The digital revolution has fundamentally changedretail. Some changes, such as the prevalence ofretailer websites, are now entrenched in the industry.

Other signs of the transformation, such as omnichannelsupply chain integration, are just star ting to ferment.

There have been tectonic changes in consumerbehavior, closely tied to technology. The balance of powerin the retailer-consumer dynamic has tilted into shoppers’hands — hands that are constantly wielding computers inthe form of smartphones. Today’s shopper hasunprecedented access to product information and theability to filter it through social networks and peer reviews.

Retailers too are leveraging technology, to betteranticipate consumer needs. They are turning stores intoplaces of digital and physical experience, rolling out Wi-Fi and mobile apps to communicate with a consumerwho is almost always connected.

This post-revolution retail is unlimited. It’s no longera matter of having multiple channels and linking them.Instead, it’s about omnipresence — immersing the brandinto as many touchpoints as consumers can fathom. Inthis realm, channels and transactions go far beyondtraditional definitions. For example, a channel could bea photorealistic grocery aisle projected onto a subwaywall, as Tesco has done with its Home Plus subsidiary inSouth Korea. Click on a quart of milk, and it is deliveredto your doorstep when you get home. A channel can be amobile app, interactive TV or social media shoppingexperience. It can be all of these things rolled into one,accessible in a store or anywhere.

Deloitte Consulting LLP recently published a report,“Navigating the New Digital Divide,” which discusses thechallenges created by the connected consumer and howretailers must respond. “Digital influence — that is, thedegree to which in-store sales are influenced bytechnology at some point in the shopping journey — isgrowing at an increasing pace,” the report states. “Weare fast approaching a day when we can assume 100percent of shoppers will be connected 100 percent ofthe time.” Deloitte defines the “digital divide” as the“gap between consumers’ digital behaviors andexpectations and retailers’ ability to deliver the desiredexperiences.”

Bridging this divide may require fashion retailers toview omnichannel through a new lens. “There is a bigtransformation ahead for most retailers, and thattransformation is in how they organize, measure and,fundamentally, manage the relationship with the

customer, because generally speaking, being organizedby channel is a hindrance and not a help in theomnichannel world,” says Kasey Lobaugh, a reportauthor, principal and chief retail innovation officer atDeloitte Consulting LLP.

The Path to Omnipresence The digital influence touched an estimated $1.7

trillion of in-store sales last year, according to Deloitte.That’s over 64 percent of 2015 in-store sales, up from14 percent in 2012.

On the road to this point, retail’s evolution hascovered significant ground.

• Single channel: prevalent until the 1990s, retailershad one channel, such as brick-and-mortar stores.

• Multichannel: the advent of the Internet broughtabout more than one channel, usually stores,catalogs and websites, but each channel wasmanaged separately, with no common inventory,sales processes, prices, etc.

• Crosschannel: in this phase, multiple channels hadthe benefit of common branding and marketingmessages, but their sales and inventory still werein silos.

• Omnichannel: here we have a model for a seamlesscustomer experience across all touchpoints. It’sbuy, pick up and return anywhere.

The opportunities brought by omnichannel are clearand compelling, as indicated by Deloitte’s “DigitalDivide” report which states:

• “Consumers who use a smartphone during theirshopping journey convert at a 40 percent higherrate,” and

• “Consumers who use social media during theirshopping process are four times more likely thannon-users to spend more or significantly more onpurchases as a result of a digital shoppingexperience.”

Increased inventory productivity is where omnichannelretailing makes its strongest business case, saysLobaugh. He highlights three important metrics:

• The retailer sells something it previously would nothave sold = increased sales.

• The retailer sells something at full price that itpreviously would have marked down = decreasedmarkdowns.

• The retailer optimizes its overall inventory = assetefficiency.

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QHow has omnichannel evolvedbeyond traditional channels toencompass many more ways forconsumers to experience a brand?

These days, we’re all demandingcustomers. We expect shopping to beconvenient, the technology to work andthe items to be in stock. A shopper’sjourney can begin anytime, anywhere,thus creating numerous challenges butalso exciting opportunities for thecompanies that serve them. To navigatethis new reality and retain acompetitive edge, organizations arelooking beyond traditional retail spaces(store, web, apps and catalogs). Theydo this by leveraging technology tocreate new venues for shoppers tointeract with the brand along theirbuying journey. This translates into aproliferation of channels that providecustomers with what they want, whenthey want it. Some of these new touchpoints include social shopping (e.g.Facebook), pop-up shops,marketplaces (e.g. eBay), augmentedreality, fashion trucks and store-in-store, to name a few. These newmediums are freeing brands fromphysical constraints, enabling them togive customers personalized brandexperiences, wherever they happen tobe. As the “Retail Prophet” DougStephens put it, “In the new age ofconsumerism, the world is now yourstore.”

