A Future Stores 2017 Interview Report

Six Critical Factors for Omnichannel Retail SuccessLeading retail brands share direct insights on the future of customer relationships

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Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Industry Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Six Critical Factors for Omnichannel Retail Success. . . . . . . . . . . . . . . . . . . . 5

What are the greatest challenges for retailers when adopting new omnichannel strategies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Why is social important to retailers, and what are the risks for retailers engaging consumers in social environments? . . . . . . . . . . . . . . . . 6

How are retailers utilizing omnichannel customer data to improve the performance of in-store retail? . . . . . . . . . . . . . . . . . . . . . . . . .7

How does the customer journey begin, and how can retailers understand customers’ paths to purchase across channels? . . . . . . . . . . .8

How are retailers responding to evolving customer expectations, and how does that transform their omnichannel strategy? . . . . . . . . . . . . 9

How would you describe the current state of omnichannel, and what are your predictions for the future? . . . . . . . . . . . . . . . . . . . . . . . . 10

Key Takeaways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Table of Contents

“ The digital and physical worlds are becoming one in the same. ” Wade Allen · VP Digital Guest Experience & Analytics · Chili’s (Brinker International)

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The democratization of information is challenging traditional retail.Today, customers have access to endless amounts of information—they’ve done research on products and have knowledge that greatly exceeds that of customers in the past—so the value traditional retailers can drive to those customers has been diminished.

While customers can acquire a great deal of product information with little research, many retailers know little or nothing about their customers. Now, retailers have a problem meeting expectations, where store associates and digital platforms are lacking in personal information that customers have come to expect from retailers.

Online is providing a frictionless experience, which challenges retailers to provide the same experience in-store. But as online retailers are reducing the number of hurdles for consumers when buying on the internet, retailers must align those experiences with physical stores as well.

In this report, we will learn from six digital and in-store retail experts at every stage of omnichannel development as they share their own objectives, real-world experiences and observations, and predictions for the future of omnichannel retail.

Retailers face a profound challenge—transforming both how they engage with customers and how they create a new type of relationship, one where retailers play the role of a loyal partner. Experts from Foot Locker, Chili’s, BMW, Verizon, DSW, and Microsoft will explore six challenges in which retailers must begin their omnichannel transformation.

Executive Summary

“ Many choose mobile, but on the brick-and-mortar side, it’s about providing engaging environments for customers. ”

Dennis Vandel · VP Business Analysis & Productivity · Foot Locker

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The primary contributors to this report are executives of their respective organizations and experts in emerging technologies and best practices in omnichannel. Quotes in this report come from direct interviews of these individuals conducted by the Future Stores research team.

Industry Experts

“ We’re looking at our overall brand, our brand voice, and how that

brand appears across all channels and modes of communication. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

Michele Fuhs Head of Future Retail - Premium Retail Experience

BMW

Wade Allen VP Digital Guest Experience & Analytics

Chili’s (Brinker International)

Dennis Vandel VP Business Analysis & Productivity

Foot Locker

David Garcia Director of Experience Innovation

Verizon Communications Inc.

Beth Rick Sr. Director, Transformation

DSW

Shish Shridhar Director, Business Development, Data, Analytics & IoT

Microsoft Corp, Retail Sector

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What are the greatest challenges for retailers when adopting new omnichannel strategies?Consumers have become very passionate about personal technology. Retailers that perform customer research successfully can now predict what their customers expect from them. They have to deliver on those expectations by helping customers no matter where they are, no matter what platforms they use, and no matter what needs must be met.

“ The digital and physical worlds are becoming one in the same. Some marketers are fighting to keep the two worlds separate, but we carry phones in our pockets, have laptops at work and at home, use tablets on a daily basis, and we’re even connected to our cars. As marketers, we need to focus on how we can seamlessly make two different worlds feel like one; because that’s the world we are living in and need to be living in. ” Wade Allen · VP Digital Guest Experience & Analytics · Chili’s (Brinker International)

“ On the technical side, our omnichannel strategy is about how we streamline the process and communicate to the customer via whichever vehicle they prefer. Many choose mobile, but on the brick-and-mortar side, it’s about providing engaging environments for customers. We want them to come in, but it’s a two-pronged approach. Ultimately, it’s about letting the customer determine how they want to buy and interact with the brand. ” Dennis Vandel · VP Business Analysis & Productivity · Foot Locker

“ We’re looking at our overall brand, our brand voice, and how that brand appears across all channels and modes of communication. In this world, you not only have avenues and means of communication that you can control, you also haves means that you cannot control, such as social, reviews, and how the brand shows up. How the brand shows up on a Yelp page is just as important as how it shows up in a store. One thing we’re looking at is brand consistency across not only all of our platforms but also partner platforms, and platforms in which the Verizon brand may appear. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

