roadmap report how unified commerce · 2018-10-12 · unified commerce is an approach to...

HOW UNIFIED COMMERCEWILL DRIVE OMNICHANNEL

MATURITY

UNIFIED COMMERCEOMNICHANNEL

MATURITY

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ROADMAP REPORT

HOW UNIFIED COMMERCE WILL DRIVE OMNICHANNEL MATURITY

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“Customers are shouting, are retailers listening?” This was the apropos title of a 2016 Accenture infographic highlightingresults of its most recent global consumer shopping survey. There is apalpable sense of urgency for retailers to evolve — radically if necessary— to keep up with new shopping paradigms and consumer expectations.

Accenture said its survey of 10,000 consumers from 13 countries“reveals a rising intensity that’s forcing companies to adapt more quicklyto the shifting retail reality that defines the customer experience.” Amongthe research findings:

• 96 percent of consumers are going online to shop forapparel (99 percent among U.S. shoppers)

• Only about half of global apparel shoppers feel retailers’delivery options, return policies and store staff interactionmeet their expectations

• 51 percent feel the ability to check apparel productavailability online before going to a store would mostimprove the connected shopping experience, up from 27 percent in 2015

Forrester Research has uncovered similar trends:

• 89% of consumers expect to view store inventory online• 86% expect to return online orders to a store• 73% expect to “click and collect” (order online/pick up

in store)The fashion retail industry is rushing to catch up with shoppers’ desire

for a truly seamless experience. Consumers have come to takefrictionless commerce for granted in their interactions with otherindustries, from banking to food to travel. After all, if you can check yourreal-time banking account balance from any ATM and confirm flight arrivaltimes to the minute via mobile phone, shouldn’t you just as easily be ableto get the shoes or sweater you want?

Another major shift affecting apparel retailers and brands is theconsumer’s more active role in driving style trends. There are parallelsbetween this fashion dynamic and the trend toward agile softwaredevelopment, in which technology firms see a need, quickly develop newcode, test it through groups and roll it out. As a result, new softwareversions and app updates continually respond to market needs. Asfashion gravitates away from its traditional season-driven structure andtoward a more fluid development model, companies are looking for newtechnology tools and processes to help them adapt.

And then there is the elephant in the room: e-commerce. Its importancecannot be underestimated. When Internet shopping was born in the late1990s, retailers worried it was a huge threat to store sales. Then as theyears went by, many settled into new assumptions, estimating onlinecommerce would only equate to as much as a single store’s sales, ormaybe a district’s sales. These assumptions helped to justify separateteams and processes to manage this “side” opportunity. By 2015, manysaw e-commerce representing at least a region’s worth of sales, and nowit’s expected to account for 20 percent of all retail sales by 2025.4

89%of consumers expect

to view storeinventory online

73%expect to “click and

collect” (orderonline/pick up in

store)

86%expect to return

online orders to astore

Amazon is out in front, steadily booking double-digit sales increasesand getting to know consumers ever more intimately through newplatforms such as Alexa. Meanwhile, many traditional department storesand mall-based fashion retailers are seeing sales decline. Macy’s plansto close 100 stores as it “right sizes” its physical footprint and expandsits digital reach.

Rob Henneke, executive vice president of retail consulting firm RPESolutions, predicts that e-commerce sales will soon eclipse their alreadyrapid growth rate, which has ranged from 10 percent to 15 percent inrecent years. Putting unified commerce strategies into action is just asimportant as having lights and registers in the store — if you’re amultichannel retailer, you can’t do business without them. “We’re at thepoint where e-commerce is actually going to grow at a faster pace, andretailers who don’t have all of the pieces together to deliver a unifiedcommerce experience are going to suffer,” he says. “Whatever it is thatyour customers are expecting — endless aisle, click and collect,seamless CRM, etc. — you have to have it all in place.”

Unified commerce: What is it and why is it needed to win?Unified commerce is an approach to omnichannel retail that leaves noroom for disconnects. Today, though many retailers employ variousomnichannel tactics, these efforts are rarely 100 percent unified, orprofitable. Businesses may be able to offer consumers someomnichannel services, such as buy online/pick up in store (BOPIS), butbehind the scenes, the systems and processes behind such services arestitched together like a patchwork quilt and are not very flexible orscalable. This limits the potential for sustained profitability.