QIn this fast-changing reality, howcan a retailer forge a technologystrategy that gives shoppers aseamless experience?

The consumer must be at the front andcenter of your technology strategy, andan end-to-end approach to serving hisor her needs should be the cornerstoneof your model. In my opinion, aseamless experience can be achievedby focusing on three areas. Numberone, and most important, is having anintegrated technology platform with adistributed order management (DOM)engine. As a centralized orderprocessing hub, a DOM system canprovide a real-time view of thecustomer’s profile and inventoryavailability to determine the bestfulfillment option. Secondly, the supplychain must allow collaboration betweenbrands, manufacturers, retailers andtrading partners to fulfill shoppers’wants — where, when and how theydesire. Finally, once these key elementsare in place, you are in position topromote organizational alignment fromthe front line to the executive suite.Every individual needs to beomnichannel ready from both anoperational and incentive perspective.Clearly, implementing a technologystrategy does not happen overnight. Itis a transformation that should beexecuted gradually with investment inthe right architecture and people. Witha concrete plan, it is possible to remainagile and guarantee a future-proofecosystem to support omnichannelretailing and meet customer needs.

QWhat are the main advantages ofextending the supply chain tosupport omnichannel initiatives?Leveraging the supply chain in your

omnichannel initiatives essentially killstwo birds with one stone. First, iteliminates all silos and allows the free-flow of inventory and informationacross channels, thus providingcustomers with a wider and deeperproduct selection. At the same time, itenables you to optimally fulfill customerorders in a way that is both efficientand profitable. Secondly, and this is asignificant motivator, harnessing thesupply chain allows you to sellmerchandise without the hassle ofowning it. This type of collaborationwith brands, manufacturers and tradingpartners is becoming common practice,where retailers have suppliers processorders directly. This minimizes the riskof products being out-of-stock, reduceslost sales and increases customersatisfaction. To achieve this, you mustrethink your supply chain strategy tobecome more nimble, collaborative andresponsive. These are opportunitiesthat companies should evaluate in theirpursuit of omnichannel success.

Q & AEXECUTIVE INSIGHT

Jesta I.S. is an international supplier of integrated software solutions for brand manufacturers, wholesalers and retailersspecializing in fashion and consumer goods verticals. Jesta’s Vision Suite, an integrated yet modular platform, has proven to be agame changer for numerous brands, irrespective of their business model. It eliminates all silos and improves margins across theentire supply chain — from product design to omnichannel retail. The company has been empowering organizations to betterserve their customers for over 45 years and is recognized as an industry leader for customer service and support by clients suchas Carter’s, Perry Ellis International, Puma, Town Shoes, DSW, Cole Haan and Genesco.

MORIS CHEMTOVPresidentJesta I.S.

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How Town Shoes Delivers “Shoephoria”Town Shoes, the largest branded footwear retailer in

Canada, has deployed its own successful form ofomnichannel. Its strategy revolves around creating“Shoephoria” for its customers, enabling shoppers tobuy shoes and accessories whenever, however andwherever they want. “We believe the service we deliveris what differentiates us within the market segment, andwe want to continue to deliver that experience theconsumer is looking for,” says BJ Morden, seniordirector of IT for Town Shoes.

The retailer uses Jesta I.S.’ integrated platform,comprised of point of sale, merchandising anddistributed order management to enable visibility andfulfillment across its 200 stores. Rather than establisha separate warehouse for online orders, Town Shoesopts to fulfill all e-commerce orders from storeinventory. The software system automatically selectswhich store is the best choice to fulfill an order, usingrules defined by the business.

Before going live with omnichannel, Town Shoes wasdetermined to make its processes as simple as possiblefor its 5,000 store associates. The company plannedand prepared thoroughly to ensure smooth deploymentand encourage company-wide adoption. And then, inSeptember 2015, the shoe retailer began offering its fullinventory online, available for home delivery or pick up(or return) in stores. It has been a home run ever since.Online sales have doubled, and first-hit fulfillment ratesare at almost 80 percent. First-hit fulfillment occurswhen the first store designated to process an onlineorder is able to do so on the first try. That meansemployees are able to locate the inventory and set itaside for courier pickup, which is automaticallyscheduled by Town Shoes’ systems. If one store cannotfind the inventory, the order rolls to the next store thatis a good match.

