April 17, 2013
Why Are Retailers Struggling to Integrate Shopping Channels?
It has long been known that consumers are looking for a seamless experience when they shop across the various channels offered by brick & click retailers. That fact was reinforced once again by a new study from Accenture. However, what is somewhat puzzling is that, according to the study, many retailers are still struggling to deliver what consumers want in this regard.
Nearly half of the 750 consumers interviewed said the best thing merchants can do to improve the shopping experience is integrate the in-store, online and mobile channels. Ninety-four percent of those surveyed said in-store shopping was easy compared to 74 percent for online and only 26 percent for mobile.
"In many cases we have found a significant gap between consumer expectations and reality, but we believe seamlessness is achievable," said Chris Donnelly, global managing director of Accenture’s Retail practice, in a statement. "Traditional retailers must take stock of their operational capabilities. They require a presence at every stage of the customer journey to deliver a consistently personalized, on-brand experience from discovery through research, purchase, fulfillment and beyond to product maintenance or returns."
Echoing sentiments expressed in a recent RetailWire article by RSR Research’s Nikki Baird on pricing consistency across channels, 73 percent expect a retailer’s online pricing to be the same as in-store. According to Accenture, only 16 percent of retailers offer the same pricing online and in stores.
As an extension of the pricing issue, 61 percent of respondents expect online and in-store promotions to synch up. According to Accenture, 73 percent of retailers offer the same promotions across selling channels.
Accenture’s research points to physical store locations as an asset that can be exploited by retailers in competition with pure play e-commerce operations. While 73 percent of respondents engaged in some degree of showrooming activity, resulting in an online purchase, 88 percent did their research online before going to a store to buy.
When asked what information they would like to have before heading out to a store, 82 percent said current product availability was top on their list. According to Accenture, only 21 percent of merchants currently provide this information.
BrainTrust
Recent Discussions
Discussion Questions
Why do some many retailers appear to be struggling to provide a seamless shopping experience? Can the perception of a seamless experience be achieved without matching pricing and promotions across channels?
Poll
My impression is that retailers are still struggling with the basic question of how online activities affect offline sales. Do other BrainTrust members believe this is true or have retailers tackled this more effectively? If it’s still true, the issue is to connect online behaviors with both online and offline sales using log-ins and frequent shopper profiles. This is also the same approach that will link together cross-screen behaviors.
I’m not sure why this is a surprise, actually. The problem is pretty straight forward — lack of investment in an extensible IT infrastructure. That 15 cent sentence means that because there is no visible ROI in building an integration bus, many, many retailers just don’t have it. The same report cited above showed retailers most frequently cited way to overcome organizational inhibitors (that keep them from implementing better pricing practices) is better integration tools. And that’s just pricing.
Retailers also lack Content Management Systems and other basics that would make this seamless experience easier to achieve.
We’re just not used to moving this fast as an industry and have under-invested for decades. This is the fruit of those issues.
There are at least two reasons for this problem. The first, as stated in the abstract, is price. In order for many retailers to compete with the pure play online retailers, they offer product online at a lower price then in their stores. When it comes to full omnichannel retailing, this is a mistake.
Second, and easier area to fix, is sales credit. Retailers currently manage the inventory by channel. Stores get credit for what they sell and not for what is sold online and that creates issues for any retailing wanting to implement ominchannel. Ominchannel retailing, in my way of thinking, means I can buy anything from any channel — in-store, online, on my phone — and pay the same price. I can order the product online for pickup in the store. I can buy a product in a store and return it online.
Until the retailer considers measurement, not by inventory but by customer satisfaction, they cannot enter true omnichannel retailing.
Creating a seamless shopping experience makes the erroneous assumption that all departmental channels within the retailer and the brand vendors are all on the same page in terms of strategy and tactical implementation. These departments have functioned within isolated silos for so long that it is difficult to flatten the organization into a transparent and cohesive system.
