Are Omnichannel Shoppers More Valuable to Retailers?

That’s the question that the Harvard Business Review set out to answer in a recent study conducted between June 2015 and August 2016. They collaborated with a major U.S. Company which operates hundreds of retail stores across the country and studied the behavior of 46,000 shoppers. The customers were asked about “every aspect of their shopping journey with a retailer”, focusing on which channel’s they used and why. The majority of the shoppers who participated - 73% - used multiple channels during their shopping experience and were deemed “omnichannel customers” by the study. Only 7% were online-only shoppers and 20% were store-only shoppers.

In tabulating results, the study considered each app, digital tool and shopping venue provided by the retailer as a separate channel, and discovered that the more channels customers use, the more valuable they are. In fact, the study revealed that omnichannel customers are “more valuable on multiple counts.” They spent an average of 4% more on every shopping occasion in the store, and 10% more online than single-channel customers. Additionally, with every channel that an omnichannel shopper used, they spent more money in the store. For example, compared to shoppers who used just one channel, customers who used four or more channels spent an average of 9% more in the store.

In additional to spending more, omnichannel shoppers were more loyal. According to the study findings, within six months after an omnichannel shopping experience, these customers had logged 23% more repeat shopping trips to the retailer’s stores and were more likely to recommend the brand to family and friends than those who used a single channel.”

Source: Harvard Business Review

THE OMNICHANNEL HOLIDAY CHALLENGE WITH STORE INVENTORY AND FORECASTING

Holiday shoppers have just a few more days to get their shopping done. Do they order online and get it shipped? Do they order online and then pick up in store? Or do they go into a store hoping to walk out with the items they want to purchase? Retailers have the challenge of meeting all of these needs, many of them using store inventories as distribution centers to handle online purchases, whether shipping it to the customer’s home or having it available so they can pick up the item in the store.

An online customer who is having their products shipped does not care which store or warehouse handles their purchase. A shopper in the store or on the way to a store does – they expect the item to be available on the shelf. Retailers are using different strategies to manage these needs. Some, such as Target, are holding inventories back from online purchasers in order to keep inventory on the shelf for their in-store shoppers. In Target’s example, an online shopper may try to go online and buy or reserve an item in store but are unable to do so. Other retailers, like Toys ‘R Us, have a “first-come, first-served” strategy. The big challenge is for retailers to determine, by product and by store, how to divvy up the store’s stock, and need to forecast in-store purchases to try to have the right amount of inventory on the shelves.

 

Tracking item-store inventories as real time as possible is the best way for these retailers to make these forecasts. Retailers without inventory systems who can keep up with purchases are having to keep extra available in the store and not online, in order to avoid the mistake of selling the same item to two customers around the same time.

Source: Chicago Tribune.com, Wall St. Journal

WHICH ACCELERATED ANALYTICS CUSTOMER IS ‘POPPING UP’ IN NEW YORK? VERA BRADLEY!

Vera Bradley has plans to open a pop-up shop in NYC, replacing a shop occupied by Kate Spade through the end of last May. Opening in September, the pop-up shop will be 2,700 square feet over 2 stories and will carry the entire Vera Bradley collection. The store will also be the grand debut of Vera Bradley’s redesigned logo and store concept.

The store is geared toward an omni-channel customer experience, with interactive touchscreens allowing customers to participate in the “It’s Good to be a Girl” campaign over social media. Three digital wall displays will display virtual patterns. A kiosk in store will open shopping on VeraBradley.com.

“We are thrilled to open our first Vera Bradley store in New York City," said Robert Wallstrom, CEO, Vera Bradley, Fort Wayne, Ind. "We look forward to showcasing our iconic collections and signature in-store experience to both the local community and tourists.”

Accelerated Analytics has worked with Vera Bradley to provide POS sales and inventory reporting and analysis for their key retailer accounts and independent specialty retailers since 2013. 

