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Tom Brouillette Thoughts at Large

943 posts
tbrouill

Omni Channel Purchase

Posted by tbrouill Dec 10, 2017


The omni channel purchase process is probably the critical link in the consumer relationship battle that is being fought by the large legacy retailers for the favor of consumer shopping and purchasing.  The convenience of true omni channel purchasing cannot be beat and this is also the most difficult aspect for the large legacy retailers to deliver.  Consumers now demand cohesive offers and support across the retail fulfillment channels to meet their needs at the time of the purchase, these are truly opportunistic shopping and purchasing activities that must be met at a moment’s notice in a manner that supports the consumer need at the time of decision.  This includes all of the input consumers receive from their mobile devices as they are shopping whether online or in a store.  The mobile input to shopping decisions is a continuous stream of comparisons and suggestions when the consumer allows location based communications.

 

I know that in my shopping and purchasing practices that I am drawn to the opportunity at the time I am shopping and based on input from all channels, in other words I am continuously reviewing cross-channel options for purchasing and utilizing the retail store as a showroom for my shopping and decision finalization.  Millennials are even more technically aware and plugged into the opportunities available through mobile and wireless technologies.  This is not however an age bias because seniors are also highly capable from a technology basis and even more drawn to the simplicity and opportunities to eliminate trips and lugging purchases available via the online channel. 

 

This is a cultural as well as a technology challenge for the large legacy retailers to overcome because traditionally these retailers have traditionally focused on the brick and mortar store channel to draw customers and the size of the chain to drive cost savings from their size to provide volume discounts that are then passed to consumers.  The technology challenge is the changes required to support the true omni channel requirements, beginning with the inventory challenge and finishing with the purchase.   The challenge really starts with the assignment of the sale to the channel and this first hurdle really slowed the large retailer acceptance and also ability to take advantage of the opportunities.

 

These retailers must look at the purchase supporting across channels and the shopping supports the purchase.  There will be some products that lend themselves to the physical shopping environment and some that lend themselves to the online shopping environment.  Retailers must embrace these differences and not limit the purchase to the channel where the shopping is executed.  This seems to be the continuous major challenge for large legacy retailers and this challenge seems to be related to the culture of the brick and mortar vs online shopping practices.  This is the change required to support a true omni channel purchase and when this is embraced by these retailers they will be able to then focus on the advantages that a large network of stores and warehouses present to supporting consumer demands.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


The changes in the retail market are just as much a consumer reaction to their frustrations with brick and mortar shopping as they are embrace of new technologies.  Consumers have reacted to their frustrations with shopping and purchasing by building their own virtual retail market where they can shop and purchase while interacting with friends and family in a virtual shopping experience that allows them to meet their lifestyle needs efficiently and effectively.  Amazon and other eCommerce retailers have taken advantage of these frustrations to expand their reach and disrupt the retail market as a result.  Some retailers have realized their challenge and are now scrambling to react and adjust to the new and changing consumer demands with some success.

 

Amazon is a great example of a retailer that has recognized the frustration and provides a robust alternative that embraces consumer choice and collaboration.  Amazon has made the online shopping experience personal and has focused on developing the relationship with consumers to develop a bond and expectation of value for the consumer.  Amazon has been able to create a two way conversation with the consumer that legacy brick and mortar retailers have be eliminating for years and this is the secret sauce for Amazon and other online retailers. 

 

Small local retailers have not really suffered during this disruption and I believe this is because these small local retailers focus on the relationship with the consumer, they personalize the experience and consumers react positively.  Contrast this to the large legacy retailers of a pure focus on price without the personal consumer relationship and you can see that consumer reaction to leave in droves for the eCommerce marketplace where price is a competitive advantage.

