omnichannel

Looking Ahead | Emerging Trends in Retail and Digital

A future looking perspective on Retailer's world in coming years and me making sense of the technology events around us.
Source: eMarketer Report by Ethan Cramer-Flood-Feb2023

Globally, the retail industry went through an interesting shakeup in the last three years. The share of digital retail revenue in total retail revenue saw a sharp climb in 2020, rising from 14.3% in 2019 to 18.5%. However, it later settled at 20.2% in 2023.

Investments in digital skyrocketed during the pandemic and many real estate deals were renegotiated or exited. Supply chain disruptions also brought Retailers on its knees. Now, the overall outlook for retail looks slow with a projected growth rate of only 3.9% in 2023. It is likely to grow at slower rate in the next four years (around 4% or lower).

In 2019, everything from Meta to Web3 and IoT were considered promising technology. Meta was expected to impact the sphere of customer experience, blockchain in the sphere of supply chain and so on. Then, last year, Generative AI caught the imagination of all businesses and retailers across the globe. As of today, it is known to impact digital retail through its ability to change marketing operations, customer experience management, and many more areas. McKinsey says the overall impact will be about $400 to $660billion a year. 

If you are a retailer and looking at this rebalanced and stirred-up world of digital and physical retail and wondering what new paradigms to consider while building plans and strategies based on everything (digital) around us, here is a little something I would like to share.

Three ideas to consider as you build your future digital and retail enterprise.

1. Think of media in its new avatar: 

Among all the business functions which are impacted by Generative AI the most obvious one is media and content because, well, it is ‘Generative AI’. The technology could increase the productivity of marketing function with a value of 5%-15% of total marketing spending says McKinsey

I believe about 50% of digital assets I call media (images, product data, styled photos, social posts, consumer engagement, email templates, web content, videos, audio etc.) would be supported by Generative AI in 2 years and therefore must be much impressive creatively.

If this was the case, all the current vehicles of production which develop this media (collectively referred as agencies) will have two key threats.

  1. Impact on commercial model: Commercial models will have to change when a high productivity and generative tool is available at every agency’s disposal.
  2. Accountability to generate real sale: Greater accountability will have to be introduced for all the marketing, media, and engagement. The function will be under pressure to justify the marketing ROI. The generative tools will not come cheap and not using them will not be an option and above all creativity will be commoditised for a while. Although, true creativity will outshine all. 

The older models of developing broadcast media, digital media and having your trusted entities to build, engage and broadcast will be significantly challenged. (Yes, there are many businesses still running on older models where high level of inefficiencies exist in marketing operations.

Generative AI will indeed introduce a new avatar of media that will be either truly creative or just mediocre and it will have new hybrid methods of developing it. 

One unit fully aligned to brand’s purpose and business objectives should ideally have all the capabilities to develop all this media (across channels) in its new avatar. 

2. Make store as your technology powered asset.

The massive re-balance of customers coming back to the stores after the pandemic while maintaining their new online activity highlighted the X factor of physical stores.

Of course, the focus on omnichannel capabilities increased during the pandemic. Only 8% retailers had omnichannel capabilities in 2018. It reached 52% in 2020 according to a 2021 survey. 1

Yes, some retailers (e.g., Canada Goose, Story, Neighbourhood Goods, Camp, Nike etc.) have excelled at the store experience2 but the experience is possible by technology powered convenience factor. To elevate the X factor requires retailers to re-focus their technology linked efforts in re-inventing the role of stores. For example, the use of dynamic pricing displays, catalog extensions, use of Generative AI to create virtual try-on of a product and making them available when they visit the stores and Generative AI enabled concierge staff to provide a superior experience to the customers are all examples of technology enabled convenience.

All such technology powered solutions will impact hard business metrics across ALL channels and not just stores and that indeed re-asserts the irrelevance of channel centric thinking in building action plans and strategies.Store is the best asset (and not a channel) to be powered through technology because it represents your business like no other entity does. 

3. Redefine customer service.

Elevated customer services begin with empowered employees.

Although Gartner predicts that 1 out of 10 workers in customer support will be replaced by AI by 2026 the essential action for businesses is really in retraining and empowering the remaining 9.

In an era when every customer begins to get massive amounts of synthesised level of information with a click of a button, the expectations from all businesses who provide their support/services for the goods or services they sell will have to be significantly information rich.

