Omni-Channel Is So 2010 – But Retail Still Hasn’t Figured It Out by Knowledge@Wharton
When retailers talk about the omni-channel shopping experience these days, it’s mostly about how the word “omni-channel” is so 2010.
But the reality underlying those proclamations is very different, says Beth Ann Kaminkow, former executive vice president of the Westfield shopping center company and currently COO of Wearable Experiments, a wearable technology firm.
“We’re a long way off” from a true omni-channel experience, Kaminkow said. “There’s still distance; it’s way off in the future. That’s why people prefer to rename it or not talk about it.”
Retailers are still struggling to create a truly integrated online and offline experience – and innovative tech isn’t the answer so much as deploying path-breaking practices in a strategic way, Kaminkow said. She and Andrew Cherwenka, vice president for commercialization at design and innovation firm Kinetic Café, spoke about the challenges brick-and-mortar and e-commerce companies are facing at the third Retail and Consumer Packaged Goods Summit held last week in New York City. The discussion was moderated by Vivek Raj, vice president and business unit head for retail and consumer goods for Tech Mahindra. The conference was organized by Knowledge@Wharton, Wharton’s Jay H. Baker Retailing Center and Momentum Event Group.
“There are three reasons that retailers do not have good customer-facing tech,” Cherwenka said. “The vast majority of stores you walk into are the same as they were 20-30 years ago. I used to sell shoes when I was a teenager, and nothing about that process has really changed.”
First, retailers need a platform that integrates relevant back- and front-end systems. “It’s very hard to do and very expensive,” he said. “Most retailers are not making that investment.” Second, retailers need expertise – also hard to obtain because many of the best engineers and designers are looking to work for tech companies, rather than retail. “The third thing that’s sadly missing is any is any sense of collaboration even between competitors.”
When No One Is Watching
Where retailers can start, Kaminkow said, is thinking about how to use technology strategically to give customers what they want, when they want it, and to make the shopping experience something special. As an example, she pointed to the Turnstyle market that recently opened under Columbus Circle in New York City. Designed specifically for commuters, the market offers food, shopping and services in a clean, modern space – one of the first private developments to open in a New York subway station.
“The vast majority of stores you walk into are the same as they were 20-30 years ago.”–Andrew Cherwenka
“One of the best ways to think about how to innovate is to see what customers are doing when they don’t think anybody’s watching,” she said. “You watch women go through the aisles at a grocery store and open up caps and smell, or open up diaper bags and feel the diapers…. When you watch what somebody actually does when they don’t think you’re watching, you’ll see what you need most to convert them.”
Instead, many retailers are “taking a fire hose and sprinkling across a zillion different things and nothing is exceptional,” Kaminkow said. No one is going to win that way, she noted. “More retailers need to to get to the place of asking, ‘If we recreated this company and started online first, what does that mean now for the physical touchpoint? Then they can start getting to what they are actually willing to prioritize.”
Another example of innovative retail done right: The Target Wonderland holiday market that the retailer set up in New York City this past Christmas, Kaminkow said. The space included a jumbo Etch-a-Sketch and a LEGO pirate ship, but also gave every shopper a custom lanyard and a digital RFID key so they could immediately purchase items that caught their or their children’s eyes.
“Imagination around retail isn’t happening enough,” Kaminkow said. “That does not need to be a pop-up – that needs to be all of the time. Brands can experiment with pop-ups to figure out how to push the level of imagination and the level of entertainment into the experience.”
More than just innovative tech, she noted, customers want a shopping experience that is exciting and engaging. “Sometimes we think the beauty of online is that you can put out all manner of choices there – there is an endless amount of inventory,” Kaminkow said. “But the customer doesn’t really experience online like that. Online is a frame, it gives you a small window…. Online doesn’t allow you to actually see choice. Those kinds of insights are setting brands apart in thinking about how to use the physical space.”
