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The Retail Bulletin Omni-channel Summit 2016
Significant investment needs to be made in technology if retailers are to meet the demands of consumers who are making increasingly complex shopping journeys across multiple channels, which is straining the present capabilities of merchants. By Glynn Davis
Investment is Imperative
Speaking at The Retail Bulletin Omni-channel Summit 2016 in London recently Mark Lewis, head of omni-channel customer ordering at John Lewis, told delegates: “We’re massively investing in technology. As a percentage of capital expenditure we’ve gone from 15% to 37% over the last five years. This is a phenomenal investment in technology.”
Phenomenal continued growth of online
This is necessary because he says the landscape is changing so dramatically. Online now represents around 38% of total trade – with Black Friday seeing huge growth online and leading to quiet stores. Lewis predicts that online will overtake the high street by 2022, which contrasts with earlier predictions by John Lewis that forecasted 30% would be the ceiling for online sales at the company.
This is leading to complexity across the business and as such Lewis says it is essential to build a solid infrastructure that can cope: “We need the systems in place to give the level of service that’s required. Our focus is on the foundations because you can have the whizzy front-end but it does not work if you’ve not got the foundations in place. We’re implementing a new Oracle ERP and an order management solution from IBM Sterling Commerce.”
Jonny Wooldridge, CTO of The Cambridge Satchel Company, is also overhauling the technology at the specialist bag retailer having recognised that the retail sector as a whole has been poor at investing in new solutions relevant to a multi-channel world.
Retailers need to up their digital game
“Things have plodded along with legacy systems at the core of their technology strategies. But we’ll see things crumble and break. The real problem for retailers is that they are not software companies. They do not take it seriously. But it is becoming evident that software is running their businesses,” he suggests.
At The Cambridge Satchel Company he is putting in the foundations that will enable the likes of the Internet of Things, Beacons and NFC to be utilised and for data to move freely across the business. “All the data will be available via API. Hopefully it will be simple, flexible and future-proofed,” says Wooldridge, who clearly recognises that data has a massive role to play.
The rise and rise of data
This is clearly at the heart of Google. John Gillan, industry retail head at Google UK, says retailers need to take a more data-driven approach if they are to understand shopper journeys across channels. He says 98% of journeys are now multi-device and that the likes of Macy’s in the US are re-organising their business structures to be able to use data to understand how shoppers move across channels.
“The journey is now very fragmented and retailers are struggling with it and not picking up customers on mobile phones. They need to understand the journey and have a single view of the customer. It’s not easy. It’s the holy grail,” he admits.
Mark Hobell, director of GIS and location intelligence at Pitney Bowes Software, agrees: “You need a single customer view. Who they are? What is their productivity? Where are they located? And how do they behave? Maximising the value of your data requires a transaction level view of the customers.”
Intelligently identifying people and products
David Smith, head of digital at GS1 UK, is working with Google to better map information on customers when they are online and also where products are available. At the heart of this are identifiers called GTINs that are included in the data feed that retailers provide when customers undertake searches on their websites.
Ideally Smith says the GTIN would be in the form of structured data held within the retailers’ individual web pages, which dramatically improves search. This identifier helps to identify products online and also in-store because regular barcodes also contain the GTIN. This link between online and offline is massively important in the context of complex shopper journeys and managing inventory across channels.
And the channel that continues to be the most exciting is undoubtedly mobile and a mobile-first strategy is increasingly recognised as the way to go. Maria Bobrowska, senior European commercial manager for mobile at Tui Group, says: “Many retailers have not gone mobile-first yet. It needs senior management buy-in and for decisions to be made to shift to this strategy.”
Not only has mobile replaced desktop for traffic to retailer’s websites but she suggests that it could also replace the high street for some younger consumers: “Millennials, yes, it could replace stores but we need to be channel agnostic and be aware of all the channels.”
Stores and online complementing each other
The reality for most retailers is that mobile and physical stores are increasingly being used alongside each other. Gillan says a third of mobile search advertising clicks on US retailer Target lead to a store visit: “Mobile is the new front door to Target stores.”
Sam Hill, chief architect at Marks & Spencer, agrees although he recognises that the store might not ultimately take the transaction as the consumer might undertake this online. “The footfall figures of Tesco and M&S have not seen changes in terms of numbers coming into the stores but the sales numbers have changed. There are lots of products that still require touching and feeling,” he says.
Ben Sidebottom, director of solution architecture for EMEA at Visual IQ, adds: “It’s complementary. It enables the customer to access data that complements the shop experience. And there is more trust in collecting items in the store [via Click & Collect] rather than having them delivered to the home.”
Such is the popularity of Click & Collect that the high volumes now being managed are forcing changes on the technology and practices of people in-store. Lewis says: “The systems were not set up to deal with the high volumes of Click & Collect data we now have. We have had to create the capability to find products fast and we’ve now got [new] front-facing technology.”
The company has also experimented with installing Beacons in its Peter Jones store in London that alert the Click & Collect team when the customer is in-store to collect an item and can prepare the goods ahead of them reaching the collection desk. This ensures queuing times are reduced and improves the efficiency of the Click & Collect service.
Difficult to predict the future
What makes life tough for retailers is the inability to plan very far ahead for such initiatives because the advance of technology and customer adoption of devices is difficult to predict. Dave Derby, head of operations at Evoke Creative and former group head of innovation at JD Sports Fashion, recommends retailers do not try to plan too far out: “Don’t look too far ahead otherwise you’ll get paralysis. Just look at what’s around now or one or two years out maybe! I’m certainly not a retail prophet.”
What is clear is that retailers need to make changes, and that this requires serious levels of investment into their digital strategies if they are to create an omni-channel business. However, it might help if retailers do not refer to it as omni-channel, according to Tim Barton, director of strategic accounts at iVend /CitiXsys, who says: “The way to get omni-channel projects through the board is not to call them omni-channel. Customers don’t call it this. They just call it retail.”