Businesses will be expected to operate at the same level of efficiency and information as the customers are used to in their personal and professional lives.

All businesses that have been working on initiatives to personalise customer experiences or build more effective marketing campaigns will have to do away with creating campaign calendars and think of constant communication in real time with your audiences.

All businesses that depend on large amount of customer data and run post facto analysis and hold control within their hierarchies, will have to empower customer service and support reps with real time synthesised knowledge about the customer and their services to address customer queries, complaints and literally every form of engagement.

It may appear daunting to stay on top of the technology trends and ignore the hyperboles but building practical action plan and strategy is possible. Being bold and knowing what is of the highest value to you and your customers alike is an essential part of it. The ability to deliver the technology benefits should be based on what value you want to deliver to your customers and not what the technology can do for you. Putting it simply at a visceral level – technology linked advantages as promised will only be realised when it significantly impacts (1)human experience (2) capability (3) convenience, and most importantly brings business benefits as a consequence of all three of them.

References

1 – Digital Commerce 360 Report in 2021

2 – Store is Media by Doug Stephens

Other Posts

Digital Minimalism | Exceptional Retail | Digital Retailer’s Litmus Test

Digital Retailer’s Litmus Test

Ecommerce is the first Imperative among a myriad of others (IOT, social, analytics etc) in running your business DIGITALLY.

If you are a retailer and not yet online let me tell you that it takes time and patience to build it before you see the business impact on your top line, it is very important that you keep checking if you are not heading for a disastrous or broken outcome.

How do you know that you have chosen the right team to take you on the next-gen commerce journey which they promised? How do you understand the so called checkpoints? What do these checkpoints indicate about the health of your project implementation and what is the likelihood of it delivering an outcome that you aimed for?

A self evaluation framework on these lines is a good starting point. Whether you are just starting off or midway through the process of building your e-commerce platform or have gone live but looking for a litmus test to ‘RESET’. It’s never late to evaluate and re-evaluate. Introducing an evaluation framework which can help businesses to self rate their e-commerce platform initiatives and verify their alignment to their Omni Channel Commerce strategy.

This framework is based on a self evaluation questionnaire with scores which can be weighted against its business priorities. What you get is a multidimensional score chart across multiple parameters. Each tells you where you stand.

There are two broad categories of self evaluation to keep in mind.

  1. Global Standards & Best Practices
    1. Customer Centricity of your Platform
    2. Branding , Visuals and content Marketing approach
    3. Heuristic Evaluation
    4. Omnichannel Capabilities
    5. Alignment to Business Operations (merchandising, publishing process, creatives)
  2. Project Planning & Delivery
    1. Project Scope Control and Optimisation
    2. Project Test Plan and Coverage
    3. Project Planning and Execution
    4. Project Risk Planning and Performance Assessment

 

Global Standards & Best Practices

It is clear that no ecommerce platforms are alike and what applies to your competitors should ever be considered AS IS. It is also very important that the scope of your ecommerce platform features is keeping in mind the customer base that you are trying to impress and the geography you sell to. This sounds common sense but a lot of companies do ‘copy paste’ the website of their closest rivals (or business threats). Add to that situation the ‘productised’ solutions who promise faster time to market often standardise far too much and compromise customer experiences. Result – a ‘me too e-commerce store’ which neither creates a great customer experience nor delivers on the promise of sales which it aimed to provide to begin with.

Chart1It is important to remember that –  the functionality could be same as any ecommerce store the CUSTOMER EXPERIENCE SHOULD BE UNIQUE TO YOUR BRAND.

“Does the designed system consider optimal navigation paths to place an order”? Does the website communicate to the customer it does offline? Does it convey to the customer – I am here (anytime), I am awesome easy and I will be here to listen to you?

Heuristic evaluation should consider questions like “Does the system keep the error avoidance approach instead of error message approach?

“Is the user proactively informed about everything about the most important things in an ecommerce store aka “product, price and orders”?

“Is the system focusing on the balance between visual appeal, right content and ease of order conversions?” Even one aspect being compromised leads to poor customer experience.

Do you have clearly defined key metrics to chase e.g. average order value, unique visitors, conversion rates etc ?

