In Part I of Supply Chain Nation’s blog on Retail Revenue vs. Execution, Deborah Weinswig, Chief Customer Officer at Profitect, commented on why retailers seem to be spending a lot more time and investment on generating eCommerce revenue than on establishing supply chain practices to effectively execute on those orders. In this follow-on Expert Insights post, she discusses the steps retailers should take as a result.
SCN: What steps should retailers take now to deliver seamless omni-channel shopping experiences?
Weinswig: A hot topic in board meetings at many retailers recently has been where to invest. We’ve seen a slowdown in physical stores being built, so there are CapEx dollars available to invest in technology. One CIO told me, “I have 100 projects and I don’t know where to start.” He said, “I’ve got funding. That’s not the problem.” I think CIOs are balancing so much that it is very difficult to decide where to invest their funds and resources. Do you look at your consumer data in terms of predictive analytics? Do you consider a loyalty program the next big thing that you want to invest in?
One of the biggest things CIOs have to deal with right now is that store data is separate from eCommerce data, which is separate from mobile data. That is a very critical foundation for a seamless shopping experience. You need to really understand who your customer is, where your customer is, and how you’re going to get products to them in the shortest amount of miles to surprise and delight them.
I think 2014 is going to be the year where retailers start to rethink their portfolio stores. Everyone keeps saying it will be the year of mobile, but I actually think it should be the year of supply chain. That is the underlying engine of omni-channel. With Amazon adding grocery and with the average consumer going to the grocery store 2.1 times per week, they’re building a pipeline into the home. Retailers need to think about how to compete with these large online retailers who can satisfy a lot of consumer needs and how they are going to differentiate themselves.
I think every retailer needs to think about what differentiation means within omni-channel. For example, when you think of Nordstrom’s, you think of amazing service, but how do you take that service in the store and transmit it online? A recent NRF survey looked at satisfaction and Amazon was number one and both J.C. Penney’s and Kohl’s were ahead of Nordstrom’s. You are seeing some real changes in terms of how the consumer thinks about service. It’s getting more competitive out there. So when you consider technology spend, while for the consumer 2014 is the year of mobile apps, from the retailer’s side it should be the year of supply chain.
SCN: What factors will separate the leaders from the laggards in this journey?
Weinswig: I actually think that it’s the C-suite. You’ve got to have a management team able to think much differently than they have in the past, because the consumer is so much more demanding. What does your consumer want? How do you approach that with a consumer who’s so much better informed? You need a C-suite that is aligned on all the issues and how they’re going to solve them.
I love what Saks has done, for example, which was create an omni-channel management team. Many retailers still have separate buyers for stores and online. You can’t have that, it’s too expensive.
You need to be nimble and think younger in terms of how the consumer wants to interact with you versus five years ago. It’s incredibly different. I think it might be wise to make some small tech acquisitions and bring different talent into the organization to jump-start the process. If these people are a part of your organization and are committed to helping you outflank the competition, it can create a spark, because there is so much that needs to take place in such a short period of time.
What I’m worried about are those who don’t feel it’s a big task. When Target moved away from the Amazon platform — I remember speaking to the management team. I said, “Don’t you think this is not the best time of year to be doing this? It was August. Black Friday was not that far away. They said, “We’ve got tons of time.” Then they had a problem that took out their systems and that holiday it was very difficult to order a product and put it in your basket. Retailers need to be careful in terms of the timing of when they do things and make sure that everyone is informed.
The other thing I really want to bring up, which is starting to differentiate retailers, is some retailers now have venture capital arms. That allows these retailers to really think outside the box. That could give them a real edge in the future. These retailers have an opportunity to invest in supply chain and loyalty programs, and really have an ability to compete.
I think the bottom line is it starts in the C-suite. It’s not necessarily dollars. It’s not this willingness to spend a lot of money. It’s the willingness to think about how to spend —where you spend and how you prioritize, because there’s so much you need to spend your money on.