“ Streamlining the process of finding the vehicle and getting them into the vehicle online, getting them access as quickly as possible in as few steps as possible, is the priority—making sure they do all of those things even before they get into the store. ”

Michele Fuhs · Head of Future Retail - Premium Retail Experience · BMW

Top Challengesfor Omnichannel

Converging digital and

physical worlds

Brand control and

consistency

Seamless, engaging

environments

Engaging digital

content

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Why is social important to retailers, and what are the risks for retailers engaging consumers in social environments?Social media presents an evolving and complex digital challenge for retailers, where customers can express their opinions openly and potentially help or damage retail brands. As a result, retailers must respond carefully as they engage with vocal customers, whose reviews of retail brands are resounding.

“ In addition to technology, the biggest omnichannel challenge is social. Today, customers shop as individuals and they want something unique to them. That’s not the way it was in a retail environment 15-to-20 years ago. Making those changes from an infrastructure standpoint is one piece, but the bigger picture is understanding how the customer wants to engage with your brand, then making it happen. ” Dennis Vandel · VP Business Analysis & Productivity · Foot Locker

“ When it comes to social behavior, you have to respond. That is a challenge for many brands, because it’s harder to keep up with all of the ways people can review you. Your social presence has to be relevant. It has to be contextual and appropriate for each medium so that people actually engage with you on those platforms.

We feel that social retargeting is a really good avenue for us. It’s on your handset so it’s almost surreal that you get the ad in the palm of your hand while you’re using one of our devises. We see people becoming more comfortable with social media retargeting, and we see more and more people becoming comfortable with self-serve as a result of having better services. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

Industry Insights

Social media challenges retailers to be more responsive to consumers, whose opinions can quickly resonate in an open digital environment.

Consumers respond to retargeting and advertising differently via social channels, where users are more receptive of contextual messaging.

As a channel, social enables consumers to interact with brands in any way they chose, so brands must have the infrastructure in place to engage with them.

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How are retailers utilizing omnichannel customer data to improve the performance of in-store retail?While many consumers are not comfortable with the amount of personal data made available to retailers, digitally savvy consumers and especially younger consumers have grown accustomed to retailers personalizing products and services, or using that data for mutual benefit. Retailers who collect the right information about their customers can utilize that data to provide cross-channel, frictionless experiences to customers, and do a better job of selling to those individuals in the future.

“ The more you analyze, the more you understand customer behavior. The solution would be somewhere both on and offline. There will be no differentiation between online and offline in the future. ” Michele Fuhs · Head of Future Retail - Premium Retail Experience · BMW

“ A lot of it is about aligning product information with customer information, as well as understanding customer preferences and having that data available to store associates. It’s ultimately about being able to deduce what to offer based on having a customer’s wish list information and their order history. For instance, if the customer bought the same type of shoe every fall and now it’s available in a different color, the associate is able to offer it to them.

We are hyper-focused on giving our store associates as much knowledge as the customer. Customers have more information from our website or our mobile app about the product data, and we want to level the playing field to make it a lot easier our associates to help them. ”

Beth Rick · Sr. Director, Transformation · DSW

“ From an in-store perspective, retailers are looking at peak times in the store based on demographic filters and the behavioral patterns that they see, and when they correlate that with the planogram. That way they can tell what products interest different groups.

Most retailers are focused on getting very detailed information on which area of the store is getting the most traffic, and then correlating that to additional data. So for example, if they pull in demographics data and other information such as income levels and age group, retailers are able to correlate that and filter out store traffic to know what the behavioral pattern is for 20-year olds versus the behavioral pattern of 30-year olds. ” Shish Shridhar · Director, Business Development, Data, Analytics & IoT · Microsoft Corp, Retail Sector

“ I don’t know a particular retailer out there that feels like they absolutely know everything they want to know about their customers. We have a two-way communication between our online and offline services and we use the standardized commerce platform across both. If a customer starts an order on the website or a mobile phone, that order can be viewed in any channel, continued in any channel, and ended in any channel. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

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How does the customer journey begin, and how can retailers understand customers’ paths to purchase across channels?Traditionally, the customer journey begins the moment a customer walks into a physical store. Now, most often those journeys will begin at home. Understanding how these journeys begin on customers’ paths to purchase provides key data for retailers seeking to understand more about how those customers will ultimately interact with their brands. This “start anywhere, finish anywhere” behavior is difficult to understand, and made more complex by the many options available to consumers in omnichannel environments.