Does your product data from the Product Masters consider the ‘digital catalog essentials’? Digital catalog essentials include three primary requirements (a) customer friendly product title and product information(including pictures) (b) extensible product data structure which can evolve with time and covers aspect of inventory, price and promotions too. (c) Alignment of this product data structure to match the overall experience of the stores. Are the publishing workflows understood by your business teams?

“Are you focusing enough on the complete experience (physical and digital channel) or just focusing too much on order capture? Did you consider ways to help customer get updates about his order and products with the same rigour with which you incited him to place his order?”

Are you making your click and collect or BOPIS customers wait for their orders in stores? Did you forget to train your staff for these orders and the related process of delivery and service in your stores? Did you explain this process well enough to customers and do they know what to expect? What if customer wanted to cancel one of those items ordered online when they come to collect in store? What if they want to convert it to a gift?

Did you plan to ensure that the web platform does not miss out on the minimum security standards like PCI, Privacy Standards (PII), COPPA, OWASP top ten security vulnerabilities etc ? What’s more critical to your country and it also depends on what you sell.

Have the Business Operations beefed up to support the upcoming ecommerce platform? Have the teams been identified, trained and engaged at a deeper level to enrich product data, support customer service requests both for online and physical stores – (overlapping scenarios). By the way it makes a lot of sense to bring up cross functional teams  as champions of the new environment.

Depending on the size of your product catalog, what is the readiness of your teams in achieving the following for your ecommerce platform?

(a) product feed file preparation for product, price and inventory information
(b) product data enrichment process on PIM
(c) product photography and banners
(d) test data readiness for those testing cycles
(e) test data verification and agreements for the vendor teams to test them and time

Project Planning, Testing & Delivery

Scope

In any new technology (platform) adoption, defining a right fitting project scope (aka minimum viable product) and executing it till it delivers through a 1st launch– lays the foundation of an application which is built to last for your current and future customers. If you fail here, you are starting off on a shaky vessel. A shaky vessel never go the distance – it’s just a matter of time. Very soon you will be out scouting for an alternative service provider or an alternative technology platform. Anyways the rate of technology change rivals the timeframes applicable for phased developments today.

But before the application is built, was there a consensus among all the business stakeholders and IT teams about the scope of the project. Was there a collaboratively created business requirement document / user stories? Did the user stories evolve into a visually stunning and content rich and useful web pages or mobile app experience? Did you identify who and how would you create that engaging content? Did you mobilize those resources? Did the creative process align to the technical? Did these teams understand what is critical for your business?
You would have changed a lot of business requirements from the point you started to the time teams were brought together to verify the said application. Were these changes tracked carefully to ensure no business requirements are missed?

Chart2Did your vendor also cover non-functional software requirements. Examples like ‘expected concurrent users, page views per second, other performance benchmarks, global configuration settings, internationalisation, data migration, archiving rules’ etc? Did you participate in completing the loop?

Did project WBS cover important milestones, demos, common dependencies between its tracks? Did the plan get updated due to unmet dependencies? Did the plan get updated to cover up for the scope creep which cropped up ;-)? Did you add a new third party relationship during the project execution (e.g. a new ratings and review platform? Did you realign project plan and the deliverables to cover this new component of the application? Did you plan for setting up this business and technical relationship?

Architecture & Testing

Were the key architectural decisions discussed and taken through consensus? Did you ensure that a functional as well as a technical roadmap was placed on the table for atleast a 3 year horizon? Did they converge well? Were the resources required for those upcoming projects were made available and put in place today?

Test Planning and Strategy

The test strategy highlights important feeder checkpoints in the development lifecycle where a certain part of the application is verified. (e.g. dummy credit cards and white labeled cards need to be available to testers to verify your loyalty account payment transactions). Availability of data for these feeder checkpoints is critical for verifying application delivery on time. Availability of related third party system for it’s sandbox servers should be committed and made available early during the ‘construction/creation’ phase of the application.

There is nothing like a working piece of application. So even if you are following a standard RUP or Agile based delivery, a working piece of the application is always an important part of the plan. It creates fantastic engagement opportunities and also reference point for the business stakeholders. For RUP processes, demos should be proactively planned and given its importance for any solution delivery. Agile method assumes this.

Peak load performances should be based on

  • deployment frequency
  • number of assets involved
  • size of assets applicable at each performance test time.