Omnichannel can be a consternating challenge. A survey of 250 retailexecutives by Forbes Insights and Synchrony Financial found that 73percent of retailers say omnichannel is important, yet only 38 percentconsider themselves past the beginning stages of their omnichanneljourney.

The payback for omnichannel mastery keeps retailers focused on theprize. According to Euro IT Group, multichannel shoppers spend threetimes more than single channel shoppers. Similarly, HFN reported thefollowing in early 2017:


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omnichannel shoppersspend 1.7 times more than

store-only shoppers

omnichannel shoppersspend twice as much as

store-only customers

omnichannel shoppersare worth four times more than

single-channel shoppers

Under unified commerce, a retailer’s operations play like a symphonyorchestra. Many different “instruments” — websites, stores, loyaltyprograms, distribution centers (DC) and the list goes on — cometogether, following the same sheet of music. The conductor (c-suiteleadership) can control swells and quiet interludes in supply and demand.How is this possible? Below are the core characteristics of unifiedcommerce:

• All data is accessible via one platform• Key data is available in real time, including information

about customers (orders, loyalty preferences), products,prices and inventory

• Data is accessible to all parties who need it (customers,management, buyers, supply chain, store operations,marketing, planning and allocation, etc.)“Retailers need systems that truly share information from inventory

management to the supply chain to stores to e-commerce, so that you’rereally looking at one view of the entire organization,” says Henneke.“That’s the best practice. You pull all of that data together and truly seeone version of what’s going on in the company. That is what’s reallyimportant.”

There isn’t a standard playbook for unified commerce that will work forevery fashion retailer. However, by following this roadmap, companies canavoid some common pitfalls that may impede their path to unifiedcommerce and omnichannel maturity.

Address organizational issues separating channelsThe greatest roadblocks to unified commerce are often the silos withinthe apparel retailer’s organization. Disparate teams, systems, processesand information create customer service and operational issues. “Toomany retailers still view and treat e-commerce and store channelscompletely separately,” says Henneke. “Channels need to be broughttogether. In doing so, you have to bring all departments together so thatyou don’t have an e-commerce marketing department separate from thestores’ marketing department. Store operations has to be part of e-commerce operations and the other way around. You have to not justunify commerce but unify the company.”

An April 2016 survey of attendees at the World Retail Congress inDubai highlighted the following challenges, which are holding retailersback from offering shoppers a cohesive experience. Most can be tracedto organizational issues that separate channels.


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67%lack of customeranalytics across

channels

48%siloed

organization

45%poor data

quality

45%inability to identifycustomers across

shopping trips

39%lack of internalcoordination fordigital channels

Step1

ROADMAP TO UNIFIED

COMMERCE:ONE SIZEDOES NOT

FIT ALL

Here are four areas to explore in your quest to break down barriers.

ORGANIZATIONAL STRUCTURE:Is e-commerce run separately from stores? What is the role of stores vs.warehouses in fulfillment? Do you have a holistic approach tomerchandising and marketing across all channels? Wal-Mart recentlyaddressed some of these organizational issues at the highest levels,naming a chief technology officer to oversee both e-commerce and brick-and-mortar stores and expanding the duties of its U.S. chief marketingofficer to encompass online marketing.

PROCESSES:How do loyalty rewards and clienteling programs translate acrosschannels? How could BOPIS processes be integrated into store workflow?How do returned omnichannel products go back into inventory? How cantraditional processes be re-engineered with omnichannel in mind?

POLICIES: Are some long-standing policies outdated? Who gets credit for endlessaisle sales? For example, store managers and teams increasingly areexpected to help consumers find products that aren’t in stock in thestore. They may spend a lot of time and effort helping shoppers identifyjust the right product online or in inventory at another location, and guidethe purchasing process. Yet due to legacy computing systems orcorporate policies, they may not get any credit for the transactionbecause the inventory never left their store location. For these associatesand managers, it’s as if their contribution to this important omnichannelwork was invisible.

Decisions and directives to change long-standing incentive policiesneed to come from the c-suite or even the corporate board. This type ofchange will be extremely important as in-store inventory levels contract,and retailers rely more on associates to connect consumers with productoutside the store’s four walls.