“ There’s that flow often referred to as “phygital” where one can seamlessly go between the physical and digital world as well as have a digital experience in the physical store. Anything the person abandoned in their cart online will be offered in the store those same offers that show up on their mobile device specific to those products. If the consumer is in the store and is looking at something that is not provided in his or her size or color of choice, a single tap would automatically enable them to order it online.

All of these channels are touchpoints in the customer’s journey, and they become aspects in which you can utilize commerce. That is the big transformation. We will see the customer journey transform and we’re not just going to see it as in-store and online, because every point in between is going to be a possibility for conversion. ” Shish Shridhar · Director, Business Development, Data, Analytics & IoT · Microsoft Corp, Retail Sector

“ Commerce needs to be able to occur at the moment of need rather than just digitally or physically. It’s more of an amalgamation of the two. At that moment it may be best to be served physically or digitally, but we want to be heading on the cusp of both.

That moment a customer decides to buy a new phone is critical in the customer journey when they can engage the way that they want. Let’s say the customer browsed online, went to the store to talk to the representative, and decided they wanted to order it later with same-day shipping. We see those customer experiences. They generate tremendous value back to Verizon.

Every retailer stays up at night thinking about how they have consistency in the experience they deliver. Companies are depending on the scale in which they retail. It can progressively get better or more worrisome. If a business has a thousand stores, there can be wild inconsistencies between stores on process or behavior. Each individual store has its own culture. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

Industry Insights

The customer journey now includes multiple channels, where consumers can move seamlessly between all of them on their path to purchase.

Acquiring new customers depends on retailers’ ability to best serve consumers at their moment of need, no matter the channel.

Retailers lose value when they do not allow consumers to engage with them in whatever way they choose.

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How are retailers responding to evolving customer expectations, and how does that transform their omnichannel strategy?As retailers must continue to learn more about their customers just as customers learn about their products and services, changing preferences over time require that retailers transform their omnichannel strategies and brands maintain meaningful relationships. According to our experts, the key is creating value propositions that combine channels into a single platform, providing a holistic customer experience.

“ During my time at Chili’s and in the casual dining space, I’ve learned that technology has set a precedent in our society giving consumers the need and satisfaction of receiving something immediately hassle free. At Chili’s, we ask ourselves, ‘How can we remove any friction so that our Guests can receive an optimal experience?’ We strive to create a frictionless experience for our Guests when it comes to the digital space so they can receive their order hot and fast. That’s what we’re really focused on.

We continuously watch, learn, and listen to how our Guests respond to the different ways we communicate to them. Based on the data received, we can identify a Guest’s preferred communication channel and only use that medium moving forward with them to help leverage our relevancy with them. ” Wade Allen · VP Digital Guest Experience & Analytics · Verizon Communications Inc.

“ We have roughly 100 million customers, so aggregating all of that user data and then using it in a way that is meaningful to the experience is something we strive to do. When we talk to customers, they tell us things like: ‘You guys know everything about me. You know where I go; you know who I talk to; how come it’s not better?’ With regards to us, the customers actually expect us to use that data and service them in a different way.

We’re looking at emerging consumer expectations as well as consumer expectations that have been established in the last two years. We’re not only rethinking our brand but our business and commercial model. As part of that, we’re looking at the overall distribution strategy for retail and our digital channels, and how we prioritize our efforts around where we believe customers will be engaging with us.

Overall, the mobile handset is changing omnichannel. While most people today do not shop in store on a mobile device, they absolutely shop online on a mobile device. If you can create a value proposition around doing both, then that does change the consumer’s experience. If you maximize the value prop of using the handset and having a store, then it changes the dynamic around omnichannel. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

Industry InsightsMobile has transformed the industry, providing consumers with dozens of ways to learn about, interact with, and buy from retail brands.

Retailers must integrate digital and physical environments to add greater value to customers’ omnichannel experiences.

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How would you describe the current state of omnichannel, and what are your predictions for the future?As advanced consumer technology escalates and consumers adapt to those changes, their expectations of retailers will grow until retailers become a fluid part of consumers’ everyday lives. Whether a customer walks into a store or browses online—perhaps even when that customer simply thinks about a certain brand or product—retailers must act upon that information without creating friction in that new experience.