The system test plan should be upto-date and should be revised periodically to accommodate all the change requests initiated during the course of the project

Automated workflows to publish the content are great but they should consider all the failure scenarios (as in the real world) (e.g. auto deployment of minor catalog updates could have a failure scenario where manual deployment should be considered and that should be tested)

The testing strategy must cover all the aspects of the project. Most commonly missed activities in testing approach are

  • Browser Compatibility Testing
  • Multi Lingual Testing
  • Multi Site Specific (difference) testing
  • Planning for A/B testing for specific business initiatives.

 

Too often IT/Business managers have a lot of these in their mind and challenges are plenty in ensuring that all of these fall in line at the same time. The orchestration of all of these activities is life and blood of an IT business manager. A trusted program advisor, a domain expert and a hands on project manager can ensure that the surprises during the execution of the application delivery can be minimised and bring the business outcome you aimed for. Using the fundamentals of this framework is relevant to any typical e-commerce implementation in an RUP based delivery cycle. However there are different models of application building/delivery/execution which creates its own set of unique challenges and checkpoints and needless to say it requires its own set of checkpoints.

As i write this, I am wondering on ‘how would you apply these checkpoints in an Agile delivery model’? What would you say are very relevant for each sprints? When and how in the project lifecycle would you ensure coverage of aspects like PCI, PII etc? How would you ensure you would ensure compliance of these standards during each sprints?

OmniChannel Customer Experience

Globally when businesses talk about OMNICHANNEL COMMERCE few themes emerge very strong.
  • Start with the Customer Experience in mind
  • Build systems/digital infrastructure which are sustainable and ready for a dynamic  future. (REST APIs etc.)
  • Consolidate downstream systems (supply chain and services) to orchestrate a better customer experience(again customer!!!).

CustomerExp3
So what is this customer experience we keep talking about? How do you go about making a delighted customer from a happy one. Let’s take some examples of an improved OMNICHANNEL COMMERCE experience.  Let’s ask some questions to get some answers.

PRODUCTS AND PRICE

PDP2When a customer looks up for a product seen by him/her at your competitor’s physical store, will your e-store provide a detailed and rich product data to the customer? Will the product search show the product he/she is looking for(correcting his/her typos and still knowing what he/she wants? Perhaps land on product detail in a couple of clicks only? If yes, he/she is likely to switch from your competitor.

Will the product data consist of details he/she is looking for? (e.g. a demo video for a coffee maker, or a product zoom for a beautiful dress)

Will the product offer a better value for the money he/she is willing to spend? Will the product be available to him/her when he/she wants it? Perhaps on her way back home in the evening? Perhaps before the weekend social event?

Will the final product price inform about tax breakups and delivery options way before he/she proceeds to checkout?

If you want to look at an awesome review of a good customer experience of an online store – checkout this article by Christopher Ratcliff @ Econsultancy. 

BTW – Did you know that Thornton’s (cited in the article above) – an online chocolate retailer in UK  sold more chocolates online than their own physical stores during the same time due to a better customer experience.

STORE PICKUP

StorePickupIf the customer is looking for store pickup, can your system tell a customer – which of those SKUs can be picked up from which stores and also tell exact inventory for each? Can it also say upfront which items are generally on store pickup? Can it give a trending info about those items? Can it say, generally available in store A during Thanksgiving?

When a customer places a ‘store pickup’ order, is the business in a position to provide real time update to the customer when the ordered item is picked and reserved for a pickup in the specified store? Can you backfill the inventory immediately if the customer does not pickup in a stipulated time?

Does the email or sms alert provide a hyperlink to the customer to view the item status or update it or cancel it? Is it device optimized (aka phone, tablet, phablet, smartwatch, google play etc.) ? Better still is it a rich media message with personalized suggestions?

Does the email or sms contain a direct phone contact to a rep for any queries? Can the customer reach an agent faster who already has customer data preloaded before the customer shoots his/her question?

In a very rare occurrence(yes it should be rare), if the reserved item not available anymore or is identified being damaged, is the system in a position to provide alternative nearest store for a pickup proactively?

Better still, is the system capable to intelligently re-route/reshuffle shipments in real time -to make the promised item in the said store?

Does your store actively track and improvise store pickups process per day? Is your store staff mature and aware about online ordering process?