Investing in Tech – and People
Two weeks ago, Cherwenka was in a sporting goods store waiting while his girlfriend shopped. A giant digital touchscreen featuring Adidas products was set up in the shoe section. Cherwenka started swiping through and found a few pairs he liked. “I asked the salesperson, ‘Can I get this in a size 13?’ and he said, ‘I don’t know. That display has nothing to do with the store,’” Cherwenka said. “It’s great innovation, but it’s not tied to the store; it’s not connected to the inventory.”
His company is currently working with shoe retailer Aldo to test technology that identifies customers via their smartphones and activates a beacon when they walk into a store so people can see which shoes are available in that store in their size. “You can take any shoe and scan it with an iPhone and pull up a look book so you can see what you can wear with that shoe.”
The technology was designed based on the “natural questions that would happen for me as a customer,” Cherwenka said. “Maybe not everybody wants [this type of technology], but some people do.”
As e-commerce retailers work to create dynamic offline experiences and traditional retailers seek to enhance their digital presence, each sector faces different advantages and challenges.
“One of the best ways to think about how to innovate is to see what customers are doing when they don’t think anybody’s watching.”–Beth Ann Kaminkow
“I think brick and mortar retailers are in a better position to understand the customer experience than pure-play online retailers,” Cherwenka noted. “Sales associates are still so important – they’re more important than ever, according to almost every study. But you have to arm them with technology to meet the expectations of customers coming in.”
Customers are walking into stores with more knowledge than ever, and are being let down by sales associates who ask — or can’t answer – the most basic questions, Cherwenka said. In contrast to the sporting goods store experience, he recalled the best customer service he has received, from a salesperson at a New York Hugo Boss store.
“Four months after my last visit, I came in and he said, ‘Andrew, welcome back,’” Cherwenka noted. “He remembered my name and he remembered what I bought. He said, ‘I’ve been waiting for you to come back. I have a pair of shoes you have to see.’”
It’s unrealistic to expect that every sales associate will naturally have, or be able to develop, that level of knowledge about individual customers, Cherwenka said. Moreover, most retailers have a high turnover rate and the person working at the store four months ago is highly likely to be gone by the time a customer comes in for another visit.
But that’s where technology comes in, and can be used to arm salespeople with the same type of information that the Hugo Boss associate had in his head, Cherwenka said. “Customers expect the staff to know who they are, and tech can help with that,” he noted. “We need to make sure sales associates can use what they are armed with, even if it’s something as simple as an iPad to show different products and allow customer data to be displayed.”
The Benefits of a Blank Slate
While purely e-commerce companies don’t have the in-person history with customers, they also benefit from not coming in with a scaled business, Kaminkow said. “[Brick and mortar retailers] are so huge that what it takes for them to change is tremendous,” she noted. “We look at Apple … as the best practice, but they are totally losing the customer experience in store…. They’ve gotten so into the process of how to make something that’s scalable versus really listening to the customer and understanding how customer needs have changed.”
“Imagination around retail isn’t happening enough.”–Beth Ann Kaminkow
Pure-play online retailers often don’t have to decide what to stop doing or how to adapt practices that have been in place for decades or more. When they move into in-person retail, they have a blank slate to design an experience, Kaminkow said. “Pure play is already figuring things out in a very defined manner: how their product comes to life in a physical environment, taking the consumer proposition and expanding it in a way that is compatible with their touchpoints,” she noted.
Firms that want to do it right need to invest heavily in designers and engineers, and engage in rapid prototyping, Cherwenka said. He noted that the Aldo experiment benefitted from being done at a privately owned company where founder Aldo Bensadoun himself supported the initiative. The firm also had a clear expectation for ROI – to increase in-store conversions. “They have gone up 180 basis points on average across 23 stores since we first employed it last fall,” Cherwenka noted, adding that projecting that out across implementation at all stores shows that the technology essentially would pay for itself.
While Kaminkow predicted that retailers have a long way to go before becoming truly omni-channel, Cherwenka expects that within the next year or so there will be more examples of brands that have made the transition.
“By now, brands have knocked down the silos … and retailers are ready, but from a customer-facing point of view, omni-channel simply doesn’t exist,” he said. “I think there will be more examples soon because of the competitive threats of retailers … that are working on it now. Everyone else will have to because the expectations are there.”