‘Me and Now’ Merchandising
In the world of retail, buy online, pick up in-store (BOPIS) is fast becoming mainstream. In fact, personalization and BOPIS are among key shopper expectations and drivers of customer satisfaction, according to Cognizant's 2014 Shopper Experience Study.
Increasing digitization is opening up newer avenues for personalization. Each one of us is creating our own personal "Code Halo" with every click or swipe of our phone, tablet, laptop, Glass, Nest, dashboard or other smart device. Every transaction we make or "like" we record is building a digital fingerprint of who we are and what makes us tick.
Fields of digital information have come to surround people, organizations, products, processes and devices. These code halos contain a richness of business value that far outstrips the value of physical assets that have historically underpinned market leadership. Customers’ code halos, based on their likes, reviews, shares, comments and purchases, hold far-reaching potential to drive personalization and enhance the shopper experience.
BOPIS in Omnichannel Merchandising
BOPIS for omnichannel fulfillment represents a strategic advantage in that it improves shoppers convenience by enabling them to own the item "now." Industry research suggests that 41 percent of retailers either already support or are in the process of implementing BOPIS.
A single view of the customer, sales and inventory are foundational enablers for a retailer's omnichannel merchandising strategy. The need is to merchandise the right "me" products to the right sales channels "now" at the right price. Processes across the enterprise, from planning through supply chain, will need to be integrated and data will need to be consolidated and available to derive actionable insights.
What innovations will need to be implemented to execute real-time demand planning and execution to support BOPIS? Will omnichannel "me" merchandising require new case pack combinations?
We're witnessing a profound transformation propelled by social, mobile, analytics and cloud (SMAC) technologies. Retailers must move quickly to embrace the change enabled by SMAC because competitive advantage, market leadership and profitable growth are at stake. Optimizing the SMAC stack will enable retailers to rise to the needs of the next generation of shoppers.
Social supports the code halo data needed to optimize the personal experience. Mobile supports the customer demand for product and purchase information "now." Analytics of code halo data allows merchants to create customized assortments, evaluate demand using more real-time data, and support guided decisions to improve gross margin, promotions and inventory levels. Cloud computing allows for a cost-efficient option to manage all the data.
Omnichannel's Impact on Traditional Merchandising Practices
Consumer demand has altered the breadth and depth of assortments. Consumers want a broader assortment of products and sizes to choose from. Their demand is fueled by social media. A posting of a celebrity wearing a particular item can create a sellout within hours.
Consumers expect a wider range of available products and services to choose from and flexibility in terms of how they're fulfilled. Product flow may need to be adjusted to meet unexpected changes in demand. Product lifecycle management may need to include what styles, colors, flavors and product designs are being impacted by social media likes, sharing and reviews.
How can sales be increased during these times of more volatile demand? Retailers need to optimize upsell/cross-sell opportunities when the customer is in-store or shopping online. Retailers need to monitor the source of the social media trends and build "stylist" suggestions to create a total look. This will increase basket size and complementary purchases.
The customer experience can be enhanced by adding mix-and-match suggestions based on applying predictive analytics to customers’ historical purchases as well as offering complementary products and services to meet customers’ anticipated needs. For example, grocery retailers can suggest recipes based on historical ingredients bought.
Promotions need to be real time, updated to optimize the most current purchasing trends. Financial planning and open-to-buy need to be proactively evaluated and managed to account for unexpected changes in demand.
Mobile will be a venue to implement and gather information. Based on a shopper's location in-store, the retailer can push items on promotion and localized cross-sell/upsell options. Space planning will support in-store location-based value-add services.
Imagine walking into a store to pick up a BOPIS order or just to shop and your smartphone automatically receives a text with a showroom number where the sales person has your BOPIS order ready and your personalized assortment in your size and favorite styles based on your latest likes, shares, reviews and purchase history.
What are the processes and organizational impacts that need to change to support the future retail experience? How will retailers use code halos? What are the analytics tools needed?
The New Omnichannel Operating Model
Tighter integration across the retail value chain, from product lifecycle management and merchandising through supply chain execution, will be required to support the next generation of the customer experience.
Improved predictive analytic capabilities and operational process excellence will be required to support more customer-centric planning and execution. Technology will need to be enhanced to support cloud-data analysis driven by the exponential increase of future data volumes generated from websites and mobile devices. More flexible allocation of resources, including assortment and space, will be required to meet ever-changing customer demands. These are just a few of the capabilities retailers looking to thrive in the omnichannel paradigm will need to implement. The question they need to ask is whether they're ready for "Me, Now."
Steven Skinner is senior vice president of retail consulting, and Steven La Schiazza is director of retail consulting at Cognizant, a global provider of information technology, consulting and business process outsourcing services.