“ We would love for our associates to be experts about the product or at least have information about it. Then they could know which shoe fits like another shoe, or if a customer is looking for a hiking shoe to know which ones would meet their needs—that’s what we’re working on. ”

Beth Rick · Sr. Director, Transformation · DSW

“ The biggest challenge, and not only for BMW, is getting away from old behaviors. Selling cars in the 1980’s and 1990’s was one thing. Customers have changed so much. As consumers, we have much more information and we’re less loyal because there are such a big variety of alternatives. You have to completely change your approach on how to engage with your customer. ” Michele Fuhs · Head of Future Retail - Premium Retail Experience · BMW

“ We all agree that mobile is the key area in which the customer has decided to shop, and that changes our infrastructure as well as how we relate to the customer. In the last few years, we’ve focused more on how to make the shopping experience seamless, regardless of channel, but particularly from a mobile device perspective. ”

Dennis Vandel · VP Business Analysis & Productivity · Foot Locker

“ Omnichannel at one point was really about brick-and-mortar and online almost operating in silos. What I foresee is that commerce will happen across various channels and will seamlessly flow across them. A person could begin on one channel, move to another, and it will be seamless. When a person searches for something online and then walks into the store, there will be information about what they did online, their identity is available, and they’re identified automatically. ” Shish Shridhar · Director, Business Development, Data, Analytics & IoT · Microsoft Corp, Retail Sector

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“ One of our focuses has always been on the transactions and behaviors of our consumers. People can tell you one thing, but their behavior will show you another so you must consider how you want to communicate to those people. In terms of consumers’ real-world behavior, their elicited response is much stronger when you can talk to them in a personalized way that’s contextually relevant. The days of sending an impersonalized email to a Guest is long gone. We use behavioral transactional data and augment it with demographics and other external sources that have behavioral data not associated with our transactional data to get a richer picture of our consumers. We use everything from segmentation to profiling and then communicate to our Guests based on those data fields to provide relevancy at scale. ” Wade Allen · VP Digital Guest Experience & Analytics · Verizon Communications Inc.

“ Through our segmentation we know which customers are more inclined to service themselves digitally versus wanting in-person support. We do both. Whatever the destination, the definition of seamless to a particular person all depends on who they compare you to. While we might be great amongst our true competitors, we may not be as good as companies outside our industry and we need to get better. That’s one of the key things we do that keeps us moving. We don’t necessarily just compare ourselves inside a category; we’re always comparing ourselves outside a category to see if we’re really pushing the limit. ” David Garcia · Director of Experience Innovation · Verizon Communications Inc.

Industry Insights

Consumers increasingly expect in-store personnel to be knowledgeable about their preferences and online activities.

Retailers must now compete across verticals to deliver on consumers’ service expectations, which are industry agnostic.

Consumers’ behavior, demographic, and transactional data can provide a more accurate picture of consumers than interactions in a contextualized setting.

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Customer journeys can begin anywhere—retailers must be aware of where those journeys began and where they are going.Customers now create their own brand experiences, which can begin within any channel of their choosing. Now, retailers must comprehend all variations of the customer journey in order to engage with specific customers or customer segments effectively.

Engaging with customers must occur on their terms and in any environment.Customers now expect retailers to offer services through any channel of their choosing—be it digital, social, or physical—and demand frictionless experiences in every space. That means both digital tools and human staff must have access to essential customer information at the moment of engagement, lest customers lose their trust or interest in those brands.

Customers expect to move seamlessly between digital platforms and physical stores.As those customers create their own customer journeys, they expect to move between channels and platforms without any loss in the degree to which retailers can service them effectively. Retailers must offer the same options on every channel, whether it’s checking on a return, recalling a shopping cart filled with items on a different channel, or at least engaging a service representative with intimate knowledge of customers’ information.

Retailers must build meaningful relationships with customers by responding to them in an informed way, across any platform.In the future, consumers will have more than a commercial relationship with retailers. They will think of retailers as meaningful contributors to their lifestyles, their work, and their well being. Retailers who can adapt products and services to those customers’ expectations and evolve the ways they engage with those customers effectively will succeed.

Key Takeaways

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Authors

Building upon Worldwide Business Research’s (WBR) vast expertise in creating educational executive events for the Retail Sector including eTail, Mobile Shopping and Next Gen Customer Experience, the Future Stores Event was launched in 2013 and continues to be the leading in-store experience event. Months of industry research with over 100 retail executives is compiled to create the program each year.

Kibo is a leading omnichannel commerce platform for retailers and branded manufacturers with over 800 customers fulfilling orders in 75 countries. Clients achieve optimal performance and loyalty through truly connected customer experiences across customer devices and retail touchpoints. Kibo’s unified approach includes a leading ecommerce platform, big data 1:1 personalization, mobile POS, and distributed order management delivered via a modern, cloud based infrastructure. The Kibo platform can scale as clients grow their business while maintaining a low cost of ownership and faster time to market than other solutions. Kibo enables you to reach higher peaks of sales and customer loyalty. No matter the challenge, Kibo powers your success.

WBR Digital connects solution providers to their target audiences with year-round online branding and engagement lead generation campaigns. We are a team of content specialists, marketers, and advisors with a passion for powerful marketing. We believe in demand generation with a creative twist. We believe in the power of content to engage audiences. And we believe in campaigns that deliver results