INFORMATION GAPS: Where is real-time data needed but lacking? Where are interfacesbetween point solutions or segregated inventory preventing real-timeinventory visibility? Can store systems recognize shoppers’ onlinespending?

The ultimate goal is to integrate channels in order to have a singleversion of the truth for products, prices, customers and inventory.However, integration does not mean homogenization. Utilize thestrength of each channel to feed your unified commerce ecosystem.Leverage e-commerce to drive traffic to your stores, and use your storesto create a memorable brand experience that builds loyalty and sales.For example, the e-commerce channel gives retailers an opportunity togather more information about their customers because it is easier tocapture digital data than it is to track in-store interactions. Websitesyield a wealth of insights that retailers can translate into a betterunderstanding of the customer. This information, in turn, can influencestore design and service.


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Decisions anddirectives tochange long-standing incentivepolicies need tocome from the c-suite or even the corporateboard.

In the store, shoppers still want to touch and feel clothing before theybuy, and it’s up to retailers to make the overall experience amazing.Consider the new Samsung store in New York, where the brand doesn’tsell any inventory but rather entices shoppers to experience products andthen buy online. Social media channels also play a unique but integratedrole. For example, they offer real-time feedback on products and provide aplatform for brand evangelization.

With unified commerce, all your channels add up to a single total. Asyou break down organizational silos, aim to create a symbiotic relationshipbetween all consumer touchpoints for increased sales and loyalty.

Identify top customer expectations and company goalsThe second step on the road to unified commerce may seem obvious.Fashion retailers are constantly looking to see what issues are mostimportant to their customers. Yet their perspective can be limited bycurrent constraints. “You have to start by looking at the opportunitiesthrough the customers’ eyes, not from the vantage point of ‘What can wesupport? What can our systems support? What do our incentivessupport?’ Instead, you begin by asking, ‘What does the customer want?’And the answer is going to be different for every retailer, even for retailersfrom within the same category,” Henneke says.

Some retailers may decide endless aisle — the ability to fulfill productfrom anywhere across the organization — will have the most positiveimpact with customers. For others, it may be a seamless loyalty programthat recognizes shopping preferences and activity across channels.

Accenture’s 2016 global shopper survey found that 50 percent ofconsumers “can’t wait” to receive real-time promotions via mobile, upfrom 12 percent who cared about this the prior year. At the same time, 39percent said they wanted to easily order out-of-stock items via mobilewhile in the store, up from only 7 percent who were concerned about thiscapability the previous year. There are different system, process, peopleand policy changes required to execute any of these strategies. Eachretailer has to analyze the nature of its own customer base to determinewhich expectations top shoppers’ wish lists.

A closely related part of this step is to consider what the businessneeds to do to succeed. The answer may align perfectly with the answer tothe previous question (i.e., what do consumers want most?), or it may betangentially related. For example, consumers may really want personalizedpromotions, and they also want endless aisle. From a businessperspective, executives may only be able to implement one at a time, sothey must calculate which capability will yield the greatest benefits. Whichpain points can they address for the greatest ROI? Is it most important toclear up cloudy visibility into customer behavior and then offer lucrativedeals to build customer loyalty and the promise of greater sales? Or, it ismore critical to gain real-time inventory visibility to capture omnichannelorders? Or if omnichannel fulfillment costs are the real problem right now,is the most pressing need for stronger distributed order management? Itcan be tempting to tackle projects that appear to offer low-hanging fruit byrolling out a point solution, but it’s crucial to evaluate what approach willposition the business for stronger sales and profits.


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Step2

50%of consumers

“can’t wait” to receivereal-time promotions

via mobile

Ýup from

12%who cared about this

the prior year

39%said they wanted

to easily order out-of-stock items via mobile while

in the store

Ýup from

7%who were concernedabout this capability

the previous year

Priorities can vary a great deal. For a luxury brand, it is mission criticalto intimately understand customer preferences and offer a highlypersonalized experience, Henneke says. These retailers also may havemore to gain from visibility into the extended supply chain, so that theycan expedite desired products direct to the consumer. On the other hand,a mid-tier, mall-based apparel retailer may see more immediate ROI fromclienteling technology that takes in-store cross-selling capabilities to thenext level. “They need to empower their associates to seizeopportunities, i.e., ‘What else can I sell you while you’ve got $20 in yourpocket?’”Henneke says.

