By Rob Garf
I attended the annual IRCE show in Chicago last week. One of the highlights was a private breakfast hosted by Colin Sebastian, Managing Director at Robert W. Baird, & Co. My colleague Erica Smith, who heads up investor relations, and I attended — along with other leaders from the retail, software and analyst community — to share thoughts on industry trends.
The eggs were underwhelming, but the dialogue was priceless. We covered a number of topics over the course of the roundtable…the following four areas stuck out to us:
Online and Offline Convergence – While IRCE is the quintessential .com trade show, it was clear that participants at our roundtable discussion see the increasing convergence of store and ecommerce technology to establish a single platform that manages consumer interactions and transactions across all channels. An interesting point raised by one of the retailers is the impact this has on IT organizations. Historically, retailers had different individuals oversee store and ecommerce technology, but are now moving to a single individual responsible for all consumer-facing applications – including POS, ecommerce and marketing – to reduce complexity, streamline development and ultimately serve customers more effectively.
Inventory Optimization – While there is much banter in the industry regarding omni-channel, the financial analysts were specifically interested in the order management component and how that potentially drives operational efficiencies (cost savings). And I’m with them since order management helps retailers realize their “buy anywhere, fulfill anywhere” vision. Leading retailers are enhancing their ability to provide visibility into inventory across the supply network and efficiently fulfill orders where consumers demand. One manifestation is enabling consumers that are shopping in a brick-and-mortar location to make a purchase, even if the products aren’t physically available in the store. This is a game-changer as it positively impacts key operational metrics (carrying costs, turn and margin). Increasing sales per square foot without increasing inventory is not a bad equation. Investors were also keenly interested in the possible cost savings derived from turning each brick-and-mortar store into a satellite distribution center, which can also be powered by a robust order management solution.
Search Attribution and Mix – There was much discussion regarding Google and its influence on product search and discoverability. While viable competition has emerged from the likes of Amazon and Facebook, there was a consensus among retailers in the room that Google will continue to play a key role in their marketing mix. The challenge they face, however, is measurement. The buyer’s journey is no longer linear, but rather fragmented across channels and touch points, so it has become increasingly difficult to attribute attraction and conversion metrics by lead source. Mall operators also share the measurement concern; Michael P. Kercheval, President & CEO at ICSC, recently acknowledge that the commercial model for mall tenants – which traditionally factored in sales at the till – needs to be examined in our digital and omni-channel world.
Social – The analysts were keen to understand our point-of-view on social. I, along with several retailers in the room, shared that it is powerful for brand awareness and customer service, but not necessarily a productive or appropriate shopping channel. This was evidenced by talk around the table of lower conversion rates through social channels. My recent personal experience with U-Haul is a prime example regarding service. After having a terrible experience – where the truck wasn’t available even though I received a confirmation email, and the customer service agent wasn’t willing to help and blamed the issue on me – I took to Twitter. I included @uhaul_cares in a tweet where I explained my situation. Within 20 minutes I received four tweets, after another 20 minutes I received a call from a district manager, and my problem was resolved within an hour – and this was on a Saturday night. Yes. I’m a sample size of one. But this shows the power of accountability and responsiveness and our age of transparency.
Thanks to Colin, and the other attendees, for getting our day going with such an interesting and thought-provoking dialogue on the future of retail. Next time, though, I should probably have a muffin from my hotel.