Source: Chain Store Age

HOME DEPOT AND LOWE’S ATTENTION TO PROS SHOW DOUBLE DIGIT SALES INCREASES

Both Home Depot and Lowe’s report that they have increased sales to professional customers by double digits. They have taken several steps to seek out professional and MRO buyers, including adding products to their pro business lines as well as offering new services, making it easier for pro customers to order and receive supplies. “We continue to strengthen our pro business, driving comps well above the company average, by further advancing our products and services offering to better serve the pro customer,” said Lowe's COO Ricky Damron during the company's Q1 earnings conference call.

Lowe’s has developed an omni-channel approach to pro business, using Account Executive Pro Services with more than 180 representatives in the field. They also have a targeted marketing strategy aimed at the professional customer and buying events in store to generate new business.

Home Depot offers pros private label cards with extended terms and special return policies. They are also expanding a flexible delivery program seven days a week and next-day delivery, as well as in-store pick-up in 2 hours. Home Depot says it currently has a small percentage of sales in building and maintenance and Menear said “we think there’s lots of opportunity to grow.”

Source: Inddist.com

Data Analytics Among Strategies to Combat Loss in Omnichannel

With new technologies hitting the market on a regular basis, the retail industry is constantly evolving. Most retailers now operate in a technologically sophisticated omnichannel environment that includes strategies to enhance selling, including online, mobile retail and social media marketing.

In a 2015 retail industry survey conducted by PricewaterhouseCoopers, findings revealed that technology is making it more difficult for retailers to prevent, detect and manage loss.

“At the core of omnichannel is the concept that a customer can securely purchase and receive their product in any manner they desire,” Zawoyski says. “For many retailers with legacy pre-omnichannel operations and systems, ensuring secure and dynamic customer purchasing and fulfillment is a significant challenge. Beyond the well-documented data breaches and information security risks, many retailers struggle with ensuring supply chain inventory accuracy.”

According to the PwC report, many companies haven’t fully integrated new technologies that are needed to combat loss in omnichannel effectively. One key recommendation for the report: Retailers should embrace the process of root cause analysis while increasing their use of data analytics to better spot and mitigate shrink. Zawoyski says 59 percent of respondents reported they are employing data analytics and end-to-end root cause analysis as a primary tool to identify losses.

One of the many strategies that PwC suggests to enhance root cause analysis is to leverage data analytics.

“Effectively leveraging advanced analytics and end-to-end root cause analysis allows retailers to assess, strategize, plan and deploy risk mitigation programs,” says Zawoyski.

Sources: National Retail Federation: STORES magazine, June 2016, PricewaterhouseCoopers

OMNI-CHANNEL SWITCHEROO: ONLINE RETAILERS GET PHYSICAL WHILE RETAIL STORE STALWARTS SHRINK

Amazon.com opened its first brick-and-mortar store in Seattle in November, and announced plans to open another store in San Diego. Macy’s announced it is shutting down almost 40 stores this year. Kohl’s plans to follow suit and close 18 stores, stating its online sales increased 30% in the fourth quarter, causing their reevaluation of its store footprint. Similar announcements of closing stores were also made by Sears, JC Penney and The Gap, as 8% of total US retail sales are now online.

Companies that began their retail lives online, such as Athleta, Fabletics and Birchbox are now adding brick-and-mortar stores. They are moving into prime real estate that was once reserved for top-performing retail stores, such as Birchbox opening its first store in Manhattan.

Is this the new evolution of retail, blending the two worlds? Experts say the trend will continue to grow. The impact will be different in each retail category, such as electronics versus clothing. "For most products, consumers actually prefer to shop in store because they want to see and touch what they're buying," said Dave Parro, vice president of the retail technology practice at Walker Sands, a PR marketing firm. "But they also shop online regularly because of the convenience and range of products available."

The winners of the switcheroo? The consumer. Those who are omni-shoppers know which retail channel and retailer is best to fit their needs.