Does the store have a clearly laid out business process and system level tasks for the store reps to honour store pickup requests? Hope that the reps are not attending to store pickup requests while a REAL PHYSICAL CUSTOMER is waiting for his/her billing?

WISHLIST & GIFT REGISTRY

1425474422_PresentIf a customer is buying for a friend’s gift registry in a store, is the system capable enough to suggest the customer other related items of that gift registry created online? Does the rep know where are those items? Does he/she know how much is required(as specified online) vs how much is actually available in that store? Is the store rep empowered enough to do all of the above with a finesse, only a human can provide?

What about other gifting ideas for the buyer? What about suggestions relevant to the owner of the gift registry? Can you assign a store rep to talk about all of the above with knowledge and charm? Can he/she ensure it is not intrusive but only delighting?

Can the store rep, suggest the buyer if his/her item in the wishlist is on sale? Can he/she show the item physically in the store with buyer’s consent? Can he/she demo it?

If a customer is in a store and creating a gift registry(with a phone in hand), can the customer scan the barcode of the item via a mobile app and add that item to the gift registry? Can he/she look up for a related item and still add that item to the same registry? The related item may not be present in the store at that time.

RETURNS & EXCHANGES AND REFUNDS
ReturnsWhen a customer walks into the store to return an item which was bought online, does the store rep know about the order, the time and fulfillment method of that item? Does the store system have the capability to register this return, ship to applicable DC and perhaps offer a replacement item right at that moment? Can the replacement sale be linked to the original order?

When a customer initiates a return of the item, can your system capture customer friendly version of “reason data” and also let merchandisers have intelligent insights on why certain products of certain suppliers are returned more than usual? Do you know why is it that customers from a certain region often have a relatively active return history?

When the customer looks at his order history, can he view the store location where he/she could return/exchange the item or have returned in the past? Could he have rated that experience immediately on his/her mobile device? Can he/she remember that store as a preferred store for all future purchases, returns and exchanges? Can all of this be done right at that moment by the customer? (immediacy and relevancy)

When a customer at the last moment decides to pickup the order from store B instead of store A,  can the system offer this flexibility to the customer to cancel 1 pickup and reorder the same for another store pickup?

If the customer bought a product on promotion, can you make it transparent to the customer as to what would be the refund amount when the customer returns a discounted item?

NEXT GEN EXPERIENCES
UserProfileCan the retailer app (OR APPLE SIRI), provide a time and  distance dependent reminder to the customer for a store pickup(e.g. you are 1 mile away from the store which has your ordered item waiting for you. Yes the store is open until 8:00 pm, Lisa is at the CS desk”)

Can the NFC enabled loyalty card(in the customer’s pocket) help a retailer to identify the customer’s interests, purchase history, patterns, returns, exchanges etc without being intrusive? The loyalty card is not used to identify the customer but only personalize the offers, update about returns/exchanges when the store rep interacts with those users?

Can the augmented reality glasses (perhaps Google Glass V2.0) help store reps know customer before making a relevant offer? Imagine a “HIGH SPENDER” text floating on top of customer’s head when he/she is around the store? Imagine “LOOKING FOR SIZE M” floating over my head when a store rep looks at me in the store via Google Glass (or equivalent) ? You guessed it right – the loyalty card talks to store systems which feed into the store rep’s Google glass, and voila you have a smarter store rep via augmented reality device.

You would notice that in all of the instances sighted above (including the futuristic ones) – the overarching rule will and shall remain delivering value to your customers. Didn’t we know this already? Didn’t we know, technology is just an enabler? The use cases of customer experiences are plenty and limited by anybody’s imagination. The key to knowing them ALSO lies with your customers. I am sure you would agree.

What is OmniChannel? Really?

So what does it mean for a retailer to be really OMNI CHANNEL. Being a consultant by profession and wired the way I am, I will take a shot at it from the following 3 dimensions and would also put across some of the do’s and don’ts.

  1. What are the common use cases ?
  2. What does it mean operationally for a retailer (We know that OmniChannel is really an operational concept driven by the customer expectations and user stories)
  3. What does it mean strategically for a retailer?

