IN 2014, OMNICHANNEL MERCHANDISING IS TAKING MORE ACCOUNT OF
LOCATION THAN EVER BEFORE. CHRISTIAN ANNESLEY REPORTS
How are retailers’ merchandising systems and strategies shaping up in a world where many now aspire to deliver a wide ranging, ‘channel-agnostic’ customer experience?
If the experts agree on anything, it’s this: the pace of change in this space is slower than you might think, even if there are trailblazers out there among the slowcoaches.
What’s holding things up for some? Not the technology as such, as this is out there in abundance, and hugely enabling for those that are ready.
But for omnichannel to work seamlessly, retailers must have embraced the change necessary in their systems, set-ups and culture to be able to go after all the opportunities with real aplomb.
Joey Moore, multichannel strategy head at ecommerce personalisation specialist Peerius , paints the picture for us: “Omnichannel integration behind the scenes. But many traditional retailers have been set up in silos over a long period-each stores as its own profit-and-loss centre, ecommerce treated and run in isolation from the moment it first came along, plus perhaps a separate catalogue operation somewhere in the background, run out of a dedicated warehouse.”
It’s the kind of set-up that acts against sophisticated omnichannel processes, but it’s what retailers need to change if they are to get to where the want to go with the vision, which everyone understands makes sense: a single view of the customer, fully integrated and visible stocks, and channel operations that all work as one.
The ecommerce pureplays aren’t bogged down by the same legacy systems and cultures, of course, but then the high street is still where a lot of retail takes place and where omnichannel is still the big prize somewhere on the horizon – or rather closer for some.
LOCATION MATTERS
So far so backward-sounding. But the reality out there on the ground is that retailers are making headway, some substantially, around delivering effective omnichannel engagement. It’s just that incremental change, driven very often by niche and successful projects, is the way that things develop much of the time. There might be many examples of omnichannel merchandising across a big retail chain with a large UK store estate, but the complexity of the overall operation probably also means there is a long way still to travel. Many will not be so far advanced.
In terms of tangible change and development, Peerius director Roger Doddy says what’s certainly changing now is that retailers are embracing the relationship between in-store and online. Many are developing ways to ensure the two play off each other for the benefit of the customer, and to help drive sales and convert opportunities.
“One trend to pick out is that ecommerce is, for more and more retailers, no longer a separate, homogeneous play but part of the local picture and tied to local stores. That’s a change that’s being driven by data analytics that recognises location as a crucial element in buying decisions by customers.”
For example, says Doddy, Peerius works with several fashion brands that can now see that what customers are buying online varies enormously from place to place: different items are popular, different colours, and perhaps different sizes of a particular product. These are all variables that that can now be understood and analysed in a localised way, and used to inform stock holdings for particular stores.
“Some of this is driven not just by taste but circumstance, of course,” says Doddy. “Wet weather gear has probably been selling well for outwardbound stores in Somerset this winter. But the point is all the great data that’s collected online is being analysed now by retailers in new ways, and helping to inform everything. The regional and city data is there, it’s just a question of using it effectively.”
A UNIFIED APPROACH
The next level of engagement for retailers, which goes beyond making better links between in-store and online, is to push a more unified approach to analysing the transaction across all channels.
“That’s how buying decisions get taken, after all,” says Tom Smith, product marketing manager for SDL’s Fredhopper ecommerce platform. “For the customer there is no inconsistency between those different stages: you are on your way to work and on mobile, then later you might make a purchase on a browser sat at your desk, and complete that click-and-collect purchase the next day by dropping into a store.
“In this vein, it’s all about the touchpoints with the customer being consistent – and for the experience to work you need to link up the relevant data points in the background.”
One example Smith gives again demonstrates how merchandising systems that deliver local knowledge and insight are becoming more and more important.
In September 2013 Majestic Wines implemented a new website with device-optimisation built in, an improved stock system reflecting local availability, and personal recommendations provided by the company’s team of wine experts.
The website runs on the ecommerce platform Intershop 7 and uses SDL Fredhopper for search and navigation.
“There is a lot built into the site that feeds the omnichannel drive of the business, including wine recommendations based on previous likes and purchases, but for me it’s the use of geographic mapping techniques that stands out,” says Smith. “The customer can select the closest or preferred store and be presented with an available range using near-real-time stock management. It’s great for the customer and also lets Majestic Wine manage customer expectations while balancing supply and demand.”
