How retail giants can fulfill their omnichannel ambitions
Photography: Enno Kapitza
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How retail giants can fulfill their omnichannel ambitions

Jim Mortleman & Clare Simmons — January 2016
Exclusive video interview
As online and physical worlds come ever closer together, the development of ‘the connected store’ will become a key differentiator for retailers, says Fujitsu global retail strategy VP Richard Clarke

Since the birth of ecommerce in the late 1990s, business analysts have predicted the demise of physical stores in ever-greater numbers, as online giants such as Amazon, ASOS, Alibaba, eBay, Spotify and Netflix continue their march. Initial efforts by traditional retailers to counter that assault typically focused on creating online properties that were run independently of their physical stores, in many cases out of fear of cannibalizing their own in-store sales.

But in recent years, several technology trends — the proliferation of cloud services, easier integration through application programming interfaces (APIs) and big data and real-time analytics, among others — are enabling big retailers to converge the business, employee and customer processes of those physical and virtual stores in increasingly sophisticated and comprehensive ways.


Today, major retailers with such multi- or even omnichannel ambitions now argue that it makes little sense to consider online and offline activities in isolation. As Fujitsu’s global retail director for strategy and business development Richard Clarke believes, that makes this the most exciting time in the retail sector’s history. “The store is back, it’s alive and that physical presence is going to be fundamental to retail going forward,” he says.
Blending digital and physical




The ability of retailers to respond to that omnichannel challenge will be the key to their future success, says Clarke. “The fundamental disruptor is what we call the ‘connected store’ – the online world coming together with the offline world. And it’s really starting to accelerate now.”

It will fundamentally transform the sector for retailers, their employees and customers. “We already see it with the growth of ‘click and collect’ – where customers research and buy products online, but collect them in store,” Clarke says.


This, though, is just the beginning of the joined-up process. Retail businesses are investing in a raft of technologies that will transform both the customer experience and their own operations, giving them the ability to track customers’ journeys seamlessly across physical and virtual spaces, understand and respond to their needs in real time and deliver increasingly personalized and convenient retail experiences wherever customers are and however they choose to shop.

“Customers want the same personalized service in-store that they get online, whether that’s through their smartphone or a store device.”

“When people shop online, the retailer recognizes who they are and can provide them with personal recommendations and product information — a tailored service. Customers want that in-store too, either via their smartphone or some other device,” he says.

All manner of existing and emerging technologies give retailers the potential to do just that — from customer-tracking technologies and in-store displays and beacons that communicate with people’s mobile devices to one-touch pay-and-go systems that, over the next few years, will start to eliminate traditional tills and checkout queues. The ultimate aim, Clarke says is to blend the convenience and information-rich experience of online shopping with the tangible appeal of physical retail.
The next big deal


But the pace and nature of that adoption will vary, both by geographical region and retail sub-sectors, as will the precise role that physical stores play in the mix, says Clarke. “There’s no one-size-fits-all approach. Different countries and regions are at different stages of technology adoption. And the store will serve a different purpose, depending on the retail sector you’re in,” he says.

So for grocery, it’s still going to be about visiting the store, touching, feeling and perhaps even tasting produce. In areas like fashion, speciality retailing and apparel the model is likely to be more around click and collect. Customers may use online to ensure a desired product is going to be available before they visit a store, to reserve it and then visit the store to see it first hand and, in the case of clothing, to try it on.”


For retail businesses and their IT functions, this is going to mean fundamental changes. “Disruption always introduces an element of complexity and cost, and retailers need to make very clear infrastructure investment decisions. Omnichannel retailing is all about the flow of data between systems, customers and colleagues. If you hardwire something today that you’ll have to break up in two years’ time, that’s going to be very expensive,” Clarke advises.

“Most fundamentally in terms of IT, if you’re going to build the infrastructure for the future, you’ve got make some decisions regarding your point-of-service solution and how that’s going to connect to your customer data system, or to order management or your business intelligence (BI). Because if you make those decisions now and remove complexity, it’ll make life a lot easier in the future,” he adds.

“Staff in stores are going to have to be trained to deliver services in a different way — to provide a personalized service to customers from tablets.”

But it’s not just “the plumbing of the business” that needs to change, says Clarke. There are also significant challenges around organizational structure and culture. “Today, many retailers are broadly set up with an online organization and a stores organization. Those will have to come together to match what the customer wants — personalized product offers, joined-up service levels and so on.

“In terms of process, staff in stores are going to have to be trained to deliver services in a different way, so that (for example) customers can easily reserve products they’re interested in, collect products they’ve purchased online or be provided with personally relevant information in-store from staff with tablets,” he says.

Omnichannel infrastructure


Another fundamental element of delivering the right level of services is data analytics. “If you want to market to (and speak with) customers as individuals, you’ve got to know who they are, their preferences and where they are in the [buying] process. So, for example, if you want to send them a message on their smartphone, you need to be sure you send the right message at the right time, in the right place,” says Clarke.


He adds that analytics is also going to be very important from an operational standpoint. “Retailers want to know more and more about customers’ route through the store, or from online to the store, which departments they visit and where they actually make their purchases. Analytics, supported by things like Wi-Fi-enabled customer tracking, is going to help them do that.”

At the moment, he concedes, it can be difficult to measure how the different channels are contributing to the bottom line. Did the website encourage people into the store or was it the promotion in the window? he muses. “With Wi-Fi devices in-store and the use of big data, I think questions like this will become easier to answer, and that will further drive omnichannel development.”

• Fujitsu will be showcasing Connected Retail solutions at NRF 2016, ‘Retail’s BIG Show,’ in New York, January 17-19.
First published January 2016
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