Optimizing Omnichannel Commerce through Retail Store Deployment

Download Optimizing Omnichannel Commerce through Retail Store Deployment

Post on 03-Jan-2017




0 download

Embed Size (px)


  • 1

    Optimizing Omnichannel Commerce through Retail Store Deployment By Jennifer Brooks, Operations Senior Director

    Consumers demand seamless, superior service across channels. Retail stores remain the foundation of that experience. But to integrate channels and meet customer expectations, you need to deploy the most effective retail store technology quickly and successfully, without revenue-robbing downtime.

  • 2

    Meet Maria. Like many consumers, she shops across multiple channels.Over breakfast, she gets an email on her tablet from her favorite retailer. On the train to work, she browses the retailers e-commerce site on her smartphone. She adds an item to her cart but decides she wants to see the product at the retailers store on her way home. A few days after she showrooms, she buys the product online and has it shipped to the store for pickup.

    Sound familiar? It should. Because the majority of consumers now shop this way. And its true for all companies that serve consumers, from fashion brands and drugstore chains to grocery stores and bank branches.

    Your customers interact with your brand through online, mobile, call-center and brick-and-mortar channels. They expect seamless movement and consistent, satisfying service across all those channels. Yet the retail store remains the foundation of that experience.

    Because the store is so central, you need the right technology in your stores to integrate channels and serve customers effectively. And when you launch a new location or refresh an existing store or hundreds of stores you cant afford to have your operations offline for long. You need your new equipment up and running quickly and effectively.

    Channel CentralWhile online and mobile channels are growing in importance, the physical store remains central to the retail experience. Even though consumers increasingly use electronic means to research products and pricing, 61 percent value or highly value asking a store associate for recommendations. And 72 percent would rather ask an associate if another store has a product in stock than look it up themselves on a mobile device.2


    1, 2 Customer Desires vs. Retailer Capabilities: Minding the Omnichannel Commerce Gap, Forrester Research, January 2014.

    Shoppers who expect to view in-store inventory online1

    Browse online, buy in store (webrooming)


    Figure 1: From Showrooming to Webrooming

    0% 20% 40% 60%SOURCE: Global Survey of E-Commerce, Nielsen, 2014


    Browse in store, buy online (showrooming)

  • 3

    But consumers want the store to be integrated with other channels. Seventy-one percent expect to view in-store inventory online, and 50 percent expect to buy online and pick up in the store. The value of sales completed in stores but influenced by the Web will grow from $1.3 trillion in 2013 to $1.8 trillion by 2017.3

    Retailers are increasingly aware of this blurring of channels. Retailers estimate that one-half of their store revenue is already influenced by online and mobile channels.4 Market leaders are responding accordingly:

    At Best Buy, all 1,400 stores can fulfill online orders, cutting average online delivery time by two days.5 At Walmart, 10 percent of items ordered online are shipped from stores, the majority in two days or less.6

    At Toys R Us, 31 percent of e-commerce sales are omnichannel, including in-store pickup, ship to store and ship from store.7 At The Gap, a pilot order-in-store option lets customers place an online order from inside the store.8 At mens clothing purveyor Bonobos, customers can buy in the store and have items shipped to their door.9

    Crossing Channels: Look Both WaysBut integrating the store with other channels isnt trivial. In addition to extensive strategy, planning and organizational shifts, it requires an investment in technology. Smart retailers recognize this need. In fact, 60 percent expected their IT investments to increase in 2015. Where is that investment being targeted? Among the top priorities for retail CIOs is enabling an omnichannel approach.10

    3 Customer Desires vs. Retailer Capabilities: Minding the Omnichannel Commerce Gap, Forrester Research, January 2014.4 Get Prepared for the Top Retail and Technology Trends, Gartner, August 2015.5, 6, 7 Why Every Retailer Should Ship From Store, Forrester Research, May 2014.8, 9 One Way Online Shopping Is Actually Helping Brick-and-Mortar Retailers, Washington Post, September 3, 2014.10 The Retail CIO Agenda 2015: Secure and Innovate, Forrester Research, February 2015.