 

Large retailers must change their focus to improving the shopping experience and giving consumers a reason to come to the store again.  These retailers cannot change traffic jams but they can change parking challenges through a focus on experience getting to the store as an example.  Large retailers have spent years focused on cost reductions in the store and this has resulted in reducing the attraction for consumers to go to the store.  Large retailers must now focus on the omni channel shopping and purchasing capabilities in the store and the consumer experience when in the store.  In my opinion, these retailers should reduce the square footage of product display in the store, increase the space for product backroom storage to support direct to consumer shipping to support the omni channel shopping and purchasing demands of the consumer. 

 

The last addition for these large retailers is to produce product events in the store as a means to attract the consumer to spend more time in the store.  When I was young we used to go to the mall and the large retailers for the entertainment just as much as the purchase.  As a result of the product demos and other entertainment options people spent more time in these stores and purchased more.  Omni channel shopping and purchasing allow the retailer to redirect their spending into areas in the store that will produce greater value and greater sales.  

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


This year I believe the consumer has reached a turning point with brick and mortar retail shopping due to the level of frustration generated and not just when shopping but the whole experience from driving to the shopping center, finding parking, and then the struggles in the store to find the right product.  This is not to say that the retail store is dead, it is just beginning to share the spotlight now with eCommerce online shopping and the opportunities for omni channel shopping that this brings to the consumer.  We are still in the early stages of the omni channel shopping and purchasing transformation and there are still many reasons for consumers to go to a brick and mortar store for some purchases.  These reasons are changing now though and these changes are steadily increasing in momentum to  change the brick and mortar requirements and experience.

 

Consumers are viewing their total shopping experience now which includes their experience in getting to the store, parking, finding the appropriate product in the store and then finding a clerk to wait in line and purchase the product.  Then after all of that fun, they must carry the product back to the car, navigate through parking lots and then roads to home.  This becomes in many cases a day trip to complete and I for one am not especially fond of the thought of these hurdles to shopping, especially when you can complete your shopping online, at least for most products, in a fraction of the time and the hassles!  There are still reasons to go to a brick and mortar store for specialized products for instance however these reasons are also continuously decreasing as the online shopping and purchasing opportunities increase.

 

The next frontier for omni channel retail is the realization of the consumer frustration with brick and mortar shopping and a concerted effort across all participants to change the physical retail marketplace into an entertainment experience.  Consumers are investing a great deal of time and effort in their physical shopping activities with a great deal of frustration and this encourages these consumers to forsake the physical shopping experience in greater numbers.  Retailers must collaborate together and along with real estate developers and entertainment venues to redefine the experience into one that delivers on positive experience and encourages consumers to return and spend time.

 

Brick and mortar retailers must take this consumer shift in shopping and purchasing as feedback on the brick and mortar experience and a reaction to the frustration with the physical shopping experience.  They must change their shopping and purchasing viewpoint to support a true omni channel marketplace by redefining their stores and then they must redefine the physical shopping experience by redefining the physical shopping centers.  This is not just a retailer issue any more it is also a real estate issue and an employment issue that must be addressed and resolved.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


The recent changes in consumer shopping habits are more than anything an improvement in consumer efficiencies to shop and purchase.  These changes embraced by consumers more than anything show the overwhelming desire for consumers to spend less time in the physical shopping activities and complete their purchasing more efficiently and more cost effectively.  The retail omni channel shopping and purchasing changes are at a very basic level a search by consumers to increase shopping efficiencies in support of their lifestyle demands.  Consumers require efficiencies in their shopping so they can spend more time on activities that give them pleasure and the opportunity to spend more time with their family.  Retail shopping in the brick and mortar store is not an opportunity for families to spend time together, it is a necessary activity for families to support other more enjoyable family activities.

 

These consumer objectives have been at odds with the retailer objectives for quite some time and only changed when the technology and wireless capabilities available to consumers approved to a point where these consumers could create their own marketplace for shopping and purchasing that meet their needs.  These capabilities frankly caught many retailers by surprise because the retailers were so intent on their own requirements and unfortunately for these retailers they did not follow the consumer changes to their logical ends.  In fact this process of consumer changes has not ended, it is going to continue and the rate and velocity of these changes will increase. 