Evaluate the best path to data unificationAs with step two, there are many different ways to approach step three,but the end goal is the same: Establish a central hub and unified view ofall inventory and customer activity. What you prioritize to do first, second,third and so on with that unified data depends on the individual retailer. Inthis way, unified commerce is like coaching a basketball game. When youput in different athletes and decide to run various plays affects how yourbusiness’ unique game plan is executed. But every retailer benefits fromhaving a clear understanding of the assets and dynamics on the court tobegin with.

Analyze how each “player” for your business — including data, peopleand processes — interacts with and matches up against other players,including the competition’s lineup. How does this interaction affect howdifferent technology investment strategies could play out? Which playersand which plays are most time critical to call out first? For example, onthe road to unified commerce, some fashion brands choose to focus firston their core merchandising and order management processes. It’simportant to them to never lose another order because they don’t knowtheir true inventory position. Everything else builds from there.

Still, for other retailers, the choice may be different. Their point-of-salesolution may be on the brink of total failure or so limited in itsfunctionality that executives are losing inordinate amounts of time simplytrying to track sales. They may have to execute the POS piece of thegame plan first.

Regardless of which pain point a retailer prioritizes, the key to unifiedcommerce is to have a master plan for data unification. Some technologysolutions are designed with this unification as a central strength, whileothers are built more narrowly to address a particular process. On thisomnichannel journey, point solutions can have a place but also can poseproblems. “It can be a pitfall to implement best-of-breed solutions that donot talk well to each other,” says Henneke. “Then you end up with a veryun-unified set of data.”

Think of each IT tool as a bullet. Every bullet needs to sit perfectlywithin the cylinder for the weapon to fire properly and powerfully. Somepoint solutions can seem like shiny new tools with the promise of dazzlingshoppers, yet if they are implemented prematurely or don’t interface wellwith the overarching unified commerce platform, the retailer will not beable to fire on all cylinders. For instance, a new mobile POS solution mayhelp speed checkout, but if it can’t communicate seamlessly with the


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Some point solutionscan seem like shinynew tools with thepromise of dazzlingshoppers, yet if theyare implementedprematurely or don’tinterface well withthe overarchingunified commerceplatform, the retailerwill not be able tofire on all cylinders.

Step3

order management system or clienteling solution, then there are hugemissed opportunities to engage with shoppers to offer endless aisle orpersonalized promotions.

Finally, analytics are the “ah-ha” insights of the unified commercegame plan — the parts that give you strong clues about what your nextmoves should be. Once you have all of your data unified, you can useanalytics to help predict, forecast and plan all aspects of the business,from the supply chain to sales to promotions. Business intelligence(analytics) software can quickly sift through enormous volumes of data(including social media information) to help retailers understand buyingpatterns. Then they can plan focused promotions based on real-timetrends in their e-commerce channel, store locations and othermarketplaces. Unification of the core data facilitates more scientificmanagement of the business because it provides visibility across all ofthe different segments.

ConclusionsIt’s time for omnichannel strategies and initiatives to leave thetumultuous years of childhood and adolescence behind and to enter amore seasoned period of maturity. Whereas “mature” can be synonymouswith low growth in some contexts, the opposite is true for omnichannelretail. Apparel retailers have an opportunity to embrace unified commerceas a pathway to omnichannel maturity. Unified commerce is achieved bybreaking down organizational silos, identifying customers’ most importantneeds and aligning them with business goals, and unifying core businessdata on a single platform.

There is impressive ROI for successfully executing a unified commercestrategy. Retailers are likely to experience sales growth when they meetthe needs of cross-channel shoppers, who spend significantly more thansingle-channel shoppers.

Also, when all channels are connected, fashion retailers and brandsprovide a seamless customer experience, fostering loyalty. They giveconsumers what they want: the ability to buy products however andwhenever they wish. Connectivity and transparency between channelsbuilds trust within the retail organization and with shoppers, making iteasier to retain loyal shoppers, acquire new customers and build yourbusiness profitably. By following this unified commerce roadmap, apparelbrands and retailers can confidently show shoppers they are listening —and delivering on their customers’ demands.