Source: Philly.com, WSJ

National Retail Federation (NRF) Consumer Research Reports Consumers Plan Holiday Spending to be flat Compared to Last Year; Expect This to be biggest omnichannel holiday ever

An NRF survey of over 7,300 customers indicated that the average spending per person this year will be almost flat with last year, increasing to $806 this year versus $802 last year. This is the highest amount of spending in the survey’s 14 year history, but is still disappointing to retailers.

“We continue to see positive momentum in retail sales growth, giving us reason to believe consumers will show up this holiday season as they look to take advantage of all of retailers’ promotional offerings,” said NRF President and CEO Matthew Shay. “In an effort to attract all shoppers – from the extremely price sensitive to the online millennial, retailers will be offering exclusive incentives, low prices, price-matching, top toys and everyone’s favorite - free shipping and buy online pick up in store offers.”

It is expected to be the most omnichannel holiday ever. Online spending is expected to be 46% of total spending this year. The survey found that 21.4% of shoppers will use their smartphone to purchase holiday merchandise. 37.9% will research products on their smartphones, and 20.3% will use it to look up product availability in stores.

Adding to the complexity of predicting holiday spend is consumer spending behavior. 40% of shoppers surveyed begin their holiday shopping before Halloween. When asked why, shoppers indicated the need to spread out their budget (61%), avoiding crowds (48%) and avoiding stress of last minute shopping (46%).

Source: Retailing Today

The Home Depot Builds Third Facility of 1.6 Million Sq Ft to Support Omni-channel Operations; Will Open a New Technology Center in Marietta, GA in October

The Home Depot is officially opening a third facility to support its online business. The new 1.6 million facility in Ohio will employ 500 employees and will support its online operations that currently account for 5% of its business and continues to grow.

Home Depot also announced plans in October to open its Marietta Technology Center, a 200,000 square foot office complex that will employ 1,000 IT jobs. The Home Depot has enhanced its IT capabilities in conjunction with its supply chain and merchandising operations.

"These investments are advancing our interconnected retail strategy, which allows our customers to engage with Home Depot however they choose," said Craig Menear, chairman, CEO and president of The Home Depot. "We're also pleased to contribute to the economic growth of these communities."

The Home Depot is not the only major retailer ramping up fulfillment support for omnichannel retail. WalMart is spending $200 million to build a new distribution center in Polk County, Florida dedicated to fulfilling e-commerce orders.

Source: Retailing Today

Retail Store and Warehouse Inventory Data Tracking Imperative for Successful E-Commerce Strategy to Deal With Online Returns

A new survey by HRC Advisory indicates that 80% of retailers are not prepared to transform their supply chains for a customer-centric, omnichannel model. 95% of retailers said their biggest issue is mitigating online returns, which can run as high as 30% and are very costly for a retailer.

The high cost of online returns come from returns of online purchases to a store that does not carry that particular item. Also, when returned to a fulfillment center there are costs for freight, damage and a lost opportunity for a replacement sale in the store.

All of the retailers surveyed felt that fully integrating inventory and fulfillment between the online and physical store channels would achieve the most effective customer outcome and the lowest margin risk.  But 52% of them stated they do not have the systems in place to provide the required visibility to inventory in each store.  Only 35% had capabilities for vendor drop-ship and order in store and deliver to the customer. 60% of those retailers have plans to further invest in their e-commerce systems to provide an improved customer experience.

Currently, only half of the retailers were currently able to present customers with accurate inventory information and to fulfill the entire order at the time of the online purchase, and only half could ensure fulfillment from the closest location when an item is available in multiple locations and distribution centers.

Only 25% of retailers are starting initiatives to combine fulfillment from stores and warehouses to manage both channels more cost-effectively.

Vendors who use POS data analytics tools, such as Accelerated Analytics, to help track and manage inventory levels in stores and fulfillment centers can work with their retailer buyers to optimize their working capital investments in inventory and partner with them to create a better customer experience and reduce their lost sales opportunities.

Source: Chain Store Age

HOME DEPOT IT INVESTMENTS IN OMNI CHANNEL FOCUSES ON CUSTOMER EXPERIENCE

The Home Depot discussed this week its IT investment and strategy that focuses on the customer buying experience. The company’s Common Order Management system, or COM, is the largest IT project in the history of The Home Depot.