 

Retailers are now beginning to realize these demands will not stop and will not slow down and are beginning to take measures to address.  These retailers are now taking steps to address these demands and as a result improve their relationship with consumers.  I have seen the changes in my interactions with many retailers this holiday shopping season in my interactions with retailers and also via news reports of retailer modifications to shopping and purchasing capabilities.  Another area this year showing real improvements has been in transportation and parcel shipping direct to consumers.  Parcel carriers are also taking important steps to improve both their capabilities and interactions with consumers in delivery coordination and notification.

 

I personally noticed a big difference this year in the manner and options to shop and purchase Christmas gifts and these new virtual shopping and purchasing capabilities have produced a greatly reduced stress level in shopping.  In fact when I shop in stores now I really notice the impact on my personal time and frustration.  This encourages me to focus more on eCommerce shopping and also in my limited brick and mortar shopping I have a tendency to focus on retailers that blend their virtual and physical shopping experience to simplify the purchase.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


One of the benefits that can be realized in the omni channel retail market is improved efficiencies in fulfillment, both to the end customer and also the brick and mortar stores.  This was not one of the original objectives or probably even one of the original potential opportunity identified by retailers however the changing consumer demands in developing and omni channel marketplace provided this opportunity for retailers to flatten and standardize their fulfillment practices across channels to gain dramatic efficiencies.  These efficiencies will provide long term improvements in both the fulfillment costs and delivery efficiencies due to the expansion of fulfillment across the entire retail network of brick and mortar stores, distribution centers and supplier drop ship programs.

 

Retailers must take a broad view of options and opportunities in order to increase the fulfillment efficiencies and increase both services and savings.  Retailers must view the fulfillment demands not only across channels but also across delivery demands.  This requires a paradigm shift in how retail stores and distribution centers are viewed in the omni channel marketplace.  The fulfillment demands and comparisons between store replenishment and customer direct delivery are converging and this means that retailers must view the fulfillment not from a channel but from the process required to support the business and consumer fulfillment demands. 

 

The fulfillment demands require that retailers expand the functionality supported in brick and mortar stores to include direct to consumer fulfillment.  The fulfillment demands require that retailers finally revise their inventory view and management practices to support sales across all delivery methods from one pool of inventory.  Retailers can greatly improve their delivery service levels and transportation costs by expanding capabilities in the stores to include direct to consumer shipments from the store.  This simple practice will reduce overall transportation costs and service levels because the spectrum of zone one deliveries will expand as well to reduce the overall transportation costs.

 

These are not difficult changes, in fact these changes should be accepted and a recognition of the new reality that consumers are creating to support their own lifestyles.  Retailers now must view and identify methods to support consumer demands rather than attempting to bend consumers to the processes and methods that simplify the retailer’s practices.  Consumers will no longer accept limitations from retailers because there are too many options and competitors vying for sales.  Large retailers must change their fulfillment methods to meet these demands and the resulting changes can be implemented to improve both inventory management  and also improve fulfillment efficiencies and costs.  

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


Mobile technology integration and consumer collaboration has become a very large piece of the retail toolset and because of this increase in utilization and importance it is very important for retailers to develop a robust business continuity plan to recover in the event of an event that compromises these capabilities.  It is only a matter of time before an event impacts the access or the historical archives developed by the mobile business practices and retailers must be prepared for the loss of functionality, loss of data and recovery requirements.  The retailer must include in their business continuity planning and reviews a critical section for recovery of the mobile business practices, even though in many cases these processes are support via cloud based technology. 

 

In most cases I believe that mobile technology is utilized as a portal or interface to the corporate data, in other words the mobile technology provides access to business processes supported behind the retailers firewall.  However I also believe that more and more retailers utilize cloud technologies and data stores to support the mobile and eCommerce solutions, especially as it related to social networking and interaction with the consumer.  These are the areas of concern and must be reviewed on a regular basis to identify potential points of failure and recovery procedures.  These recovery procedures become much more complex because of the interaction with external partners and service providers. 