    Increase >25%

    Increase 10% to 25%


  • 4

    Retailers report that the most important reason to invest in omnichannel commerce is to respond to customer demands. Other key drivers include keeping pace with competitor capabilities, matching online pure plays such as Amazon.com and enhancing customer satisfaction and lifetime value.

    That IT investment must occur in the front office, where customers interact with the brand. And it needs to take place in the back office, where sales associates and the store itself interact with inventory and other corporate systems.

    In the front office, retailers are exploring new capabilities that help them engage customers wherever they are in their buying journey. Many of these capabilities begin with loyalty programs that enable retailers to automatically recognize customers as they move from online to mobile to store channels. So when customers enter the store, they might receive personalized coupons on their smartphones based on past purchases.

    Technology companies are supporting these efforts with innovations. Intel, for example, has introduced digital signage that retailers can place throughout the store to showcase new inventory or promote closeouts. Such signage can include cameras that capture anonymous information such as the gender and approximate age of shoppers. They can also track where shoppers eyes linger, how long they look and where they go in the store after viewing the sign.

    Strengthen data security

    Integrate channels to enable omnichannel

    Modernize merchandising to enable omnichannel

    Implement analytics

    Mobile-enable employees






    Figure 3: Top Five Retailer IT Priorities

    0% 20% 40% 60% 80%SOURCE: The Retail CIO Agenda 2015: Secure and Innovate, Forrester Research, February 2015

    Meet customer demands

    Match competitor capabilities

    Compete with online pure plays

    Improve customer satisfaction

    Improve customer lifetime value





    Figure 4: Top Five Reasons to Invest in Omnichannel

    0% 10% 40% 60% 70%SOURCE: Customer Desires Vs. Retailer Capabilities: Minding the Omnichannel Commerce Gap, Forrester Research, January 2014

    20% 30% 50%


  • 5

    In fact, indoor positioning systems are emerging as a key technology. Seven of the 10 largest retailers will use indoor positioning by 2017, to help shoppers quickly find products.11 Consumers seem happy to share their locations with retailers; more than 20 percent did so as early as 2013.12 In-store location tracking can help retailers create contextually relevant offers that improve sales, margins and customer satisfaction.

    In the back office, retailers need to leverage the data theyre capturing out on the floor. That requires big data platforms in corporate headquarters to perform advanced analytics. It also calls for in-store infrastructure, from mobile point-of-sale and inventory-management systems to the wireless and telecom networks that support them.

    And just as front-office marketing solutions can track shoppers, back-office inventory systems can track merchandise. So sales associates have instant access to inventory data within the store, in other stores and wherever else it may reside throughout the supply chain.

    Some retailers are taking inventory management further with radio-frequency identification (RFID) tags at the item level. RFID helps sales associates instantly locate inventory within the store, even if it has been misplaced. It also enables them to connect inventory with shopper behavior. For example, retailers can use RFID data to identify items frequently left in the dressing room, perhaps indicating a sizing problem. Leveraging technology in this way can simultaneously optimize store operations while improving the customer experience.

    Rapid RefreshBut deploying new technology and upgrading existing infrastructure often require a store refresh and this is where retailers run into challenges. Thats true for smaller retailers rapidly building out stores, and it applies to established players quickly refreshing hundreds or even thousands of locations across regions.

    Retailers that choose to launch or refresh stores with their own IT staff can find this process daunting. They need to identify best-in-class solutions that enable new front- and back-office capabilities. They need to configure those devices to meet their unique needs. They need to integrate components from various vendors. And they need to rapidly stage, test and deploy equipment in each store location.

    Those efforts can prove to be a logistics and staffing nightmare. Every day a store remains offline means lost revenue and lost customers. Project delays or unexpected equipment problems can mean further downtime and damaged reputation.

    Then there are aspects of store rollouts few retailers anticipate. One is the need to manage relationships with multiple IT providers. Another is the need to centrally warehouse, configure and test components before theyre deployed in the store. A third is the fact that equipment needs to be paid for upfront, often month