Wal-mart Sets Course for Omni-channel Strategy

In a recent shareholders meeting, Wal-mart CEO Doug McMillon acknowledged the need for the retail giant to make a shift towards an omni-channel approach to business. As mentioned in this ZDnet article McMillon pointed out:

"One customer can shop with us in so many different ways - in stores, on their phones, at homes, a pick-up point," he said. "But they just think they're shopping at Walmart, at ASDA, at Sam's Club."

With a worldwide footprint of eleven thousand stores, making the shift will not be easy. However, Wal-mart has a strong background in adopting technology. Their early adoption and development of advanced supply chain management software helped them to grow to their current size. While it may not be a smooth transition, they have proven the ability to manage that kind of change in the past.

In the past year they've been exercising a strong push to get their piece of the ecommerce pie, which is essential in the omni-channel market. Their low-cost shipping and pick up in store options have been picking up steam. With affiliate partnerships in place, they've been getting significantly more love from the deal blog community and are primed to have a big 2015 online.

Although McMillon didn't reveal any specific plans, he did send a clear message to everyone in attendance.

"I want us to stop talking about digital and physical retail as if they're two separate things. The customer doesn't think of it that way, and we can't either,"

Can Amazon be Beaten With a Good Omnichannel Strategy?

I was just going through my newsfeed and I came across this article on Multichannel Merchant. The points all come from a talk by Jason Goldberger, president of Target. One point that stuck out to me was the speed in which data is becoming obsolete for retailers. Goldberger recounted the launch of their Lilly Pulitzer line, which overwhelmed their web properties and backed up their fulfillment centers. All because the projections were made off data that was 6 months old.

You can’t attend a tech conference without hearing one speaker talk about the glories of failure, and we failed very publically - Jason Goldberger

While your company might not be the size of Target, the lesson can still be adapted. Make your decision based on the latest data or, where possible, in real-time. The environment changes dramatically in 6 months. Also, test your website(s) to know how much traffic the infrastructure can handle and have a plan in place for how to manage it if something goes wrong.

Goldberger also outlined how Target was taking omni-channel to the next level with their free shipping. They've lowered the threshold from a $50 spend to $25 in a bid to make their competitively priced items more attractive than Amazon. This might now be an option for a lot of smaller brands, as they would most likely be taking a lost on low margin products as a way to instill customer loyalty.

Target also took an interesting approach to the showrooming issue that concerns so many stores. In their Denver area stores they set up patio furniture and allowed customers to see the sets that were only available for purchase online. To keep their stores happy, they received credit for sales made in their area. While this is still a crude way of accounting for sales, Goldberger noted that they sold 3x more furniture than prior seasons.

The main take away from this article, to me, was that retailers who are willing to take risks and try new approaches will eventually find their sweet spot in the shifting omni-channel market place. For brands with less cash or leverage to experiement, you can piggy back on the research being done by big retailers like Target.

What do you think?

JC Penny Brings Back the Catalog As Part of their Omnichannel Strategy

After cutting costs by axing its catalog a few years ago, the executives JC Penny have changed their tune. When the original decision was made, it was expected that customers would simply switch to browsing online on their desktop or mobile device.

According to this article over on Diginomica, now that the change has had time to sink in its starting to look like the print material played a bigger part in the sales cycle than expected. The numbers don't lie, and JC Penny has just published a small (by their standards) catalog for home items. While it isn't the 1000 page thick book they published traditionally, it is a concession based on what they think the customers want.

The man in charge of the catalog initiative is, oddly enough, the one who chose to take it away, Myron Ullman.

We’re not going back to the thousand page several times a year book. That’s frankly with paper and postage not a good proposition and frankly, that’s not the way the customer wants to shop.

It's true. With rising postage and printing costs, it could be hard to justify the investment in the full blown catalog that was once a JC Penny staple. If the move proves to be profitable, the brand could follow other big retailers like Target and customize their catalogs based on customer preferences.

It's not all about Sales. Customer Service Needs to Adapt to Omni-channel as well

I was doing my morning reading when I came across this article on 1 to 1 marketing. It it is a shallow dive piece on customer service in the omni-channel marketplace, but it raised some interesting points and got me thinking about a few things.