 

Supply chain partners and service provider collaboration and especially the mobile collaboration activities must also be evaluated for points of failures and business recovery procedures.  The recovery procedures and timeframes become much more complicated as the technology platforms and the number of partners increase because of the complexity inherent in the interactions and dependencies on business processes with partners.  The interaction between partners and the expectation of data and process availability will provide the greatest risk to any partner business continuity and these interactions and dependencies must be reviewed on a regular basis to confirm recovery procedures.

 

The retail marketplace is a fast paced environment with a very high rate of change across many platforms and partners.  This environment increases the complexity of the business relationships and also the complexity of the business continuity planning and implementation.  It is very easy in this type of environment for retailers to overlook the need to account for the business continuity requirements as they are reacting to the consumer’s changing demands.  This is the most important reason though to account for business continuity planning because when there is an event that requires quick response to recover the retailer cannot afford to lose hours or days in recovery, especially during a busy holiday season.  

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


Retailers are enhancing their store experience with consumer mobile interaction while shopping in brick and mortar stores that are based on both location awareness and in store promotions and service activities.  These activities take advantage of mobile and wireless technology capabilities in an attempt to enhance the customer’s experience.  Retailers are now releasing mobile apps that use the location available from the consumer mobile phone to push notifications and provide self help capabilities for consumer during their in store shopping activities. These retailer breakthroughs take advantage of the technology already supported by third party technologies that allow and encourage the consumer to utilize their phone more while shopping. 

 

This is a great development for the major retailers and provides a platform for the retailers to extend collaborative activities including micro surveys and also consumer interaction on product selection and information.  The retailer app that I have used initially (Macy's) provides a means to perform product price look-ups and also promotes in store sales and  price reductions.  This app also encourages the consumer to utilize the store network for improved capabilities and elimination of dead spots while the consumer is shopping.  This apps integration with the retailer store systems also allows for price reductions to be taken by the consumer from any purchase outlet, store or online.  The mobile app is user based so the retailer can actually track the consumer in their store visits and purchasing based on discounts because of a combination of location and access to the store’s network.

 

One of the key benefits the retailer can gain from this improved app is through product prices checks which provides a means to track consumer shopping activities in the store.  Then through a combination of loyalty program and product electronic discounts the sale closure on products can be tracked.  This is where the consumer collaboration activities can really expand to improve the experience.  These activities should include inventory availability for all related product sizes and colors based on price checks, suggestions to ship the purchase directly to the consumer, and most importantly providing consumer reviews and feedback regarding products.  All of these activities highlight an increased consumer interaction and option for collaboration that enhances the consumer shopping experience by providing an personalized service opportunity for consumers. 

 

My shopping experience was enhanced through the improvements to the mobile app and this is just the beginning of the potential.  These activities should focus on improving the retail shopping and purchasing business process model to improve the consumer experience.  Macy’s has made the leap to these integrations and focus on the consumer shopping and purchasing experience because this is what consumers demand.  Now the next step for retailers is to create a two way relationship with consumers by increasing interaction through every touch point. 

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


Retailers must develop and implement a method to sense and respond to changes resulting from consumer demands that supports and encourages collaboration between consumers and retailers to both identify the change and also determine the appropriate reaction to the demands.  Consumers will provide information when asked and the challenge for retailers then is to determine how to ask and the appropriate questions that will draw out clarification and demands from the consumer.  Consumers require a continuous stream of questions in the form of mini-surveys to create the type of collaborative relationships that provide value to the retailers.  This type of activity in itself requires a continuous improvement process in order to refine the relationships and most importantly to define the questions and timing of interaction that supports a value add collaboration.