COM is an inventory visibility platform that looks at millions of deliveries through small and large delivery trucks, direct fulfillment to DCs and in-store pick up transactions. COM will help identify the best fulfillment option for a customer, while allowing Home Depot to leverage its omni-channel options.

The focus on this area is based on the fact that 1) the retailer’s fastest growing ecommerce channel is buy-online, pick up in sore, 2) the average ticket for ecommerce transactions are considerably higher than physical in store transactions and 3) ecommerce chat and email are growing  in product information exchange.

“The IT investments we are making are really to optimize the whole supply chain offering,” said Home Depot Senior VP and President-online, Kevin Hofmann.

Source: Chain Store Age

Home Depot Offers Shoppers an Omnichannel Experience

The Home Depot kicks off the Spring season with a variety of omnichannel shopping features. Online shoppers can have purchases sent directly to their home or shipped to their nearest store for pick up. In 2014, 40% of online orders on Homedepot.com were picked up in a local store. Online tools and calculators, such as a Pest Problem Solver and Grass Seed calculator help solve customer problems and assist them in purchasing the right products and the right amounts.

Inside stores, The Home Depot mobile app identifies where products are on the shelves, and offers “expanded aisles” connecting customers to a variety of product options available online.

The Home Depot also has tools in place to help shoppers plan and design their outdoor living space. The Garden Club features tips and expert advice tailored to a customer’s gardening region. The Fencing Project Planner and Decking Project Planner guide additions, upgrades and restorations.

Source: Chain Store Age

Sephora Announces Omnichannel Strategies for 2015

Sephora announced several strategies and technologies focused on omnichannel retailing, for both in-store and mobile shopping.

The first is “Sephora Flash”, an Amazon Prime style subscription service, offering customers free 2-day shipping on all products for $10 per year. The Flash will be free for their Rouge Beauty Insider members, who spend more than $1,000 in a calendar year.

Second is “Augmented Reality”, allowing customers to engage with custom content by placing their phone over the images of the nine female founders found in the retailer’s windows and display cases. Launching in April, scanning the images will show content options, such as interviews and product videos. The stores will also deploy beacons that a customer can opt-in on, receiving birthday alerts, loyalty program updates and events happening in the store.

Sephora is also launching “Pocket Contour”, a new mobile app, where a customer can upload a photo of herself and get personalized face contouring advice and product recommendations.

In their San Francisco corporate hub, Sephora has created an “Innovation Lab”, where the Sephora team can brainstorm and test ideas in a think-tank environment and the company can groom future management.

We’re completely focused on making shopping more efficient, intelligent and fun for our clients,” said Julie Bornstein, chief marketing and digital officer for Sephora.

Source: Retailing Today

Analyzing Retailer POS Return Data Critical for Customer Satisfaction in Omnichannel Age

Retailers are striving to minimize return rates and maximize customer satisfaction. In a recent survey from Voxware, it was revealed that 57% of consumers are returning items they purchased online. 42% noted the products they received were in the wrong size or color and 15% said they received the wrong product altogether. Nearly 20% of consumers say they received an incorrect item a second time.

By analyzing return data, retailers can gain a better understanding of consumer preferences and behavior, as well as survey their internal supply chain and warehousing abilities.

Retailers are focusing heavily on omnichannel. Customers expect to buy what they want, how they want, when they want and have it delivered quickly to wherever they want them. Consumers can order online and pick up in a store, order from a brick and mortar store and have it shipped to them or the store, and order directly online. This requires store operations to effectively manage picking and shipping, turning each store into a warehouse.

Retailers need to analyze their business processes though POS and return data to drive sell-through velocity, margin improvements and customer loyalty.

While customers may be willing to forgive retailers after one return experience, 45% of respondents stated that they have limited their shopping with the retailer – both online and in-store after a second return.

Resources: Retail Touchpoints, Multichannel Merchant