A significant hurdle that needs to be addressed is that of success metrics and compensation programs. Often departments are measured for success and paid bonuses based upon criteria that are in conflict with other departments. Who gets credit for the sale? In-store? Online? Who has to deal with the costs and operational resources associated with returns from online purchases? Store managers?
You can see where animosity and conflicting resource allocation can obstruct the implementation of a seamless shopping experience.
I can think of a few reasons why “omnichannel” continues to be a problem, and I’m sure my fellow panelists can come up with several more. Here’s my short list:
1. Different pricing practices in-store and online only lead to distrust on the part of the consumer, one way or another.
2. Many retailers don’t put the thought into “store design” of their website to provide the same sort of ease of navigation or experience that their brick-and-mortar stores aspire to.
3. Too many retailers have drawn organizational lines between their brick-and-mortar teams and their e-commerce teams (especially in terms of merchandising and marketing). If companies don’t get their own employees on the same page, why should they expect customers to “get it”?
4. Seamless integration takes investments in capital, inventory and systems. Good execution of an e-commerce site doesn’t happen by accident.
Execution is the enemy of innovation. Retailers in general are very good at execution at scale. As more are understanding the true influence of digital (80%+ in many segments) vs. the sales “breakout” (5-15% for e-commerce) they are finding the will and investment dollars to drive multichannel innovation into their execution machines.
Lagging well behind the consumer expectation is likely going to remain true for some time, given the rapid pace of innovation in personal “connected” technologies.
Retailers struggle with a seamless shopping experience often due to supply chain issues. It is difficult to track inventory across the system (as highlighted in a RetailWire discussion yesterday) and, as a result, retailers have to “hedge their bets” in terms of service and commitment for deliveries.
The second issue is silos. Ecommerce and mobile are often managed by a separate team than retail. This structure makes sense due to the differing skill sets required. However, the lack of coordination and consistency in positioning, communication, support and information make the experience disjointed for customers across retailing.
The key is a commitment (capital, human, emotional, etc.) to an omni-channel offering. In the absence of such a commitment a seamless shopping experience will not happen. The matching of pricing and promotions is necessary but not sufficient to create seamless shopping. These essential shopper information needs must be executed as a beginning not an end point.
Systems need to be shopper centric in design and execution.
Paula is right — no surprise here!
This kind of integration requires an IT/organizational transformation project that, quite frankly, is simply beyond the scope and comfort zones of most retailers. No infrastructure — no seamless shopping experience.
As to the second question the answer is, “Yes”.
Paula R. mentioned infrastructure and bus, some of the older words in explaining the core problem that retailers are dealing with. The word to remember is “platform”. The single retail platform assures a seamless space that supports end-to-end retail across all shopper defined channels.
Retailers in one area of the world that we recently visited needed everything possible in mobile. They were already going full mobile. They stopped once they figured out that their overall merchandising platform could not synch with the mobile direction (inventory and pricing issues). Why? Not on the same level of functionality…not on the same PLATFORM.
This is not new to many, but as the speed of shopping changes, this becomes a huge challenge. What’s the next big topic now that the consumer is in charge, big data and all that are known? Back to inventory and SCM.
Integration of data is the first challenge. Providing the right information to the right people (including consumers) at the right time is the second problem. Giving employees the authority to make decisions based upon the data they receive is the third problem.
Finding a way to create business processes across all channels is another challenge. Obviously, the process is complex, expensive, time intensive, and people intensive. However, more and more companies are finding ways to make this happen. That means everyone else needs to catch up or be left behind by consumers.
The issue here goes far beyond the retailer. Suppliers have to move past channel pricing cost structures and channel specific product availability that impair omnichannel retailing.
Oh the problems, they are many! Coming from an IT background, let’s start there. Retailers have accumulated such a hodge podge of systems and platforms that the infrastructure is just too fragile and too costly for many of them to deal with. Rip and replace? Major step and major disruption.