 

Retailers have implemented a survey process to obtain consumer reviews and evaluations of their purchase experience which acts as a Consumer Collaboration 1.0 platform for basic information.  The next phase of this collaboration is to increase the interaction times and also decrease the number of questions.  This is required to begin to understand what is important to ask and also ensure that the likelihood of consumer response increases.  This is where the value comes into play through both the volume of response and the actual questions to which the consumer is responding.  I believe the struggle for retailers is in the survey definitions and the triggering survey incidents. 

 

I see retailers as struggling with implementation of a survey process that brings value to the consumer response results.  I also believe this is due to the retailer cultural definition of surveys as larger efforts with a great deal of questions that also require additional consumer action to even start the survey as resulting limitations of the response and the value derived from the response.  These difficulties are structural in nature and must be resolved for the retailers to bring value and develop a collaborative relationship with consumers.  The effort to resolve the structural challenges can be very difficult for retailers because of the level of effort required at a time when these same retailers are focused on the effects of eCommerce purchasing to the brick and mortar stores.

 

This challenge though is not insurmountable and retailers can provide guidance in resolving these challenges from the large online presences of Amazon and Google.  For instance, Google has developed a couple of pertinent options that focus on micro surveys and also location detection to respond to location activities based on your travel.  These two activities provide a great basis to support retailer collaboration activities.  Retailers can use these concepts to redefine the methods in which they interact with consumers to improve both the consumer relationship and build the type of collaborative relationships that will help retailers to sense and respond to consumer demands. 

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


The retail marketplace requires support for order management across all channels along with the inventory to fill these orders across all channels. Without a cohesive strategy to coordinate and management these business processes across all channels retailers will continue to struggle with the changing demands from consumers.  Flexible and robust order management capabilities is the flip side to the coin of flexible and robust inventory management that supports the new retail marketplace.  The retail market requires a cohesive, flexible and robust business process strategy that can support the current requirements and be flexible enough to sense and respond to new demands.  The business process must support any manner of consumer shopping and purchasing in a manner that is cohesive across the business process. 

 

I don’t like to refer to a channel anymore when discussing the retail marketplace because discussion of channels implies a separation between order management, inventory placement and product delivery that should not be there.  Order management cannot be overlooked in the business process definition and management strategy reevaluation.  Just as the inventory management business process must focus on function over channel, the order management business process must also focus on function over channel.  This is not hard but requires a careful and thoughtful process to evaluate and define the process that starts with the generic functions initially and build then to support the entire process flow.

 

This effort can be difficult because the retail culture, especially in the for large legacy retailers, has a strong tendency to separate functions and process into silos.  The order fulfillment silo can be the most difficult to breakdown because of this cultural and business silos that have become ingrained over the years.  Due to these ingrained tendencies the effort to define the business processes will be difficult.  Success in this effort requires an iterative process, a continuous improvement process, that will institute review, analysis and refinement of the process throughout the efforts.

 

This continuous improvement process is a base requirement to the success of these efforts to define a robust process that first meets the consumer demands and second provides a basis to sense and respond to the changing demands.  This continuous improvement process provides the tools necessary to develop and maintain the order fulfillment business process models as required to support the changing consumer demands.  A key to success is the realization and acceptance that these efforts are not a ‘once and done’ exercise but a continuous effort to maintain the process model through these change requirements.  The large legacy retailers must develop the model that provides the means to provide the effort to maintain the functionality required to support the consumer demands. 

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


Collaboration is critical to the success of retailers in this new retail marketplace including collaboration across the entire extended supply chain along with the end consumer.  Consumer collaboration is a difficult objective for retailers to attain because consumers can be a very fickle group as far as interaction and collaboration are concerned.  In the retail marketplace consumer collaboration is based on situational requirements and specific needs at the moment.  The consumer must be courted and encouraged every day to react and interact with the retailer.  Consumer interaction and engagement has been raised to an artform by Amazon, based on their practice of continuously engaging with the consumer through suggestions and questions.  I believe the secret to consumer collaboration is the engagement activities that encourages reaction and engagement from consumers. 

