Shopping is often still a contact sport but, when it comes to advice seeking, bagging a bargain and ensuring the item you want is in stock, online retailers often have a distinct advantage over traditional ones.
Online shopping has changed people’s perceptions of service, value for money and convenience. Search engines have made the world our shop window, social media has become our source of trusted advice and smart phones have given us superpowers and blurred the lines between the physical and the virtual.
Showrooming is a symptom of customers’ increasing love affair with multiple channels. 1 in 2 of us now continuously leap around channels in order to get what we need, when we need it and at the right price. As more channels emerge, customers’ appetite for using these channels is continuously evolving. 82% of “autonomous customers” in BT’s recent survey of both UK and US customers say that they want organisations to give them access to all the channels that will help them to meet their needs.
However, more channels often means more complexity. It used to be easy to cope when your customers only walked through the front door of your store – now multiple channels mean multiple doors and multiple connecting corridors and it is very easy to get lost!
When things go wrong, it’s often the old, trusted phone channel that customers rely on to get answers or express our disgust. However, we may not stop there – we may then email, webchat and Tweet our way around the same issue.
The challenge for retailers is to ensure that these multiple doors are connected. The store, the website and the contact centre are intimately linked in the customer’s mind, but are often not even next door to each other organisationally.
Staff in physical stores need to regard the web as an asset rather than a competitor. They need to be empowered to cope with some of the more challenging things that customers (particularly the under 34s) are doing in store – like barcode scanning or location based searches. They also need to be networked in, alongside contact centre advisors, supply chain and product specialists, to newer channels for advice seeking, like webchat and social media. In short, they need to become as omni-channel as their customers.
If you want to hear more about this kind of thing, I’ll be presenting a session at the BT for Retail Summit 2013 on 22-23 May at Whittlebury Hall, Northamptonshire. You can get more information and register for the event here.
Posted by Dr Nicola Millard, Customer Experience Futurologist, BT
It’s nice to share
Collaboration in retail supply chains, both the sharing of infrastructure, like shared trucks and warehouses, or the sharing of data, would give great benefits to retailers and their customers.
But retailers shy away from it because they think that their supply chains are a source of competitive advantage. In fact, because they all suffer from common inefficiencies, retailers’ supply chains are probably a source of collective disadvantage at the moment.
With the rise of online shopping there is a trend to smaller, more frequent deliveries (as opposed to the full truck, once a week of the past). But that means lorries driving around the country half empty and that is costly to retailers, their customers and the environment.
So what are the barriers to collaboration? In a nutshell: irrational fear. Managers want to protect their empires and see collaboration as a threat. Retailers don’t feel they can completely trust their own supply chains let alone someone else’s.
Yet I recently heard of a project where two competitors used the same unbranded vehicles for deliveries. It drove down costs for both without compromising service for either. So the potential for profitability gains through collaboration are definitely there.
Return to sender
Supply chain efficiency is particularly important for omni-channel clothing retailers where customers return 22% of what they buy online (Martec, 2013). The cost of processing a return can be 2-3 times that of an outbound delivery and can eat up 35% of the profit of the transaction. But a well-executed returns strategy can be a driver of loyalty and can add 2% to profitability.
The trick is to treat a return as a conversion opportunity, especially in the case of a BORIS (buy-online-return-in-store). The most precious commodity in retail today is footfall. If a customer comes into a store to return something bought online, the store staff should be trained and motivated to sell them something else.
A good up-front returns offer is necessary to put you into the shopper’s consideration set. But many retailers offer them without understanding the true costs of returns processing. Marketing and supply chain functions need to co-ordinate more closely and merchandisers should track returns percentage by product SKU (stock-keeping unit).
Outward logistics tend to be standardised and efficient, but reverse logistics are often less-well understood and can have a big impact on profitability. Returns are also often not accounted for prudently, with stock being returned to the balance sheet at full value, when a 25% mark down in value would be more realistic.
Services like BT Trace which enable collaboration, improve supply chain visibility and drive down cost to serve the customer are going to be of strategic value to omni-channel retailers.
Posted by Mark McDonnell, Senior Marketing Manager, BT Global Services
BT is today launching the findings of Retailtopia, a year-long investigation into the challenges facing the retail supply chain. I was lucky enough to be involved in a panel discussion to review the findings of the research and two words dominated the event: transformation and urgency. Every single week of the year last year we saw a major high street retailer go out of business. Things need to change – and quick.
The panel included a wide mix of retailers, suppliers and logistics, with two camps emerging: one with a focus on the commercial side of logistics, the other, more customer-facing, concentrating on supply chain agility. What quickly became clear, though, was that these two views need to be reconciled to create a genuine omni-channel supply chain.