Number one, was that despite the near ubiquity of the internet in developed countries, management still thinks the customer is too dumb to Google their issue or question.

Just 9 percent of managers believe that customers use the web frequently before reaching out to the contact center. 

Nine percent?

Really?

While I understand that not every customer is as fiercely independent as me (I hate having to deal with sales and customer support!) I think you'd be pretty blind to think that they didn't try to solve their own problem first. Most customers have the internet in the palm of their hand after all.

The article also pointed out that many customer service systems aren't equipped with the ability to track users across various interaction with the help desk. This is more of an issue in process and I think the companies that address the ability to see customers across channels in the service department will see a huge edge in the next few years.

Beyond systems, training of the support team to maintain an even temperament and manage the conversation with the client is also key.

If an agent is unable to find the information they need to support a customer quickly and easily, they're going to be frustrated. And that frustration is going to transfer over into the experience that the customer receives.

This is very true and could easily turn your customer away from the idea of making return purchases. A frustrated or irritable customer service rep is going to pass that attitude over to your customer who will be more than happy to share it with their friends. This could easily spill over to social media and amplify further.

Is Communication the Key to Success in OmniChannel Retail?

I just finished reading Paul Murphy's blog post over on Fourth Source and he raised a few excellent points about the costs, concerns and challenges facing retailers who try to go omnichannel. While the article is focused on the UK, who have long been ahead of North America in online shopping, he raises some points that enterprises on this side of the pond could pick up on and use to win.

According to his post, 56% of John Lewis shoppers chose collect their orders in the store. Providing the inventory count is correct, it shouldn't be a big issue right? But shoppers are impatient people, so it's now on the store to know who the customer is when they get there and have the order somewhere that it can be picked quickly and easily. This would also be a great opportunity to personalize the experience, as you know a bit about the customer when they come to get their items.

Paul also points out that email may not be the best way to reach a potential customer to re-market to them or let them know their order is ready.

email open rates for the retail sector currently are 23.6%, making them too unreliable for this application. SMS by comparison has an open rate of over 95% and is available

 With the advent of cheap cloud messaging services like Twillio, SMS or MMS is a viable & cost effective way of reaching consumers. The key here though, will be to ensure the messages are timely, useful and written in a way that they feel personal. The text message stream is more sacred the inbox in my opinion.

Subscription Fashion Services, the New Monster to Kill Retail

Business bloggers are always looking for a new monster to call out for sneaking around in the shadows and looking to kill old school business. This article on business insider points the finger at the new wave of subscription fashion services as the boogie man that will take a bite out of big retail.

The article also argues that kids these days are "addicted to promotions" that are available through loyalty programs, points cards and other avenues. This one takes the cake for me thoough:

A recent report by Morgan Stanley shows that millennials are spending more on expenses like rent, cellphones, and personal services than young people a decade ago. This leaves less money for buying clothes.

While this is true, I think that it points the blame at the real issue facing North Americans and is disposable income. Are the kids addicted to promotions and cheap subscription clothing services, or victims of inflation and the high cost of modern life? 

The Trans Pacific Partnership & Retail. What does it mean?

The Obama administration has fast-tracked the initiative they've called the Trans-Pacific Partnership. If you've heard about this, you may have heard the famous "NAFTA on Steriods" from Elizibeth Warren.

NAFTA, the North American Free Trade Agreement was signed between Canada and the USA in the mid-ninteties and has since been held up as the reason for jobs leaving America. Since the Canadian dollar is usually worth 20% less than the USD, it was a natural move for companies looking to save a few dollars and have no cultural issues.

The agreement will be among U.S. and Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam to gradually reduce and in some cases eliminate tariffs, and otherwise promote trade. Given the amount of apparel made in markets like Malaysia and Vietnam US companies stand to benefit.

The catch could be in provisions made within the agreement. For example, the agreement could require that signatories to the agreement must have a certain percentage of raw materials sourced within the country where they’re made.This would make for a radical change in sourcing and production. This provision is only hypothetical, but we'll have to wait and see how this develops.