And what about inventory visibility? That’s hard to do in the siloed world most retailers operate in. Each silo has unique objectives and measurements which make it hard to have the “‘one view of the customer” that is needed for a seamless omni-channel strategy.
As for price matching and promotions. Well, it is OK to have special promotions and/or pricing in different channels, however, these need to made very clear to the customer. In other words, retailers must start with one version of the truth in order to appear seamless.
Now don’t get me wrong. This is all doable and smart retailers are figuring out how. Is the answer in the “clouds”? hmmm
Unrealistic expectations is a problem in the world, period. The way that’s usually gotten around is by managing expectations. I think Chris Donnelly nailed it when he said retailers must review operational capabilities at “every stage of the customer journey.” If retailers are unaware what shoppers are experiencing, how can they meet expectations? Or hopefully one day exceed them?
There’s so much information to manage on the retail level, it is not an easy task. Usually things that appear seamless, of course, are not. But as retailers look to provide exceptional options and stand out from their competitors, they have to be prepared to compete in this technology driven market place. If 82% of consumers are looking for product availability information and only 21% of merchants provide this data, don’t blame shoppers for putting their dollars into the 21% of retailers that pay attention and address their needs.
The first step in negotiation is clear and accurate communication. Integration of “different” retail channels to provide customers with the product they want is simply not being effectively communicated to the consumer by the brick and mortar retailer in their quest to provide an e-commerce option to their customers. When consumers go online to visit a retailer they expect the product they see online to be in the nearest location.
Both the IT department and operations refer to this problem as “cockpit” errors committed by a user who is not familiar with the proper way to surf a site. The real problem is that operations and IT are unfamiliar with what consumers expect when they shop electronically. There is further disconnect in the realm of pricing issues that are leveraged due to ship to store costs and real estate costs in prime urban sites. At the present time, online shoppers expect the lowest prices and do not wish to experience a pricing matrix of “what if” or “if than” scenarios.
Adding further aggravation to the multichannel customer experience is the “free delivery” expectation which is now an anticipation of every e-commerce sale. The solution for these circumstances may be something as simple as strategic differentiation. This would allow for electronically shopping “online” OR ” in the nearest store that suites your needs.”
The biggest adjustment to day to day operations would appear in planning, distribution facilities and allocation for the retailer. It would be a good idea to add identity and corporate separation, as in a wholly owned subsidiary, to the e-commerce and IT departments of the business so as to minimize any legal ramifications and confusion as to where the consumer actually shopped any deal that needs resolution of open issues.
The growth of retail opportunities and methods carries with it an expansion of executive management scope and vision. This simply means more work for the few. Any dilution or downstream delegation into existing channels with little or no experience of this new responsibility will yield conflict that bleeds into the consumer experience as we see in this article for discussion. C?O’s need to be in concert with these opportunities and aware of the new design in creating retail for the present and future.
The Convergence of Online, Mobile and Bricks (COMB) retailing has been an obvious no-brainer for quite some time. It is ONE business, if you have ONE name on it. Good grief!!! And no, it is not necessary to offer the same price on goods delivered in different venues and by different modalities — already argued extensively here at RW.
The fundamental problem here is that online retailers have a poor understanding of bricks retailing, and bricks retailers have a poor understanding of shoppers. I believe the leaders in both areas have an increasingly good understanding of their “opposite” members, that is native bricks understanding their own online mode, and online moving further in the DIRECTION of the bricks mode.
For both bricks and online, the real revolution will be the widespread adoption of the “mobile wallet universal-credit-card” which will essentially implement a surrogate of Amazon’s “one click” purchasing, as the stock-picker shopper pulls merchandise off the bricks (aka neighborhood warehouse) shelves and does their own “UPS/FedEx” getting the goods to home or office.