Consumers are pushing retailers into omni-channel retailing, whether they like it or not and the Retailtopia vision paper highlights four ‘clear and present threats’:
1. the pace of change
2. the supremacy of the customer
3. the knowledge explosion
4. omni-channel supply chain design
While much of the traditional energy and focus was on fulfilment, getting the goods out is just half the battle for omni-channel retailers. Some sectors can expect as much as 40 per cent of the products sent out to customers to be returned. (In fact, Administrators at a large electrical retailer reportedly discovered more than 6,000 unsorted returned items going back years on pallets at a Warehouse!) And as retailers become more omni-channel, the problem of returns becomes more acute.
There and back again
Returns are an opportunity, not a problem. But getting to that stage, involves:
1. Elevating the supply chain
The supply chain needs to be the same level as traditional topics discussed around a boardroom table, such as purchasing.
2. Getting an omni-channel process for stock from store
With people buying online and returning goods to random locations, retailers need a tactical approach to get the returned goods back into the system – but it is, by its nature, almost unplannable.
3. Mapping profitability of returns
Targets need to be set for buyers and merchandisers based on returns/margin, so the right measures are in place throughout the entire supply chain journey.
To achieve all this, retailers need systems and processes in place that enable them to use the stock that comes into the store in the most profitable way possible, whether it comes in through a planned delivery or is brought in by a customer. But this demands commitment and leadership, right from the top. Effective supply chain management will increasingly become a differentiator for retailers as it becomes a vital part of the customer experience. Those who ignore it will find themselves on a road to nowhere.
To read more about the panel’s recommendations and to see video interviews with panel members, visit www.bt.com/retailtopia
Posted by Josh Pert, CEO, BT Expedite & Fresca
It’s in New York and it’s billed as Retail’s Big Show, so I didn’t need to be asked twice! And along with more than 27,000 other delegates at the 102nd National Retail Federation conference, we helped to make Retail’s Big Show the biggest ever.
Because we get caught up in the day-to-day so much at home, getting away to NRF is a great opportunity to have a look around and gauge what’s happening now – and what’s coming in the near future. With such a large event, it’s impossible to see everything, but there were some things that really caught my eye:
One curious feature of the event was that omni-channel was everywhere – and no-one mentioned it. It seems that it’s now a given that we’re all working in an omni-channel world. The recent Christmas results, building on a record-breaking ‘Mega Monday’ showed quite a stark two-speed market – split by those who offer a credible omni-channel offer and those that don’t. (Of course, there are always exceptions to this rule and Primark are a shining example!)
But we wouldn’t be retail technology geeks if we didn’t conjure up a few new buzzwords. This year it was all about ‘frictionless transaction’ and ‘reduced effort’ (explained by BT’s futurologist, Nicola Millard as covering emotional, physical and intellectual effort as well as the time it takes to complete a shopping journey for the consumer).
Your future journey starts here
The eBay stand had the best demonstration of what this might look like – with stories to illustrate an effortless shopping journey across mobile, store, web and TV, all wrapped by a completely frictionless e-wallet managing loyalty, e-vouchers, gift cards and traditional cards and bank accounts.
Combining what’s here now with what’s coming soon, the demo incorporated geo-location/geo-fencing (as I walk past the mall), personal location-based vouchers (in the mall), clienteling to provide better assisted selling (in the store), seamless anywhere, everywhere stock availability, context-relevant recommendations (on my mobile) and a smart e-wallet to ensure I clock up loyalty points when I pay. We’ll definitely be working on something like this with eBay/PayPal to bring it to our customers as soon as it’s available in the UK.
E-wallets: taking the pain out of payments
There was a lot of debate in the breakouts about e-wallets and the future of payments – with card providers, banks, payment service providers and retailers all proposing very different approaches.
As using cards is fairly frictionless already, my view is that the e-wallet has to add value for the customer if it’s to challenge the current card process. That means it needs to work across all channels and bring payment, loyalty, vouchers and gift cards together in one place – rather than the current jumble of bank cards, gift cards, loyalty cards and vouchers.
But the debate about whether an e-wallet is best delivered through NFC (via a mobile) or the cloud (available across all channels) is set to rage for some time yet, while retailers sniff out ways to bypass intermediary service providers and reduce costs.
If you go down to 5th Avenue today
On our last day in NYC, we visited the Build-A-Bear Workshop flagship store on Fifth Avenue. We were officially there on business, although one or two (who’ll remain nameless) couldn’t resist trying out the full build-a-bear experience (aimed primarily at the 4-14 age group).