 

Retailers have been engaged with suppliers and carriers for collaboration and interaction for quite some time now and all of the retail partners have certainly realized the benefits resulting from robust collaboration.  The consumer, though, has been a difficult nut to crack for most retailers and the reason for this, I believe, is that consumers must have a reason to engage and react.  There are many reasons for this but I think the most prevalent reason is that consumers simply do not generally engage without a reason.  This is difficult especially for the large legacy retailers because these retailers only engage consumers electronically via rewards programs and email programs.  These large retailers must learn the virtual customer interaction portion of customer relationships and relationship development to encourage a two way interaction and communication.

 

This is where the large legacy retailers can learn from outlets such as Amazon and Google in ways to engage and interest consumers to participate.  This consumer engagement practice is where Amazon and Google really stand out.  It is well know that Amazon has perfected consumer engagement from a retail and consumer perspective and Google has perfected the engagement from a situational perspective to provide reactions and ratings.  Google has really stepped up their game in consumer reaction and engagement to improve their maps and also suggestions for locations on the map.  Google has really extended the situational consumer collaboration through a combination of their short surveys that pay for response, their tracking of travels and then their requests for reviews and questions related to the places you travel and spend time. 

 

Large legacy retailers need to learn from these practices to engage consumers and these retailers need to develop these new programs as part of their redefinition of the retail marketplace model.  Retailers have the opportunity to create a new consumer experience but they must take important steps now to first survive in the market and second to create a niche in the market.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


Large retailers in the midst of reacting to the marketplace disruption must reevaluate their business process model and develop an omni channel inventory management strategy that can react to the disruptions.  The market changes and velocity of these changes require a strategy that is robust and flexible to support the velocity of change.  This requires a strategy that focuses on the base business process model and not on current practices and legacy requirements.  The large legacy retailers must break from the multi channel strategy to a true omni channel inventory management strategy that accounts for the business process objectives and requirements rather.  The omni channel strategy is based on a flexible business process model that focuses on process function and not on channel.

 

The multi channel inventory management strategy was in reality a transitional strategy that provided a bridge between the separation of channels and the true omni channel strategy.  This was not understood initially and only became clear with the continued change and the quickening disruption in the market that requires another view of the requirements based on a flexible business model based on process and not on legacy capabilities.  The multi channel strategy supported a transition inventory strategy that straddled the transition of channels to the omni channel model.  The omni channel model must now be based on business process as demanded by consumer practices rather than existing retailer capabilities.

 

Consumers have created an omni channel marketplace without the support or participation of the large legacy retailers and this became abundantly evident over the last year when the shift to online purchase and delivery reached essentially the same level as the brick and mortar sales.  The impact to the retail marketplace reached a critical mass at that point and is driving change at a dramatic velocity on the large legacy retailers.  Retailers have been struggling to react to the changing demands including re-inventing the legacy retail experience.  The challenge for retailers though is how to retrofit legacy processes to support the changing consumer demands.

 

This challenge requires a break from the past and a focus on the future to enable the retailer to efficiently sense and respond to changing consumer demands.  In order to meet the challenge retailers must focus on process demands and not to current capabilities.  Consumers have used technology to take control of their shopping and purchasing processes to meet their lifestyle requirements and retailer must recognize that they can no longer control how or when consumers shop and purchase.  This is a very disrupting change to the large legacy retailers because it wrests control from the retailer.  This change requires that retailers develop an omni channel inventory management strategy that focuses on process and not control.  This strategy must support processes that are at odds with the current retailer culture and this is very difficult and requires stamina and focus to change.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?


The retail marketplace disruption is driving the disruption in retail inventory management requirements to support the new marketplace.  My concern is that retailers have focused on the disruption to the retail store and reduction in traffic to the detriment of the inventory management changes necessary to support the retail marketplace.  Retailers should be reviewing their retail business processes to identify changes required of the inventory management process as a means to address the marketplace disruption.  Retailers only focused on the impact to brick and mortar store real estate are missing a potential root cause of the disruption itself which is the change in consumer shopping and purchasing practices. This change in consumer shopping and purchasing impacts the retailers in many ways and the retailer must understand how to address the changes in the most cost effective manner and not simply by divesting real estate holdings.