SPEAKING FROM EXPERIENCE
OMNICHANNEL SUPPORT MERCHANDISING
“One great example I’ve seen is a fashion retailer in Brazil that has integrated a digital display into its coathangers that shows dynamically how many Facebook likes a product has. It’s good for engaging customers but also influences the positioning of the item in-store.”
Tom Smith, product marketing manager, SDL Fredhopper
USE THE DATA
“A clothing retailer we have worked with has online, stores and a catalogue offer. It’s using the data it collects online to inform its catalogue design to drive more sales. That’s a novel use of the available technologies to do something transformational.”
Joey Moore, multichannel strategy head, Peerius
LEARN FROM CUSTOMERS
“Dynamic websites that ‘learn’ from customer interactions on the fly are being used already, but the potential to do more with this kind of technology is immense in relation to omnichannel retailing.”
Andrew Fowler, country manager, Apptus
INSIGHT FROM THIRD-PARTY DATA
Another variation on this theme of intelligent, data-driven systems delivering better outcomes is also to be seen at cycle and automoative equipment retailer Halfords – again, with Fredhopper working in the background.
In Halfords’ case, an online issue had arisen around customers buying car parts online but then came all the costs attached to returns.
The solution? Linking the motoring section of the web store to the UK car registration database. Users input their car registration, the database interrogates matches with the particular vehicle, and then only suitable products are displayed. “As you can imagine, this step has cut return costs dramatically – but was really quite simple to implement,” says Smith.
CONTENT MATTERS
Halfords also provides a useful illustration of another trend in omnichannel merchandising: that is, trying to offer a similar level of insight and expertise to customers making specialist or high-end purchases that they would find in a specialist store.
In Halfords’ case, its big-ticket items include some road bikes selling for £4,000 or more. That’s not a purchase that will be made online in a hurry, of course – so the challenge is deliver lots of context and content to help the customer understand what they are getting.
“The content is neutral and authoritative rather than marketing literature,” explains Smith. “A downloadable road-bike buyer’s guide, for example, has helped to boost conversion rates of these high-value purchases.
“The retail experience is predicated on trust, so anything the retailer can do to build trust makes a sale more likely. Digital marketers have been working hard at this for a long time, and it’s a natural fit with the agenda of multichannel retailers looking to deliver an omnichannel experience.”
NEED FOR SPEED
Another development that’s driving omnichannel further faster right now is the growing use of responsive technologies to make more ecommerce sites a fast-moving testing ground for particular products or strategies.
“If personalisation is one strand of merchandising strategy for retailers online, there is another way,” said Andrew Fowler, country manager for Apptus , which specialises in search and merchandising online tools.
“Personalisation can be a slow-moving evolution, but if relevance is what you are trying to deliver to customers that’s something that can be delivered dynamically – and instantly – using a platform like ours.
”The idea behind it is that, while a store layout cannot be changed easily, an online store can always be dynamic to try to deliver relevance to customers, based on activity and other cues.
“The philosophy we take is that an ecommerce site needs to be structured into a number of dynamic zones with their own logic and learning capability to present different assortments to different kinds of customers,” says Fowler.
For an example in practice, Fowler points to the recent success of online hardware retailer BiGDUG, which offers shelving, racking, tools and other DIY products to households, business and warehouses in the UK and overseas.“BiGDUG had a staticlooking site and an enormous and growing product range. That’s always a challenge, and the business wanted to ensure that online customers couldn’t find products easily and be made aware of relevant offers too, to boost satisfaction for the customer and revenues for the business.”
The technology, once implemented, allowed the retailer to deliver optimised search, navigation and recommendations of products to customers and promote relevant content and promotions based on real-time and historical buying behaviour.
And the upshot? A double-digit increase in conversion rates, reflecting a path to sale that’s quicker, with fewer clicks, and high levels of satisfaction among surveyed customers with the site’s ‘simple navigation’.
In BiGDUG’s case, of course, it’s an online-only offer but the principle of learning dynamically from an ecommerce site and applying those learnings in other contexts is the same, says Fowler.
“Retailers we work with are using their in-store data to influence strategies online and taking learnings from online and applying them in-store, often to a fast turnaround. It’s a powerful combination.”
WHAT’S CHANGED?
Merchandising for omnichannel retail is still a two-paced environment. The technologies are there and relatively easily integrated, but retailers need to be ready to embrace them. In this context, this year’s stand-out development is the greater use of location data to inform omnichannel retail strategies. There are many examples out there in the marketplace of successful implementations, rather than just one or two.