Build-A-Bear has just sold its 100 millionth bear – and shows no sign of slowing down. During the tour, the store manager gave us a glimpse of the company’s ‘store of the future’ which has been trialled in a number of sites with impressive results.
The technology they are introducing includes virtual fitting rooms, Microsoft surfaces for 3D interaction, Epicor advanced CRM to build ongoing relationships with customers and a seamless blending of the real and virtual worlds.
Customer feedback was that the children loved the virtual and digital interaction and often preferred it to the ‘old hat’ physical world – a scary example of the next generation absorbing new technology as soon as it appears.
All in all it was a really invigorating event. We had the chance to spend some quality time with our customers away from the pressures of the day-to-day environment; we caught up with Epicor, our software partner; we tapped into some of the latest trends and thinking; and we rounded things off with a glimpse of what’s coming next from our BT technology scout and futurologists. Oh, and the office has a new bear.
Posted by Jason Shorrock, Product Director, BT Expedite
Last night, at about 3am, I was awoken by a strange noise. Climbing out of bed I was approached by a ghostly figure. “Who are you?” I asked. “And what are you doing in a retail technology blog-related dream?”
“I’m the Ghost of Christmas Past,” came the reply. “You might remember me, I’m the one everyone remembers from the film.”
“You’ve been focussed on retail technology all year, I’m here to take you on a journey to show you the effect some of your work has. You’ll need this.” He handed me a Gift Card; the familiar bit of plastic so many of us have received, often from relatives who don’t know what else to get us or bought as a panic buy at 3pm on Christmas Eve.
“Of course in my day,” said the spirit, “it was all paper-based, fixed values, printed on till rolls, faded in the sun.”
I explained to the spirit that life and technology moved on, paper-based is great but with no real-time authorisation and a lack of flexibility around topping up they don’t quite conform to today’s real-time world.
“And look what happened last year…” The spirit transported me to a room full of gold coins. “In this room there is £250,000,000. I’ve counted the lot”
Last year, £2 billion was added onto gift cards and this was the money that was never redeemed – the unused change languishing on the nation’s Gift Cards, with people too embarrassed to ask the store to take the last 47p off the card. Or the gift card you got for that shop you never go in, or the one you lost behind the sofa or the one you forgot you had….
As I listed these situations, the spirit vanished.
Turning around, I saw another spirit. “I’m the Ghost of Christmas Present.” Suddenly I was presented with a whole load of data – my shopping habits, my Christmas list, my e-commerce and store transactional history, loyalty points information and a multi-brand, omnichannel solution.
“By buying a Gift Card this year,” said the spirit “you are providing the smart retailers out there with the perfect way to capture additional customer information; from a few simple Gift Card transactions you could be telling the retailer who you are, who you like enough to buy a present for and what they like to buy – you’re effectively signing your relative up for a loyalty scheme as an extra Christmas present. The really smart retailers will of course have a combined loyalty and Gift Card – why have two cards in your wallet when one will suffice, meaning the Gift Card remains in your relative’s wallet long beyond the January sales.”
“Blimey,” I thought, “this spirit knows his stuff. The Ghost of Christmas Present is right. Throughout this year we’ve seen a number of customers doing exactly that, by bringing their Gift Card capabilities in-house and stitching the solution into their CRM, loss prevention, POS and e-commerce systems they can really build up a picture of the customer from a single purchase. The Ghost of Christmas Past was right too. That unspent money, previously sitting with a third party supplier, is now sitting with the retailer, no longer paying a percentage of each transaction used on their Gift Card scheme.” Online authorisation of balance, liability tracking and management and web service integration means a Gift Card is a tender that can be used anywhere these days.
And I waited for the third spirit that tradition dictates would be along. But he never came.
The next morning however I noticed something strange on my phone. Of course! A mobile voucher – with a personalised greeting from the Ghost of Christmas Yet to Come. He had obviously learned from the other two ghosts how to do things properly, removing even the plastic from the mix, collating more CRM data (e-mail addresses and phone numbers) and suddenly having the ability to target those customers with unspent vouchers to drive them into his shop. And integration into an electronic mall scheme (linked to my e-wallet) means that if I don’t approve of the choice of shop for my mobile voucher, I can easily transfer it to a brand of my choice.
So am I a changed man following my experience with the three ghosts?
Well yes, I’ve seen the light; Gift Cards aren’t just for those relatives you don’t know what else to buy for. They provide a key to an omnichannel shopping experience with benefits for both the customer and the retailer alike. It’s a win-win situation.
And that’s what I’ll be telling my wife on Christmas morning.
Posted by Mark Denton, Head of Solution Consulting, BT Expedite