 

The large national retailers  are focused on the impact of reduced store traffic while the sales have transferred to eCommerce purchases.  This attitude is only natural and the result seems to be a focus on reductions in the retail store real estate holdings when in reality these retailers cannot afford to simply focus on cost reductions and divesting store real estate.  These retailers must recognize the resulting impact on the inventory support requirements and determine how to react to these changes to the inventory demand requirements first.  In my opinion the definition of the new inventory strategy should be completed prior to determining next steps in the store real estate requirements.

 

Where this change to the inventory strategy will truly impact the retailer and the future requirements of store real estate is defining how the inventory strategy will address the changes in consumer shopping and purchasing.  In my opinion the retail inventory strategy will, and should, drive the real estate decision.  I see the inventory strategy as a key starting point for defining how retailers will increase their flexibility to support the changing consumer shopping and purchasing demands.  The retail inventory disruption should drive a simplification and standardization of inventory management practices across all channels and then determine how to ensure that inventory is distributed throughout the retail network to most efficiently support the consumer shopping and purchasing demands. 

 

The retail strategy is the key to the large retailer strategy to meet the disruption in the consumer sales and purchasing practices. Retailers must take the long view in the market disruption and to me this means addressing the disruption through an inventory strategy that views store real estate as a distinct market advantage to allow retailers to move inventory closer to the consumer. 

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


Omni channel shopping, purchasing and delivery process improvements will also simplify the omni channel inventory management requirements by standardizing the business processes.  Retailers must standardize these business processes in order to support the discontinuous changes form the consumer incorporation of technology and social networking capabilities.  All of these changes can be overwhelming if the retailer has not standardized there business processes to support the demands.  This standardization will also dramatically simplify the inventory management requirements resulting in a higher instock position and reduces out of stock and overstocks conditions.  This will dramatically improve the retailers capabilities to support the changing consumer demands and also improve their margins.

 

I understand that all of this sounds too good to be true and all of these benefits cannot be achieved without some kind of catch.  The catch here is that retailers must change their brick and mortar store strategy from an almost pure retail outlet to a distribution center that includes a retail outlet.  This is the first step to an omni channel inventory management strategy that will support the fluid nature of omni channel shopping, sales and purchasing.  This requires an initiative to review and redefine the retail business process to support the omni channel consumer demands.  This can be difficult to move outside of the comfort zone of accepted retail practices that have been ingrained in the culture over a long period of time.  The challenge must be overcome though in order to achieve and sustain success in the marketplace. 

 

I understand that this is at odds with generally accepted best practices however this also provides a cost effective method to address the challenge of the marketplace. This initiative needs to start with the objective to define an inventory management strategy that can support the purchase demands of consumers in an omni channel marketplace. It is important to start with an objective that provides a robust and stable foundation to meet current demands and provides the flexibility to support changes.  A focus on inventory management provides this stable and robust foundation.  In addition, inventory management is the root of the challenge for retailers and the key challenge to the success of their omni channel strategy.

 

Retailers must realize that they must change their foundation to meet the current and future demands of the consumers.  We are at a point now where the retail marketplace is in the midst of a major disruption that is caused by changes in consumer practices.  Retailers cannot gloss over the basic demands with superficial acts such as order online and pick up in the store capabilities, they must reinvent their shopping and purchasing support to align with changing consumer demands.  The focus of retailers must be redefining the shopping and purchasing experience and not real estate, this is the only way to succeed in the future.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


The large legacy retailers with a large chain of stores are now going through a rebuild phase in their brick and mortar retail strategy to improve the consumer interaction by redesigning their store strategy.  Many of these retailers are evaluating and building a strategy around a smaller footprint for their brick and mortar store network as a reaction to the increase in Internet sales and decrease in store sales.  I think this is a mistake.  I think that retailers should instead redesign and rebuild their brick and mortar strategy to support the omni channel marketplace that consumers are demand and even building on their own. Consumers have really been very open in broadcasting their intentions towards the retail marketplace and have been embracing the tools and technology that allow them to shape their shopping and purchasing to meet their own needs.

