If most of today’s Retailers played basketball . . . they would comprise truly chaotic teams. Let’s think of a Retailer’s team consisting of 5 channels: Stores, Call Centers (or Catalog Sales), Websites, Mobile and Social Media. Each of the players is driven with the sole aim of amassing the most number of points for the season. Here’s how they would play the game:
- All of them would go after rebounds simultaneously, thus missing several opportunities
- They’d try to steal from each other in futile attempts at scoring
- Block field-goal attempts made by their own team players . . . every try at a slam dunk would turn into a basket-brawl
- There would be no assists recorded . . . and no alley-oops whatsoever 🙂
Sounds ridiculous, doesn’t it? Yet, we see so many of them doing the same thing . . . they are all measured by their respective top-lines, they all want to sell to the same set of consumers, none of them want to direct a customer to another channel where the transaction gets completed, often their prices differ by channel and no channel wants to accept customer returns for merchandise bought from another. Some of the retailers will probably differ from this viewpoint with statements like “We follow an integrated channel approach to assortment planning”, or “We now have optimized our supply chain for handling cross-channel demand”, or better still “Our shiny new dynamic offer engine now suggests channel promotions to our Customers based on their buying behaviors”.
My question back to them would be . . . “Well, Mr. Retailer, how exactly is the value generated by these systems percolating to your Customer touch-points?”
A visibly offended Mr. Retailer would probably retort . . . “Let me tell you about that, son! We have one of the world’s best ERPs and the most functionally rich POS systems around. We are a forward-thinking company, and we invested in these basic technologies many years back. They come to us with a proven track record and are used by a lot of other Retailers like ourselves! We have an e-commerce portal which is doing so well, that we decided to launch a mobile website using the same technology and saved a ton of money while doing so. Today, we can also accept payments from our Customers on our mobile site. We have an ardent fan following on Facebook and are now thinking of selling to these fans without them having to leave our Facebook page!”
Excellent! Selling everywhere is definitely what Retailers want . . . but is it truly what consumers are looking for?
Do consumers want their mobile phones just to become a means of transacting, or do they want to use it to build a more personal relationship with their preferred brands through contextual engagement? Retailers in some Countries have started getting it though, as per this article: Retailers Increase Focus on Mobile Applications to Enhance Customer Loyalty, reveals IDC Retail Insights.
Are they fans on Facebook pages because they want to be sold to there, or because that is the one place where they know that they will not be sold to, where they can engage with the brand and interact with a community of like-minded individuals who they can trust? Have a look at Why Interaction Is Not the Same as Engagement.
Are these functionally rich Point-of-Sale solutions looked at as a Point-of-Service by Customers, or just a necessary evil meant only for transacting? A more detailed look at this insight can be found here: Retail Point of Sale Systems: Is now the time to replace your old system?
Are the last-century-technology based ERPs helping in providing that much-needed process level integration with disparate systems to provide Customers with a Unified Shopping Experience, or are they actually fragmenting it instead? See how a leading Retailer overcame this challenge: Nordstrom Profits from Improved Multichannel Capabilities
A natural question that follows from the Nordstrom case study is, whether your e-commerce website encourages a customer to explore something online, check its availability at a nearby store location and go pick it up that very evening, or does it make the Customer wait for fulfillment instead?
Retailers have been so accustomed to growing their businesses by launching newer stores in newer catchment areas that a lot of them fail to see why any other channel should not be treated purely as a storefront. Traditionally, these storefronts have either operated independently, or under a federated governance model. Never has one store been dependent on another, nor have they felt the need to assist each other. This siloed culture of stores, channels, departments, functions, etc. keeping to themselves is what has now translated into a need for massive change management initiatives across organizations, which is so needed in order to leverage multi-channel dependencies towards the collective benefit of Retailers and their Customers.
The acceptance of the concept of Customer-centricity gives rise to an understanding of the criticality of embracing these multi-channel dependencies, and once these dependencies are understood, it is revealed to Retailers that agile execution is the key.
