There Is No Channel. Now What?

By Matt Pillar, chief editor

March 2016 Innovative Retail Technologies

It’s one thing to embrace the consumer’s meandering path to the sale as our new reality. It takes innovation to do it profitably.

Merchants have attempted to create a uniform in-store/online experience from many angles, ranging from a common view of the customer to enterprise inventory visibility to merchandise and pricing uniformity. We asked executives from four hot omni-channel software companies for their opinions on the imperative foundational elements of omni-channel, how mobility plays into the equation, and where we go from here.

Sarah Engel, SVP of global marketing at DynamicAction, says the first step to recovering from siloed-channel thinking is to admit that there is no channel. “Consumers view the mobile/digital/in-store experience as one multitouch engagement toward building a relationship with a single brand. Using the foundation of connected, cross-channel data is the key to success at every point in this experience,” she says. Without that foundation, she offers that retailers are prone to these symptoms of silo sickness:

• Sending your customer promotions for products with limited or no stock.
• Promising in-store pickup for products that aren’t available.
• Missing delivery dates or not reacting quickly to consumer feedback.

Lee Gill, group VP for global retail industry strategy at JDA, thinks most modern retailers understand the necessity of enterprise inventory visibility and a single view of the customer. But he’s quick to acknowledge the profitability challenges retailers are facing with their omni-channel operations. “Both enterprise labor visibility and intelligent order management have to be considered as part of the mix as well. As retailers continue to engage the store as both a shipping and pickup destination, the availability of labor and cost of labor become a factor,” he says. Understanding the labor costs of a pick and ship location, along with inventory availability, future demand, markdown avoidance, and shipping costs by location are all within the domain of intelligent order management, which is what drives profitable fulfillment decisions in the omni-channel environment.

At SPI, CEO Sid Mookerji contends that the key to building an effective omni-channel strategy is collaboration among financial and merchandise/assortment planners. “This is foundational to initiatives such as cross channel fulfillment, which is key to creating a seamless experience for customers,” he says, agreeing with Engel that it’s also the most difficult step given most retailers’ historical view of each channel as its own silo. Once financial, merchandise, and assortment planners are playing from the same sheet of music, merchants should turn their attention to inventory visibility and accuracy. “Omni-channel sets the customers’ expectations of predictability of how and where the merchandise is going to be made available,” says Mookerji. Only when these foundational elements are achieved, he says, can merchants effectively turn their attention to uniform branding and behavior across channels. “The medium and vendor rules sometimes make this difficult, but it’s important so customers have uniform experiences in the buying process, irrespective of channel mix.”

Because the pursuit of omni-channel affects so many stakeholders and processes, Jerry Rightmer, EVP and chief product and strategy officer at Starmount, says many retailers have different takes on the essentials of omni-channel, depending on their brand and the expectations of their customers. “We tend to see three elements common to successful omni-channel retailers,” says Rightmer. Those three elements are:

• A boundless shopping experience that allows customers to start shopping in any channel, purchase in any other, and fulfill an order from any location to any location.
• An informed shopping experience across channels, which requires providing complete, in-depth information on products and making that information available to shoppers and associates across all channels.
• A personalized online and in-store experience, which means that when customers visit a store, their online profiles, purchase histories, and wish lists are easily accessible.

That last element — personalization of the experience — has proven a significant challenge, particularly in stores where shoppers can wander store aisles unknown. That challenge leads to a question about the role of mobile devices in the stores.

How Mobile Is Bridging Channel-Specific Silos
Customer identification and personalization have proven their merits in e-commerce. It’s crucial to the modern retail experience, and, in stores, it’s highly dependent on leveraging the ubiquity of mobile devices. Engel says merchants need to expand their definition of mobile to think like a tech company as well as a retailer, pointing to Under Armour’s mobile strategy and development of MapMyFitness and MyFitnessPal as inspiration. She also urges merchants to develop their mobile strategies based on an in-depth understanding of their customer. “From instore beacons to virtual experiences, there are new ways to activate mobile at every turn. But consider your shopper’s true desire and behavior before going down costly mobile paths,” she advises. If your loyalty program is a key driver of increased basket size, for instance, ensure your mobile site or apps are tied to your store systems to keep track of loyalty points and off er exclusive, loyalty-based promotions. “Likewise, if customers are standing in your aisles, swiping between photos taken at home and searching online for the right part on your store shelf to meet their needs, be sure your site is mobile-first and they have the search capabilities on mobile to locate desired products quickly in-store,” she says. Mookerji adds price comparison, product review, and position-based coupon harvesting, all based ideally on proximity technology such as Beacons, to the list of consumer-held applications that help retailers bridge the channel divide.