First-hit fulfillment is the desired scenario because itensures that consumers receive orders quickly. “You

want to delight them and get it to them within two days,”says Morden.

“Reporting and analytics have been hugely importantto the ongoing success of Town Shoes’ omnichannelinitiative,” Morden says. The retailer is continuallyimproving the key performance indicators (KPIs) tomeasure omnichannel fulfillment. District managers andindividual associates receive multiple reportsthroughout the week to keep them informed of theirperformance. Town Shoes works hard to ensure itsservice model encourages associates to take care of thecustomer first and foremost, regardless of the origin ofa sale. “We consider the demand generation for anorder, provide accountability for omnichannel sales, aswell as the right amount of incentives for associates,”says Morden.

Town Shoes has taken the endless aisle concept astep fur ther, integrating with its wholesale vendors sothat the retailer can tap into their inventory, ifnecessary, to fulfill omnichannel orders. This way, thevendor could ship products directly to consumers. Theproduct catalog (EDI 832) is essential because it givesa precise view of the suppliers’ inventory. “You’ve got tohave a very easy way to move that data around,” saysMorden.

Integrating the supply chain has required strongpartnerships between IT, merchandising and vendors.The retailer consistently shares its omnichannel goalsand processes across its buying teams, who in turnkeep vendors engaged. “It’s a very easy way for thebuyers to extend their assortment, hit their plans andgrow their business by leveraging the integrated supplychain,” Morden says.

Omnichannel Operational TransformationHow can retail companies reorganize their processes

in an omnichannel world? As Town Shoes hasdemonstrated, an integrated approach is essential. Yetbehind the cur tain, there can be myriad processes and

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“There is a big transformation ahead for most retailers, and thattransformation is in how they organize, measure and, fundamentally,manage the relationship with the customer, because generally speaking,being organized by channel is a hindrance and not a help in theomnichannel world,” says Kasey Lobaugh, Principal & Chief Retail

Innovation Officer, Deloitte Consulting LLP.

business models, all of which affect how an enterprisebecomes omnipresent. Some companies are managingthe entire supply — from concept to consumer. Theydesign, plan, procure, produce, deliver, market and sell.Others focus on specific nodes in the network.Regardless of the supply chain structure, integration iskey to omnichannel transformation.

“The answer isn’t simple. It’s not, ‘Here’s what youdo.’ The world is changing at a rapid rate, driven bytechnology. You have to differentiate yourself and not beconstrained by the way your business operates today,”says Lobaugh. “The store may be an important part ofyour equation, but it may not be so for everyone. You’vegot to figure out what your equation is and workbackward from there — not forward from an omnichannelchecklist.”

Technology enables enterprises to optimize theiromnichannel strategies, no matter what their businessmodels and growth goals may be. To be effective,organizations choose systems that address the entireconcept-to-consumer (B2B2C) spectrum. To thrive in anomnichannel world, consumer goods companies mustadapt their supply chain, order management andfulfillment processes.

“It’s no longer a unidirectional supply chain,” Lobaughsays. “We’re talking about a many-to-many kind ofrelationship. You star t with the premise that says, ‘Ihave inventory in a lot of different places. All of that isavailable to any customer, no matter where they are.’Suddenly, things have gotten a lot more complex.”

Complex, but not impossible.

Innovative retailers, brands, manufacturers andwholesalers take a holistic view of their inventory andtheir customer. They synchronize demand with supplyand provide total visibility — from the shopper toplanning and sourcing. As in the case of Town Shoes,wholesalers could directly process customer orders,thus moving from bulk to parcel processing.

For these forward-thinking companies, distributedorder management powers the omnichannel strategy. Anintegrated approach provides a universal view of ordersand inventory in real time and allows products to besourced from multiple locations. Order brokeringprovides status information and handles omnichannelreturns, shipping and settlement. This translates intooptimum order fulfillment, ensuring profitability for theretailer and satisfaction for the customer.

ConclusionIn a world of rapid retail transformation, the

organization of B2B and B2C commerce must be asflexible, integrated and omnipresent as possible.Unpredictable consumer tastes and loyalties, coupledwith aggressive competition from online players, pushretailers to adapt to this new reality. To keep up, theymust develop omnichannel strategies that link thephysical store to the digital world for a connectedshopping journey. This model should integratetechnology, processes and people. From there, the roadto delighting shoppers has no limits. n

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