experience promise, Cross says, a change to scheduling processes was in order. “We have people coming in earlier in the morning or later in the evening, depending on the store, to handle ship-from- and ship-to-store orders. You can’t necessarily deal with this large influx of orders while the store is open, because you can’t distract associates from spending time out on the floor taking care of customers,” he says. Performance Bicycle is also designating specific associates to fulfillment tasks based on skill level, experience, and customer service attributes.

The company is also adding the in-store infrastructure necessary to make store-level fulfillment an efficient process, including UPS shipping stations such as packaging, fill, package measurement devices, and label printers in the back rooms of its stores.

Successfully transitioning from singlechannel merchant to multi-channel retailer to omni-channel enterprise isn’t a light task. It requires a fine balance between the upgrade (or overhaul) of retail systems and careful change management related to retail associates. Performance Bicycle appears to have struck that balance well, the results ensuring it will continue on its trajectory of growth in the specialty sporting goods segment.

IDENTIFYING, ENGAGING CONSUMERS ACROSS CHANNELS

Mike Starkey, senior VP of information systems at Performance Bicycle, admits that multi-channel retailers are plagued by a cross-channel customer identification problem. Put simply, while it’s easy — especially for local, independent, small and midsize merchants — to recognize a loyal brick-and-mortar customer when she walks in the door, it’s very difficult to do the same when that customer’s loyalty has been expressed primarily online. While that’s a challenge that Performance Bicycle is in the process of ironing out, he says a prerequisite to enabling omni-channel CRM is enabling omnichannel commerce. His colleague, VP of Store Operations Tom Cross, agrees — especially as it pertains to bicycle retailing. “Five years ago, if you told me that we would be selling high-end bikes online to customers who have never seen those bikes in a store, I would have said that’s impossible,” he contends. “Now, I’m an apostle of omni-channel.” To consummate those sales, the company is taking advantage of its growing e-commerce presence to drive engagement and interaction with customers both online and in stores. “In some ways, we have to treat that online customer — who has never experienced our store environment or associates and who may never have ridden the bike they’re interested in — more carefully than we treat our instore loyalists,” he says. “We go to great lengths to pair them with the right bike and to fit them to the bike, and the depth and breadth of inventory we can leverage through enterprise selling allows us to do that.” The enterprise selling initiative at Performance Bicycle is a product of its recent upgrade to Aptos, which Cross says began as a “save the sale” initiative. “Enterprise selling became our ability to ensure we sold customers what they wanted in any channel, whether through a store, a warehouse, or a thirdparty vendor. It’s evolved from capturing the sale into a customer experience enabler that allows customers to find the products that are right for them regardless of the channel in which they choose to shop. That’s more important than save the sale.” Store-level fulfillment of online orders is also central to the omni-channel initiative at Performance Bicycle. Through integration between the retailer’s Aptos POS system and Manhattan Associates’ distributed order management solution, store associates are notified when e-commerce orders are ready to ship, or when pick-up-in-store orders will be available to its customers.

As a result of its recent retail systems overhaul, Performance Bicycle was recently presented with the Aptos Save the Sale! Award for leveraging technology to improve customer service, resulting in “saved sales” amounting to more than 3 percent comparable same-store sales per day.