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Connectivity andtransparency betweenchannels builds trustwithin the retailorganization and withshoppers, making iteasier to retain loyalshoppers, acquire newcustomers and build your businessprofitably.

Copyright © EmsembleIQ and Apparel 2017

MORIS CHEMTOVPresident, Jesta I.S.

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Q: Why is it important for apparel retailers to think beyond their currentomnichannel practices and to aim for true unified commerce?MORIS CHEMTOV: Retailers big and small have realized that a seamlessomnichannel shopping experience is now the new normal, so naturally many findthemselves at some stage of an omnichannel transformation. However, moreoften than not, the current omnichannel practices they are employing just createa mirage of a fluid customer experience. This is because merely connecting allyour channels by integrating disparate systems does not enable trueomnichannel retail. For an actual connected experience you need a singleversion of the truth for all your inventory, customer and product data acrosschannels. True unified commerce, in my opinion, is the first step to omnichannelretailing. Only frictionless back-end operations can guarantee a fluid front-endcustomer journey. Moreover, unified commerce is the only way to respond to thetechnological innovations in the near future that may bring about furtherdisruptions to the retail consumer and industry as a whole.

Q: How can priorities on the path to unified commerce be very different fromretailer to retailer, yet the need for a central information hub be equallyimportant regardless of the road taken?CHEMTOV: Since customers are at the center of today’s demand-driven retaileconomy, a brand’s priorities on the path to unified commerce depend on thespecific shopping journey expected by these customers. For example, a luxurybrand would likely prioritize a solid CRM system to have customer data at theirfingertips in order to provide personalized service. On the other hand, a largemall-based fashion retailer may first aim to have a robust order managementsystem in place to enable delivery anytime, anywhere. In any case, irrespectiveof your vertical or the size of your business, you must have all your inventory,customer and product data unified in order to have the ability to orchestrate yourcustomer journey the way you want and, ultimately, how they want. This centralinformation hub then becomes the foundation on which you can build assophisticated a retail structure as you desire. For example, when you have real-time visibility of your inventory and customers, you can fulfill all orders anywhereand, furthermore, create targeted promotions based on available inventory andcustomer preferences. A centralized information hub not only equips you withcurrent requirements but also future-proofs you, as it gives you complete controlof your operations anytime, anywhere — the same way your customers operate.

Q: Does point solution use impact the likelihood for unified commercesuccess? What considerations should be weighed carefully to ensureeverything works harmoniously?CHEMTOV: The best-of-breed versus a single integrated system debate has longbeen a mainstay of any software industry, and retail is certainly no exception.While there are advantages to both sides, I’ve seen time and time again that thebenefits of an end-to-end platform far outweigh those of point solutions —especially when it comes to achieving unified commerce success. It all boilsdown to the integrity of the data feeding your system. Specifically, the three coresegments of inventory, product and customer information are the most importantfactors to laying the groundwork for a thriving omnichannel ecosystem. This datamust be consistent and, most importantly, available in real time. Storingeverything under one roof allows key information to flow freely across modules,without any choke points due to integration issues or miscommunicationbetween disparate systems. Therefore, having multiple best-of-breed solutionsto manage different aspects of omnichannel retailing may seem enticing as aturnkey solution but in the long run this type of approach negatively impacts yourbusiness. The optimal game plan is to ensure the consolidation of your criticalbusiness data in a single system, to allow for real-time reporting and, thus,optimal decision-making.

Jesta I.S. is an international supplier ofintegrated software solutions for brandmanufacturers, wholesalers and retailerslooking to enable unified commerce. Jesta’s Vision Suite is a modular platformthat eliminates the inefficiencies andinaccuracies of disjointed applicationsgiving you the ability to optimize youroperations from end to end. It buildsscalable business operations, helpsincrease market share and improvesmargins across the entire supply chain –from product design to omnichannel retail.Clients include Perry Ellis International,Puma, Genesco, J.McLaughlin, Town Shoes,Harry Rosen, Stokes, The Marine CorpsExchange, Cole Haan, Corporativo Ferrioni,DSW and Carter’s, among others. For more information, visithttp://go.jestais.com/unifiedcommerce

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roadmap report how unified commerce · 2018-10-12 · unified commerce is an approach to...

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