Thursday, April 24, 2014
FAIRFIELD-SUISUN, CALIFORNIA
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Retailers look to blur lines between online, brick-and-mortar

ATLANTA — It seems reasonable that consumers should be able to easily drift between shopping online with a mobile phone and in a store without missing a beat. How hard is it to buy an item online and pick it up at a store nearby?

But the reality is much more complex.

Will the store be prepared with the order when the customer shows up and be able to quickly match up the person, the order and merchandise? How does the retailer ensure that the shirt that caught the shopper’s eye online is at the store down the street? What if it’s on the rack in black size 8, but not in red size 4? What if another customer is trying it on in the dressing room? How much inventory is needed at each store?

And with all those challenges, how does the retailer know exactly what to promise to customers when they click “purchase?”

”It’s really hard to corral all of that inventory,” said retail analyst Nikki Baird. Yet if a retailer does it well, it delivers on the promise and brings another customer into the store where they might buy more. Marketers are also eager to get a fuller picture of customers’ buying behavior, which is raising consumer privacy issues.

The growth of online retailers continues to drive monumental changes in retail, as consumers come to expect more choices and more immediate gratification. If retailers can get it right, it’s a strategy that could help brick-and-mortar stores better compete against the Amazon.coms of the world, which have the advantage of lower costs and a much broader selection of products.

The idea of so-called “omni-channel retail” is to enable consumers to seamlessly shop wherever and whenever, blurring the lines between the different channels for shopping – online, brick-and-mortar stores, smartphones, tablets and catalogs.

It’s a challenge that Atlanta-based global supply chain software firm Manhattan Associates and Sandy Springs, Ga.-based shipping and logistics giant UPS are both working on, because delivering that flexibility calls for a major shift in the behind-the-scenes supply chain and shipping infrastructure and technology. For example, UPS has partnered with Manhattan Associates the last two years to supply technology for software that helps retailers improve their inventory management, said UPS retail marketing director David Sisco.

Retailers “need to have a very sophisticated IT infrastructure” to meet the promises they make to consumers, said Eddie Capel, chief executive of Manhattan Associates. “You’d better know exactly where all of your inventory is and how quickly and effectively you can get it into the hands of the consumer. And that is not an easy thing to do.”

John Bemis, executive vice president and Southeast retail market lead at commercial real estate firm Jones Lang LaSalle, said retailers “have to get it right immediately out of the gate.”

”Customers are not particularly tolerant of mistakes and mistaken orders. So they might give you one mistake, but they aren’t going to give you two,” Bemis said. “So you have to make sure you’re delivering as advertised.”

Improving the in-store pickup experience is an issue that electronics retailer Best Buy has been working on. Best Buy president of e-commerce Scott Durchslag said during a recent investor presentation that 40 percent of its online shoppers pick up purchases in the store. In the works are changes “that make it really easy for the sales associate to be able to cross-sell services or attach accessories.” he said. “. . . Today, that would have to be a whole separate new transaction instead of being able to add additional items to the cart.”

Separately, Best Buy recently launched Deals Near Me to tell customers on mobile devices what deals are available at nearby stores.

As companies track consumers’ purchases across platforms, technology could also give marketers unprecedented access to consumers’ buying behavior.

By linking consumers’ shopping online to their shopping in stores and elsewhere, they also want to develop profiles of customers’ shopping habits to better target them with sales pitches. However, that has generated controversy over privacy issues.

Targeting what retailers call “omni-channel shoppers” is a lucrative segment.

Such profiling could also bring a level of personal shopping to the mainstream mall store, by allowing an apparel store to pull items based on a customer’s buying history to try on during a scheduled store visit, Bemis said. Such personalized offers are offered widely by Amazon.

Retailers “want to have a single view of their customer,” whether the activity is online, on social media, at a store or from a mobile device, said Capel.

That could eventually include technology for retailers to “know exactly where you are in the mall . . . in a store, which department,” Capel said. “The theory is you’ll start to see digital marketing inside the store highly personalized to you as you move from department to department.”

Some privacy advocates have raised concerns.

”Marketers know more about you than some of your closer friends,” said Center for Digital Democracy executive director Jeffrey Chester. “It’s mind boggling the ability that marketers now have to not only collect data about you but to merge that in databases. . . . Just as in the 1930s and 1940s (when) we tried to develop consumer protection for radio and TV, we clearly need rules of the road to protect consumers in the digital era — and there’s hardly any.”

Marketers say targeted marketing means more relevant advertising and promotions for consumers.

”They want to glue that buying history, those buying patterns, into a single view of you,” Capel said, “so they can get a level of intimacy, from a loyalty perspective, that they’ve never had before.”

Cox Newspapers

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