 

These retailers are fooling themselves with their initial reactions to shrink their brick and mortar store presence to adjust to the shift in the consumer purchasing channel.  This focus on reducing the number of stores is increasing their loss and reducing the focus and funding for activities such as improving delivery times and inventory management improvements.  The large legacy retailers are still reacting to changing in the marketplace from a multi channel perspective and not an omni channel perspective and this reaction will not bring the turn around in purchasing and profits for which these retailers are hoping. 

 

Many of these large retailers are still focused on multi channel retail even though consumers have moved to an omni channel expectation and practice. A true omni channel requires one cohesive interaction with consumers from shopping to delivery where the shopping process includes and supports shopping online or in a store or both at the same time and then this concept follows through the subsequent selection purchase and delivery concepts.  To the consumer shopping, purchasing and delivery should not depend and be separated by channel and retailers are still struggling with, and many are stuck in a multi-channel retail practice.

 

Retailers must make a foundational change in their practice to focus on supporting the process that meets the consumer demands at the time of interaction.  Consumers may be in the store shopping and decide that they would like to purchase online and deliver to their home and the retailer must support these demands.  There are legacy IT applications that must change in order to support these demands and these have always been the stumbling blocks for major legacy retailers.  This is also where the size of the operation matters as well because this very often plays into the flexibility and cost of the initiative.  At this point in the retail experience these large retailers do not have the luxury of time to make decisions and begin a major initiative to redesign the shopping experience.  These retailers must start the change process now and understand that they are starting a new phase of continuous change and reinvention.

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

 


The large legacy retailers with a large chain of stores are now going through a rebuild phase in their brick and mortar retail strategy to improve the consumer interaction by redesigning their store strategy.  Many of these retailers are evaluating and building a strategy around a smaller footprint for their brick and mortar store network as a reaction to the increase in Internet sales and decrease in store sales.  I think this is a mistake.  I think that retailers should instead redesign and rebuild their brick and mortar strategy to support the omni channel marketplace that consumers are demand and even building on their own. Consumers have really been very open in broadcasting their intentions towards the retail marketplace and have been embracing the tools and technology that allow them to shape their shopping and purchasing to meet their own needs.

 

These retailers are fooling themselves with their initial reactions to shrink their brick and mortar store presence to adjust to the shift in the consumer purchasing channel.  This focus on reducing the number of stores is increasing their loss and reducing the focus and funding for activities such as improving delivery times and inventory management improvements.  The large legacy retailers are still reacting to changing in the marketplace from a multi channel perspective and not an omni channel perspective and this reaction will not bring the turn around in purchasing and profits for which the retailers are hoping.  Instead this strategy will result in continued sluggish profits and continued store closings and shrinkage for the retailer.

 

Consumers are now demanding an omni channel retail experience that allows them to shop in any channel and purchase from every channel.  Retailers must implement support for every permutation of shopping to purchase and instead I am afraid the retailers are still focused in their strategy on supporting the consumer in shopping and purchasing from the same channel.  I really do not think that consumers are viewing the retail marketplace in this manner because I know that I am not viewing the retail marketplace in this manner. 

 

Consumers want to shop and purchase in the channel that is most convenient for them.  I think that Amazon has realized this and that is the reason why Amazon is moving quickly into the brick and mortar physical store channel.  This allows them to capture sales in the markets from the consumers that find it convenient to purchase from a brick and mortar store and also allows for a regional presence to improve deliveries.  The legacy retailers must view their options from an omni channel perspective to allow them to improve delivery and stock positions close to where the consumer lives in a distributed strategy rather than a centralized strategy.  

 

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?