Innovative Retail Technologies

MAR-APR 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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19 Mar-Apr 2017 determined to, one, understand the true effects of consumer cross-channel shopping behaviors and, two, give today's consumers what they already expect in the digital domain: mobile and next-gen e-commerce. It's important that the top-slated new technology for winners is "enterprise cross-channel analytics". Despite recent faint praise from the investment community concerning overinvestment in omni-channel technologies, winners clearly see that multichannel customers are more profitable than single-channel ones. So the question is not so much how much more do multichannel shoppers spend, but how do they use the digital domain in conjunction with the physical one to shop? The answer to that question defies the kinds of straightforward indicators of growth that the investment community favors, such as comp store sales, especially when they are applied to the digital side of the shopping experience. Winners seek to understand consumers' paths to purchase in order to better prioritize the investments in enabling technologies. It's a good place to start, and a lesson for the entire retail community. Recommendations Omni-channel is not "done." It's not dead, oversubscribed, or over- valued. It is an essential strategy for how retailers will continue to compete and remain relevant to ever-more digitally savvy shoppers. Unfortunately, there are far too many retailers who believe they still have a significant portion of single-channel shoppers, and far too many retail executives who believe that digital has little influence on the retail enterprise beyond direct sales — that's the bad news. The good news: While this year's results in some way feel like a plateau, it appears to be the plateau that happens between two step-level changes. The first step brought us to customer-facing omni-channel processes, like online visibility into in-store inventory and in-store save-the-sale using the endless aisle. Where will the next step take us? Here are three differentiators of the omni-channel retailer best positioned to thrive in the future: 1. An Executive Team That Lives Digital As Much As Store In order to drive strategic change in the enterprise, expectations must be set and leadership maintained at the top levels of the company. If the executive team all come through stores or merchandising, chances are there is not a lot of empathy internally for how much digital is changing retail, whether at large or within the team's own business. Retail executives, particularly those at the largest retailers, can't just talk the talk about omni-channel. They have to live in their customers' shoes: shop the site on their mobile phone, visit their brand's Pinterest boards (and try to buy something from there), and shop the store with their phone out and ready to use. Consumers don't think channels. They think experience. But if executive teams don't understand or relate to those experiences, they will never create the headroom in the organization to make the level of change that is needed to make omni-channel real. 2. A Company Dedicated To Modernizing Technology And Process A company that has invested in modernizing their technology infrastructure may draw the short-sighted ire of the financial markets, but executives who take that beating are bound to sleep far more easily at night, knowing that their company is prepared for whatever unknown comes next. Omni-channel capabilities only increase the complexity within the retail enterprise, by enabling processes that have never before been supported — like buy online, pick up in store — and demanding things of systems that were never designed to support those processes. The retailers who persist in shielding their legacy systems from the requirements of the new environment are only delaying the inevitable. And in the meantime, their peers become faster and more flexible — and more able to maintain competitive advantage over time. 3. A Company That Uses All The Data It Can At least half the value of digital channels is found in the data those channels provide. The retailers who can use that data to derive insights — operational, customer, or both - are the ones best-positioned for the future. When everyone is making guesses, someone with a strong gut instinct can stand out. When more and more retailers are combining intuition with a strong analytic practice, gut instinct alone is just not going to cut it — there are too many consumer and corporate myths out there and too many ways for a gut instinct to be fooled. Why are the financial markets currently so bearish when it comes to omni-channel investments? Because retailers are barely able to articulate the value to themselves, let alone to a financial analyst who barely understands the fundamentals of the industry. Retailers have such trouble articulating the value because they do such a poor job measuring the value. They believe that omni-channel sales mean omni-channel profits. But when those sales are captured through the sheer effort of the will of the company in overcoming technology and process constraints, the likelihood that the retailer is capturing all of the value opportunity related to cross-channel has to be nearly zero. Search Out Differentiation No retailer is going to win at omni-channel by doing what competitors do, whether that competitor is Amazon or the brick-and-mortar store down the street. No one ever promised that omni-channel would be easy. But don't fool yourself. The hard part, including real technology transformation and real customer experience transformation, is still ahead. 1 https://www.internetretailer.com/2014/07/25/webs-influence-us-retail-grows

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