In order to see where retailing is going, it helps to look at it holistically and historically to see how all the pieces came into play. But, as they say, telling the future is hard — particularly the part about saying what will happen. 😉
Here are some thoughts regarding the struggle:
1. Changing life-long patterns regarding how one views a problem or opportunity is not easy. We as an industry nailed the supply side but…
2. The life cycle related to developing customer facing apps requires different people, methods, tools and focus. After eight years of failure here in the valley, we are only beginning to figure out how to prototype (pretotype) apps.
3. Tactically, keeping B2C apps secret — especially from retailers — is not easy. I’ve seen go-to-market plans include limited testing in Canada under fake app names as an example of what folks are doing.
4. Retailers run a real business and orchestrating multichannel is not easy.
I think some important clues to the resolution of the struggle are this:
Q: What was one of the most important technology enablers relating to the supply side?
A: Enterprise systems
Q: What did SAP’s Hasso Plattner, one of the founding fathers of enterprise systems, do over recent years to advance his work?
A: He provided the seed money for the Stanford Design School.
The tools, methods and people relating to the struggle might just be found in places like the d-school.
“The future is already here it’s just not very evenly distributed.” William Gibson
First off, I must offer the opinion that “seamless” is not the same as “equivalent”. Different touch points are innately different for excellent reasons — not just because of retailer incompetence.
Why don’t we substitute “congruent” as a better standard? All touch points must work together in ways that make sense to the shoppers who use and combine them. Consistency in online/offline design is desirable, and policies should be aligned. A highly-visible, universal inventory is a darn good idea too.
Prices — especially promotions and markdowns — do not need to be identically matched all the time. This is a critical, counter-intuitive insight: An item can be on steep markdown in one store for sound local reasons without forcing the online site to change too. Fear of showrooming should not distort otherwise solid decision making.
This is a classic case of “easier said than done.”
My top 3 reasons:
1. IT – It takes years of work (and investment that Wall Street might punish in the short term) for a legacy retailer to build the systems required for “seamless” multi-channel to work.
2. Org structure and inertia – I’m seeing retailers who have built their organizations around their old business model (stores and catalogs) getting slowed down by the power struggles and analysis-paralysis that can come with organizational change. For many of them, the eCommerce business was “incubated” in a separate silo and they are having trouble integrating it in as a core part of the business.
3. Readiness of front-line staff – A colleague of mine was in Nordstrom (a company that has solved #1 and 2 above) recently and the store associate was unfamiliar with an item that was featured in the catalog, which goes to show how tens of millions of dollars of investment can be undermined if the front-line staff doesn’t have the information and engagement to deliver the experience for the consumer.
Merchants that have not committed to a seamless, cross-channel shopping experience either better have a unique product/service value proposition, or they had better get seamless cross-channel experiences for shopper quickly!
This is a commitment, like so many others in retail, that merchants need to take seriously. If the merchant’s leadership doesn’t personally engage in multichannel shopping, then it is reasonable to determine why they haven’t put is at or near the top of their priorities.
Keep the effort simple, and straightforward. Create a simple, easy-to-load eCommerce site, that has “shop online, pick up in-store” and other basic traits. Then, get the store employees to execute the brick store responsibilities to pull off the seamless experience.
There are a lot of good reasons listed. As a person that specializes in data integration, I can tell you it requires expertise, but it is definitely possible. Aligning data is no mystery for those of us in the business and dealing with different pricing is also not uncommon. This issue puts retailers in a similar situation that a CPG manufacturer is in with varying price structures, hierarchies, etc.
But I think the retailers biggest problem is the fact that they run the businesses separately and that they don’t want to spend the big dollars required for a full integration project.
While I echo the IT integration issues discussed above, I think one of the core issues is that many retailers still treat the two channels as two separate businesses, with separate teams. Until there is deeper integration between traditional store teams and newer e-commerce and mobile teams, it seems only natural to expect that the less than seamless external experience would be a projection of the less than seamless internal cooperation.