Over the last couple of decades, with Retailers having invested in execution systems for buying, logistics, pricing, promotions, and selling, they started looking upstream. They invested in analytics, CRM, optimization and planning systems with the knowledge that these would help them in a heavily recessionary environment by improving their margins and top-lines since they already had operational IT in place, thus making incremental and marginal improvements in the way they conducted their business. They started trying harder to collaborate with manufacturers and suppliers, again for incremental gains.
Then things changed. Customers became more aware, more demanding, and learnt how to work the system in their favor. While Retailers were becoming smarter about their Customers, the Customers were becoming smarter about shopping. Comparative shopping apps, community based product reviews, an awareness of the desperation that retailers faced, and a high degree of accessibility to insights from other shoppers (such as “Use Best Buy to try, and Amazon to buy”) made consumers highly adept at playing hard-to-get.
While Retailers recognize that consumer shopping behaviors have changed drastically, they are still attempting to stay competitive by continuing to make minor incremental changes to their operations. They are still looking upstream to improve their current way of doing business for that additional margin of 2 cents on the dollar, whereas they could be aiming for a much larger share of their Customers’ wallets if they did things right. Considering the market conditions and the economy, they do need to make incremental changes and continue to leverage their existing investments as much as possible. Trying a rip-and-replace approach instead, could prove disastrous. However, these incremental changes need to be driven in the downstream areas of execution, Customer touch-points and last-mile delivery of products and services, by making these changes through innovations in processes and technology by managing change for their people simultaneously.
Multi-channel dependencies have caused the shopping process to be fragmented across a multitude of steps and touch-points. Leveraging these dependencies for the benefit of Retailers is what has now come to be known as Agile Commerce or Agile Retail. Agility, is characterized by ease of movement and quickness.
Ease of movement: In today’s environment, a sale is not the same as the transaction that completes it. Instead, it has become a fragmented process spanning multiple channels. A consumer looking at buying something will probably research online about the product on brand, e-commerce and social networking sites followed by a visit to the store to touch, feel and experience it; while doing so, photograph the item and share it with friends using a mobile phone to seek their opinions; check out the best price using comparative shopping sites and finally, either buy it at the store itself, order it online or through a call-center. Just like any other sale, this elongated sales cycle provides that retailer an extended opportunity to engage with the customer all through this process, thus helping the consumer transition from a cognitive state of mind to an emotional state, building liking and trust, which finally results in a sale transaction. Therefore, those retailers that are unable to capitalize on this will lose the sale. Each of these touch-points, therefore have a purpose to serve. They are utilized by consumers in a manner that is almost sacrosanct. Anyone who commits sacrilege trying to get these touch-points to do something that the consumer does not intend may result in a loss of trust, and therefore a lost Customer. It is therefore imperative that Retailers use technologies at all of these touch-points that are capable of easily engaging the Customer providing a “Unified Customer Experience”.
Quickness: Something I get to hear a lot from Retailers is about how incredibly long it takes for any new business idea, promotion or process optimization to get realized using IT. When selecting solutions, Retailers need to keep in mind the degree and ease of configuration as well as the capability of the technology stack such that it supports customizations through rapid development in a standards based manner. Things like a Service Oriented Architecture, Rules Engines and Business Process Management Engines are good things to look for in such solutions. An offer, for instance could be configured via the Rules Engine, tested to see if it behaves like it was intended to, identifies any undesirable conflicts and prompts the user with the same to seek corrective action before flowing it down to relevant stores, untouched by hand. Features such as these in software selected by retailers will help them drastically reduce their mind-to-market cycles and will move into a paradigm of “Conceptualise, Advertise and Execute at the speed of thought”.
It is when Retailers adopt these contemporary technologies for execution at Customer touch-points, incrementally over their last-century technologies, that they would truly be ready for the age of Agile Commerce.