Caution
There is enough talk about what is truly OmniChannel. Here are my disclaimers
a) There are too many definitions of the term itself and I wouldn’t be surprised if you notice a different definition somewhere or this post sounds a lot like another blog/article. I guess It does not matter for now.
b) When I say “channel” I do not mean – website, mobile, app etc. I mean the sales channel. (Brick & Mortar Store Vs Online Store Vs Partner Stores Vs Micro Store Format Vs Affiliate sites etc.). We all know that we are dealing with ever evolving systems interaction points.

======================COMMON USE CASES========================

Buy From Any Store – For Online Order
Check availability at SKU level.
All Variants available at all channels.
Find any store for ‘buy from any store’ or select regular (or any DC) for fulfilment.

Pick Up from Any Store for Online Order
Check availability at SKU level.
All variants available at all channels.
Find any store for store pickup.
Reviews about the stores itself – for online order.

Build a Single view of the following Online Only Features
Gift Registries – where customer was a buyer as well as recipient.
Customer Wish lists
Customer Likes and Social Media Conversations
Customer’s Ratings and Reviews
Customer’s Order History including Returns and Refunds
Personalisation to build loyalty.
Product Recommendations should learn from all the channels. Does not matter whether a customer bought this product online or in the stores. If it is a favorite pair of your customer. It is a favourite pair. Period.

Returns Processing
Initiate return in store (any nearby store).
Initiate return through return shipping label (easy self service-automation a must).
Initiate refunds from stores for items bought online. (i.e store walk-ins).
Initiate refunds online for items bought in store.
View my returns (per SKU) online.
View my refunds and amounts (prorated/actual per SKU) online.
Self help modules for customers which brings customers back.

Service Capabilities
Register a product online. Allow him to do what he/she might have done at the store.
Offer some self help tutorials and guides which are engaging for the customer
Offer a host of value added services. Encouraging enough to be bought.

==================OPERATIONALLY – WHAT IS IT?====================

Cost Effective:
Ship from anywhere nearby but, be cost effective – customer does not care where the item came from – if it reaches fine and on time. Needless to say this but remember a bad customer service is also when you charge a lot for shipping.

One View Everywhere
Store systems should be capable to manage online profiles.
Better still store systems & online profiles are the same as CRM profile of your customer. Ditto for warehouse systems, DCs and also fulfillment partners.

Customer Life-cycle
Marketing has a view of the life-cycle of the customer. Not just curates content, media and engages customers.Marketing rewards loyal customers based on the same CRM profile. It does not matter where the customer was acquired. Channel does not matter. Perhaps this could help justify the marketing dollars spent.

Although the deals and the offers customers use are from the same bundle of offerings. Personalisation strategy should be designed to provide – channel relevant offers/deals/incentives (e.g. do not ever offer Buy X Get Y on discount if the Y is not available in that store OR offer a free discount for every 5 recommendations)

Cross Train
Also consider this – store staff should be trained for – cross channel sales, product know-how and competitive price matching.

=================STRATEGICALLY – WHAT IS IT?======================

Single View
To have a sustainable approach to building and maintaining single view of the customer and consistent end user experience. Have a continuous review around that approach.

Strive to Have It All
Aim to fulfill all the use cases from the end customer (who shops around various channels) (eventually – oh yes there will be more use cases!).

Channel Agnostic Approach
Ensure everything is channel agnostic yet meaningful and relevant to the customer and it evolves along with these ever changing use cases.

Supply Chain Efficiency is a Must.
Agreed it is not an easy rejig. Must rely on the experts. Higher transparency across suppliers is one of the essential pointers to achieve that. Checkout http://www.GTNEXUS.com

Cater to Social Shoppers
OmniChannel should support the use cases of a social shopper. E.g. I liked a product online on Facebook and your store rep says – do you want to buy that today – you liked it yesterday? Are you still thinking?). This is a fundamental shift and it pushes businesses to rethink traditional strategies of selling.

OmniChannel as a concept should cater to odd customer requests and have an easy mechanism of managing it through a minimum cost (take this for an example: My sister bought this for me from your SF store but I live in newyork and i need to change the color at NY store. I can’t send it back to SF coz i have to fly to London tomorrow for the wedding. This is a wedding dress.). Keeping such customers in mind is at the crux of redesigning your supply chain and build a strategy to continuously improve that.

There is more….what do you think? Do leave your comments and opinions.