It is difficult to add to what so many have already very well explained here. But I too believe integration to be the key — too many systems, too many channels, too many departments, etc. Without an overhaul of the entire integration architecture, it is difficult to get things right and even more difficult to adapt to the next new channel. One thing, I don’t think has been mentioned here is MDM!!! Master Data Management has to play a more active role in retailers’ IT landscape. A shared view of customers, items, prices and inventory is the key, and that can be best addressed with MDM. A centralized repository to be shared across all systems, departments, and channels…what a concept!!
Aside from the technical challenges that need to be overcome, the other is the attention to the customer. As others mentioned, store personnel must be well educated on how to handle every type of omni-channel scenario — from ordering online, returning web purchases at the store, picking up in-store, delivery to customer, etc, etc. The frustration a savvy omni-channel customer will face when told they cannot return a web purchase or must call for online support, yada, yada, will not be tolerated, plain and simple!!
It is a combination of factors from financial reporting by channels/silos to the traditional low investment in IT as a percentage of revenue. The consumer driven technology revolution is forcing retailers to respond much faster than they are used to process wise or IT investment wise.
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My impression is that retailers are still struggling with the basic question of how online activities affect offline sales. Do other BrainTrust members believe this is true or have retailers tackled this more effectively? If it’s still true, the issue is to connect online behaviors with both online and offline sales using log-ins and frequent shopper profiles. This is also the same approach that will link together cross-screen behaviors.
I’m not sure why this is a surprise, actually. The problem is pretty straight forward — lack of investment in an extensible IT infrastructure. That 15 cent sentence means that because there is no visible ROI in building an integration bus, many, many retailers just don’t have it. The same report cited above showed retailers most frequently cited way to overcome organizational inhibitors (that keep them from implementing better pricing practices) is better integration tools. And that’s just pricing.
Retailers also lack Content Management Systems and other basics that would make this seamless experience easier to achieve.
We’re just not used to moving this fast as an industry and have under-invested for decades. This is the fruit of those issues.
There are at least two reasons for this problem. The first, as stated in the abstract, is price. In order for many retailers to compete with the pure play online retailers, they offer product online at a lower price then in their stores. When it comes to full omnichannel retailing, this is a mistake.
Second, and easier area to fix, is sales credit. Retailers currently manage the inventory by channel. Stores get credit for what they sell and not for what is sold online and that creates issues for any retailing wanting to implement ominchannel. Ominchannel retailing, in my way of thinking, means I can buy anything from any channel — in-store, online, on my phone — and pay the same price. I can order the product online for pickup in the store. I can buy a product in a store and return it online.
Until the retailer considers measurement, not by inventory but by customer satisfaction, they cannot enter true omnichannel retailing.
Creating a seamless shopping experience makes the erroneous assumption that all departmental channels within the retailer and the brand vendors are all on the same page in terms of strategy and tactical implementation. These departments have functioned within isolated silos for so long that it is difficult to flatten the organization into a transparent and cohesive system.
A significant hurdle that needs to be addressed is that of success metrics and compensation programs. Often departments are measured for success and paid bonuses based upon criteria that are in conflict with other departments. Who gets credit for the sale? In-store? Online? Who has to deal with the costs and operational resources associated with returns from online purchases? Store managers?
You can see where animosity and conflicting resource allocation can obstruct the implementation of a seamless shopping experience.
I can think of a few reasons why “omnichannel” continues to be a problem, and I’m sure my fellow panelists can come up with several more. Here’s my short list:
1. Different pricing practices in-store and online only lead to distrust on the part of the consumer, one way or another.
2. Many retailers don’t put the thought into “store design” of their website to provide the same sort of ease of navigation or experience that their brick-and-mortar stores aspire to.
3. Too many retailers have drawn organizational lines between their brick-and-mortar teams and their e-commerce teams (especially in terms of merchandising and marketing). If companies don’t get their own employees on the same page, why should they expect customers to “get it”?
4. Seamless integration takes investments in capital, inventory and systems. Good execution of an e-commerce site doesn’t happen by accident.