Gill suggests that associate mobile engagement is also central to facilitating face-to-face associate/customer interactions. “Store task applications and leveraging in-store mobile, help associates manage inventory and merchandising functions,” he says. “In-store picking in support of omni-channel offerings, like buy online pick up in store and ship from store, are made practical through these applications,” he says. That requires mobile device deployment to associates, which provides them with new ways to provide better customer service. Capabilities like leveraging inventory look up to locate items across stores and arranging for them to be shipped to the customer or available for pickup in store, or sizing and coloring applications in hard goods and soft lines, are becoming more common and increase the store associate’s expertise. “Making features available across channels builds on the positive perception of the brand and its ability to provide seamless interaction,” says Gill. Wi-Fi is a must. “Having in-store Wi-Fi not only serves as a customer convenience but also enables the use of beacons to deliver personalized, customer-specific offerings and messaging as they shop in the store.”

Mobility allows the retailer to influence the sale at the point of decision by connecting with the customer anywhere in the store and at any point in the shopping journey. “Being able to access a customer’s profile — including past purchases, wish lists, or gift registries — helps an associate make relevant and informed suggestions,” says Rightmer. “The customer’s decision process is aided by capabilities that provide product information, images, features, ratings and reviews, and product comparisons.” The mobile device can then help the associate locate and order products anywhere in the enterprise, whether from another store, a distribution center, or the fulfillment center. “It’s critical that these capabilities be offered in context and enable the sales associate to move effortlessly into the purchasing process,” concludes Rightmer.

Physical stores remain the next frontier for retailers’ omni-channel aspirations. If they’re to catch up with consumer expectations, that’s where the investment — and the action — has to take place.

HOW TO HANDLE THE EVOLUTION OF OMNI-CHANNEL RETAILING

We asked executives at DynamicAction, JDA, SPI, and Starmount for their take on the next big step in the evolution of omni-channel retailing. Here’s their best advice.

Sarah Engel, SVP of global marketing, DynamicAction: Even as retailers begin to connect data sets and get to a strong data foundation, they are challenged with how to act on them. Many advanced, data-driven retailers fi nd themselves in analysis paralysis, coming out of Monday reporting meetings with more questions than answers and uncertainty on which actions to take. The champions in the retail space are those who can connect data across all digital and physical channels – including merchandising, marketing, operations, and customer data – and have prescribed actions to take on any organizational disconnects, ranked by impact to their target goals. They know which store or warehouse should fulfill an order, based on profitability and customer experience. They are highly responsive with their marketing spend, based on its impact online and in-store. In the data-driven “fine-tuning” of their businesses, these retailers are finding millions of dollars of opportunity to drive more sales and increase profits. Just as Billy Beane and the Oakland A’s changed the game of baseball by looking at player scoring and metrics in a radical way, these retailers are money-balling retail and will forever change the way that the game is played.

Lee Gill, group VP, global retail industry strategy, JDA: Most retailers understand the challenges ahead; the reality is that customers’ expectations for omni-channel capability have outpaced most retailers’ ability to execute consistently. Building the infrastructure and eliminating the internal silos that impede successful execution and profitability are the next frontiers for omni-channel retailing.

JDA Software’s recent survey of global CEOs, in partnership with PricewaterhouseCoopers, found that only 18 percent of the respondents said they are able to provide a seamless customer experience and have removed business silos. These CEOs were more confident than their peers in their ability to deliver omni-channel profitability to their companies, felt less pressured to address the cost of fulfillment, and were spending more on value-added IT capabilities than on core omni-channel enablement.

Customer expectations are understandably high; failure to deliver can mean the loss of brand loyalty. We are already seeing retailers aggressively working to restructure their organizations to deliver on their promises to customers. Next, they will just have to work on perfecting it and doing it profitably.

Sid Mookerji, CEO, SPI: The biggest revolution on the horizon is additional payment mechanisms such as Apple Pay. This requires substantial changes to hardware and software in stores but will eliminate substantial cost.

Jerry Rightmer, EVP and chief product and strategy officer, Starmount: Today, the omni-channel model is about removing the artificial boundaries from the retailer’s enterprise that cause friction in the shopping journey. The next big step is breaking down the barriers between the retail enterprise and the rest of the shopper’s world. In today’s environment, the shopper has to find you. That will change. Instead of investing so much effort to drive traffic to their website and stores, retailers will increasingly look for ways to connect with shoppers on the shopper’s own turf. Retail brands will discover ways to become part of the shopper’s everyday experience. Instead of being omni-channel, they’ll strive to be omnipresent. It’s a similar approach to what advertisers have adopted with product placement. Instead of the usual print or broadcast ad, they’re finding ways to embed brands in other contexts that we don’t associate with traditional advertising. In the future, retail won’t be bounded by a fixed idea of where and how people can or should shop. It will be more fluid and a natural extension of the customer’s existing environment. The challenge for retailers will be extending their infrastructure beyond the enterprise into the rest of the world to make it happen.