Execution is the enemy of innovation. Retailers in general are very good at execution at scale. As more are understanding the true influence of digital (80%+ in many segments) vs. the sales “breakout” (5-15% for e-commerce) they are finding the will and investment dollars to drive multichannel innovation into their execution machines.
Lagging well behind the consumer expectation is likely going to remain true for some time, given the rapid pace of innovation in personal “connected” technologies.
Retailers struggle with a seamless shopping experience often due to supply chain issues. It is difficult to track inventory across the system (as highlighted in a RetailWire discussion yesterday) and, as a result, retailers have to “hedge their bets” in terms of service and commitment for deliveries.
The second issue is silos. Ecommerce and mobile are often managed by a separate team than retail. This structure makes sense due to the differing skill sets required. However, the lack of coordination and consistency in positioning, communication, support and information make the experience disjointed for customers across retailing.
The key is a commitment (capital, human, emotional, etc.) to an omni-channel offering. In the absence of such a commitment a seamless shopping experience will not happen. The matching of pricing and promotions is necessary but not sufficient to create seamless shopping. These essential shopper information needs must be executed as a beginning not an end point.
Systems need to be shopper centric in design and execution.
Paula is right — no surprise here!
This kind of integration requires an IT/organizational transformation project that, quite frankly, is simply beyond the scope and comfort zones of most retailers. No infrastructure — no seamless shopping experience.
As to the second question the answer is, “Yes”.
Paula R. mentioned infrastructure and bus, some of the older words in explaining the core problem that retailers are dealing with. The word to remember is “platform”. The single retail platform assures a seamless space that supports end-to-end retail across all shopper defined channels.
Retailers in one area of the world that we recently visited needed everything possible in mobile. They were already going full mobile. They stopped once they figured out that their overall merchandising platform could not synch with the mobile direction (inventory and pricing issues). Why? Not on the same level of functionality…not on the same PLATFORM.
This is not new to many, but as the speed of shopping changes, this becomes a huge challenge. What’s the next big topic now that the consumer is in charge, big data and all that are known? Back to inventory and SCM.
Integration of data is the first challenge. Providing the right information to the right people (including consumers) at the right time is the second problem. Giving employees the authority to make decisions based upon the data they receive is the third problem.
Finding a way to create business processes across all channels is another challenge. Obviously, the process is complex, expensive, time intensive, and people intensive. However, more and more companies are finding ways to make this happen. That means everyone else needs to catch up or be left behind by consumers.
The issue here goes far beyond the retailer. Suppliers have to move past channel pricing cost structures and channel specific product availability that impair omnichannel retailing.
Oh the problems, they are many! Coming from an IT background, let’s start there. Retailers have accumulated such a hodge podge of systems and platforms that the infrastructure is just too fragile and too costly for many of them to deal with. Rip and replace? Major step and major disruption.
And what about inventory visibility? That’s hard to do in the siloed world most retailers operate in. Each silo has unique objectives and measurements which make it hard to have the “‘one view of the customer” that is needed for a seamless omni-channel strategy.
As for price matching and promotions. Well, it is OK to have special promotions and/or pricing in different channels, however, these need to made very clear to the customer. In other words, retailers must start with one version of the truth in order to appear seamless.
Now don’t get me wrong. This is all doable and smart retailers are figuring out how. Is the answer in the “clouds”? hmmm
Unrealistic expectations is a problem in the world, period. The way that’s usually gotten around is by managing expectations. I think Chris Donnelly nailed it when he said retailers must review operational capabilities at “every stage of the customer journey.” If retailers are unaware what shoppers are experiencing, how can they meet expectations? Or hopefully one day exceed them?
There’s so much information to manage on the retail level, it is not an easy task. Usually things that appear seamless, of course, are not. But as retailers look to provide exceptional options and stand out from their competitors, they have to be prepared to compete in this technology driven market place. If 82% of consumers are looking for product availability information and only 21% of merchants provide this data, don’t blame shoppers for putting their dollars into the 21% of retailers that pay attention and address their needs.
The first step in negotiation is clear and accurate communication. Integration of “different” retail channels to provide customers with the product they want is simply not being effectively communicated to the consumer by the brick and mortar retailer in their quest to provide an e-commerce option to their customers. When consumers go online to visit a retailer they expect the product they see online to be in the nearest location.
Both the IT department and operations refer to this problem as “cockpit” errors committed by a user who is not familiar with the proper way to surf a site. The real problem is that operations and IT are unfamiliar with what consumers expect when they shop electronically. There is further disconnect in the realm of pricing issues that are leveraged due to ship to store costs and real estate costs in prime urban sites. At the present time, online shoppers expect the lowest prices and do not wish to experience a pricing matrix of “what if” or “if than” scenarios.
Adding further aggravation to the multichannel customer experience is the “free delivery” expectation which is now an anticipation of every e-commerce sale. The solution for these circumstances may be something as simple as strategic differentiation. This would allow for electronically shopping “online” OR ” in the nearest store that suites your needs.”
The biggest adjustment to day to day operations would appear in planning, distribution facilities and allocation for the retailer. It would be a good idea to add identity and corporate separation, as in a wholly owned subsidiary, to the e-commerce and IT departments of the business so as to minimize any legal ramifications and confusion as to where the consumer actually shopped any deal that needs resolution of open issues.
The growth of retail opportunities and methods carries with it an expansion of executive management scope and vision. This simply means more work for the few. Any dilution or downstream delegation into existing channels with little or no experience of this new responsibility will yield conflict that bleeds into the consumer experience as we see in this article for discussion. C?O’s need to be in concert with these opportunities and aware of the new design in creating retail for the present and future.
The Convergence of Online, Mobile and Bricks (COMB) retailing has been an obvious no-brainer for quite some time. It is ONE business, if you have ONE name on it. Good grief!!! And no, it is not necessary to offer the same price on goods delivered in different venues and by different modalities — already argued extensively here at RW.
The fundamental problem here is that online retailers have a poor understanding of bricks retailing, and bricks retailers have a poor understanding of shoppers. I believe the leaders in both areas have an increasingly good understanding of their “opposite” members, that is native bricks understanding their own online mode, and online moving further in the DIRECTION of the bricks mode.
For both bricks and online, the real revolution will be the widespread adoption of the “mobile wallet universal-credit-card” which will essentially implement a surrogate of Amazon’s “one click” purchasing, as the stock-picker shopper pulls merchandise off the bricks (aka neighborhood warehouse) shelves and does their own “UPS/FedEx” getting the goods to home or office.
In order to see where retailing is going, it helps to look at it holistically and historically to see how all the pieces came into play. But, as they say, telling the future is hard — particularly the part about saying what will happen. 😉
Here are some thoughts regarding the struggle:
1. Changing life-long patterns regarding how one views a problem or opportunity is not easy. We as an industry nailed the supply side but…
2. The life cycle related to developing customer facing apps requires different people, methods, tools and focus. After eight years of failure here in the valley, we are only beginning to figure out how to prototype (pretotype) apps.
3. Tactically, keeping B2C apps secret — especially from retailers — is not easy. I’ve seen go-to-market plans include limited testing in Canada under fake app names as an example of what folks are doing.
4. Retailers run a real business and orchestrating multichannel is not easy.
I think some important clues to the resolution of the struggle are this:
Q: What was one of the most important technology enablers relating to the supply side?
A: Enterprise systems
Q: What did SAP’s Hasso Plattner, one of the founding fathers of enterprise systems, do over recent years to advance his work?
A: He provided the seed money for the Stanford Design School.
The tools, methods and people relating to the struggle might just be found in places like the d-school.
“The future is already here it’s just not very evenly distributed.” William Gibson
First off, I must offer the opinion that “seamless” is not the same as “equivalent”. Different touch points are innately different for excellent reasons — not just because of retailer incompetence.
Why don’t we substitute “congruent” as a better standard? All touch points must work together in ways that make sense to the shoppers who use and combine them. Consistency in online/offline design is desirable, and policies should be aligned. A highly-visible, universal inventory is a darn good idea too.
Prices — especially promotions and markdowns — do not need to be identically matched all the time. This is a critical, counter-intuitive insight: An item can be on steep markdown in one store for sound local reasons without forcing the online site to change too. Fear of showrooming should not distort otherwise solid decision making.
This is a classic case of “easier said than done.”
My top 3 reasons:
1. IT – It takes years of work (and investment that Wall Street might punish in the short term) for a legacy retailer to build the systems required for “seamless” multi-channel to work.
2. Org structure and inertia – I’m seeing retailers who have built their organizations around their old business model (stores and catalogs) getting slowed down by the power struggles and analysis-paralysis that can come with organizational change. For many of them, the eCommerce business was “incubated” in a separate silo and they are having trouble integrating it in as a core part of the business.
3. Readiness of front-line staff – A colleague of mine was in Nordstrom (a company that has solved #1 and 2 above) recently and the store associate was unfamiliar with an item that was featured in the catalog, which goes to show how tens of millions of dollars of investment can be undermined if the front-line staff doesn’t have the information and engagement to deliver the experience for the consumer.
Merchants that have not committed to a seamless, cross-channel shopping experience either better have a unique product/service value proposition, or they had better get seamless cross-channel experiences for shopper quickly!
This is a commitment, like so many others in retail, that merchants need to take seriously. If the merchant’s leadership doesn’t personally engage in multichannel shopping, then it is reasonable to determine why they haven’t put is at or near the top of their priorities.
Keep the effort simple, and straightforward. Create a simple, easy-to-load eCommerce site, that has “shop online, pick up in-store” and other basic traits. Then, get the store employees to execute the brick store responsibilities to pull off the seamless experience.
There are a lot of good reasons listed. As a person that specializes in data integration, I can tell you it requires expertise, but it is definitely possible. Aligning data is no mystery for those of us in the business and dealing with different pricing is also not uncommon. This issue puts retailers in a similar situation that a CPG manufacturer is in with varying price structures, hierarchies, etc.
But I think the retailers biggest problem is the fact that they run the businesses separately and that they don’t want to spend the big dollars required for a full integration project.
While I echo the IT integration issues discussed above, I think one of the core issues is that many retailers still treat the two channels as two separate businesses, with separate teams. Until there is deeper integration between traditional store teams and newer e-commerce and mobile teams, it seems only natural to expect that the less than seamless external experience would be a projection of the less than seamless internal cooperation.
It is difficult to add to what so many have already very well explained here. But I too believe integration to be the key — too many systems, too many channels, too many departments, etc. Without an overhaul of the entire integration architecture, it is difficult to get things right and even more difficult to adapt to the next new channel. One thing, I don’t think has been mentioned here is MDM!!! Master Data Management has to play a more active role in retailers’ IT landscape. A shared view of customers, items, prices and inventory is the key, and that can be best addressed with MDM. A centralized repository to be shared across all systems, departments, and channels…what a concept!!
Aside from the technical challenges that need to be overcome, the other is the attention to the customer. As others mentioned, store personnel must be well educated on how to handle every type of omni-channel scenario — from ordering online, returning web purchases at the store, picking up in-store, delivery to customer, etc, etc. The frustration a savvy omni-channel customer will face when told they cannot return a web purchase or must call for online support, yada, yada, will not be tolerated, plain and simple!!
It is a combination of factors from financial reporting by channels/silos to the traditional low investment in IT as a percentage of revenue. The consumer driven technology revolution is forcing retailers to respond much faster than they are used to process wise or IT investment wise.