Scott Thompson reviews the 2010 Retail Systems Multi-channel Summit, which took place at the IoD Hub in London on Wednesday, 15 September.
It’s no longer a subject for debate. With a quarter of all retailing set to take place online within the next 10 years, traditional retailers need to become multi-channel. But in many ways they are dealing with a deceptively easy concept: easy to explain but often hard to put into practice. Many retailers are organised in silos and thus not particularly well set up to tackle it. John Lewis, Argos, Tesco and Mothercare/ELC are success stories. But very few others can say that they provide a truly consistent customer experience across all touchpoints.
Although Amazon.com was founded in 1995, it famously didn’t make its first annual profit until 2003. But the days of struggle and uncertainty are a thing of the past for e-commerce vendors. According to the IMRG Capgemini e-Retail Sales Index, shoppers spent £4.4 billion online in August, a 15 per cent increase on August 2009, and year-to date e-retail sales were also up 15 per cent on the same period last year. August was also a particularly strong month for multi-channel retailers, showing a year-on-year growth of 25 per cent. Yet the rush to grab a piece of the action must not obscure the fact that retailers, both pureplays and High Street outfits, need to get the fundamentals right before looking at fancy websites and applications. They need to look at all aspects of the customer’s journey across their various channels and not just the ‘sexy’ bits. And they must keep the technology scalable as they strive to achieve their multi-channel visions.
This was the key message to come out of the Multi-channel Summit, now into its third year, which brought together retailers, tech vendors, industry associations and consultants to discuss the burning issues of the day. The conference chairman, Martin Newman, multi-channel consultant and CEO at Praticology, kicked things off by stating that multi-channel customers are worth up to 12 times the value of a single channel customer. Yet retailers aren’t fully exploiting this - he is seeing a lot of multiple channel businesses, but not many that can lay claim to being cross channel. “Retailers have bolted on e-commerce, but over time it will become integrated,” he said. “My challenge to the retailers here today is - if by this time next year you are not cross channel, I am going to ask you: why not?” he added.
Newman then introduced the first speakers of the day, Nick Rennardson, head of IT and Jo Molineux, head of multi-channel at Republic. The fashion retailer is a fast growing company with further plans for expansion over the coming years. Multi-channel initiatives are at the forefront of its growth plans and IT is critical in developing this format. It has, for instance, recently installed Torex Retail PoS across its 105 stores in the UK and Ireland. It chose the solution as it had outgrown its existing, labour intensive legacy PoS and was looking for a long-term technology partner. Roll-out commenced in March, with Torex and Republic working together to complete 16 stores per week. The platform will enable the retailer to realise its national and international expansion plans, and extend the solution beyond PoS to include multi-channel functionality such as click and collect and in-store customer ordering from a web fulfilment system. “There is so much pressure on technology to ensure that things are working at the front end as well as the back end,” said Rennardson.
Such initiatives will help the retailer compete with the likes of New Look and Aurora Fashions, both of which also have major multi-channel plans. “We are moving towards being multi-channel. We are on a journey in terms of integrating our channels,” added Molineux who, in her newly formed role, heads up the multi-channel agenda for Republic. “We have to connect the customer journey. Creating a single view of the customer is central to my plans.”
Next up was Kees de Vos, director of business consulting at hybris. He joined hybris in 2010 to further re-enforce its focus on the business importance of multi-channel retail. In his role as director of business consulting, he is responsible for driving multi-channel success for hybris clients and helping to communicate its vision to the wider market. He has worked for clients such as Argos, Tesco, Boots, Woolworths Australia and WalMart.
In a presentation entitled ‘Key Success Factors to Achieve Cross Channel Commerce’, de Vos observed that change is happening at a phenomenal rate but the rate of change is making companies lose sight of customer behaviour. “We used to be in control but commerce anywhere has changed that.” Customer behaviour is changing thanks to ‘exploding touchpoints’ and now more than ever it is important to have a 360 degree view of the customer. “Only a small part of your orders are transacted on a single channel,” he said.
Tony Bryant, K3 business development manager for multi-channel, explained how multi-channel retailers that have embraced the challenge of delivering a cross channel proposition, are over coming some of the practical constraints to successful deployment and looking toward new opportunities and channels that can help create more engaging dialogue with their customers. Bryant talked about understanding the next road map for multi-channel. U-commerce reared its head at this point - i.e. the ability to interact and transact with anyone anytime. Must haves in this respect include click and collect, return anywhere logistics, cross channel loyalty management, a single view of stock and customer spend and price optimisation. There is much work to be done. “We are great at driving sales, but perhaps not so great at driving profitable sales.”
Delivering the goods
“I’m going to talk to you about the ugly end of multi-channel,” declared Huw Thomas, managing director at Paul Mason Consulting (PMC). The ugly end being delivery. Online retailing is largely about presentation. Delivery is an add on but it’s fundamental because online retail doesn’t work if you can’t go that last mile. And the stakes are high. In the IMRG Consumer Delivery Survey 2010, 38.3 per cent of those surveyed said that a poor delivery service either has or would stop them from ordering from a retailer again. Equally a good experience will work the other way.
Thomas believes that for many customers a considerable gap still exists in the product delivery aspects of multi-channel retailing. “There’s nothing more important to the customer than receiving the product they have purchased. Retailers invest significant sums in the shiny front ends of their channels but seemingly do not apply the same diligence to the last few yards. That’s the journey from the delivery vehicle to the doorstep and the lasting effect of that experience. Poor delivery destroys marketing messages, sales effort and brand image,” he said.
He flagged up new research carried out by the Royal Mail which shows that online retailers lost £2.7 billion in 2009 as a result of customers abandoning their shopping carts due to issues surrounding delivery. The report reveals that 52 per cent are failing to meet five of the most important customer criteria around delivery. Eighty five per cent do not allow customers to choose specific delivery dates, 74 per cent do not enable shoppers to specify special delivery instructions, 16 per cent don’t offer online order tracking, 54 per cent take three or more working days to deliver on standard orders, and 30 per cent don’t display delivery charges.
Technology exists to address these issues, however. Thomas noted that representatives from Shutl were in the audience and that the company is doing groundbreaking work with Argos. Its technology, which connects retailers with local same-day delivery couriers, is allowing central London-based visitors to www.argos.co.uk to get their orders delivered within as little as 90 minutes, or pick a one-hour delivery window between 9am and 9pm.
Social media then made its first appearance of the day as Guy Stephens, senior consultant at Foviance and founder of Where Social Media Meets Customer Service (LinkedIn group), gave an overview of the multi-platform call centre and the shape of things to come. The increasing ubiquity of the smartphone, together with the emergence of the most powerful tools of self-expression that there have ever been, has created not only a customer that is far more vocal, demanding and technologically savvy, but an expectation in them that everything can and will happen ‘now’. The moment of truth can literally take place whenever and wherever a customer dictates. What has been the impact of this on how customer service is and can be provided?
“The emerging social media customer service paradigm reinforces the point that the power dynamic is tipping into the hands of a more socially active and vocal customer, happy to help themselves and their friends and in doing so, bypass the need to engage with a company altogether,” said Stephens. “It is against this increasingly fragmented and disjointed backdrop that we must interpret the evolution, or indeed revolution, that is taking place within customer service.”
He offered up BestBuy as a good example of changing times. “BestBuy’s Twelpforce in the US has come to represent what is possible when times are changing. Twelpforce signals perhaps the single most advanced application of social media by a company and on a scale not seen before.”
Stephens is something of a trailblazer in this area, having set up the use of social media with customer service during his time at The Carphone Warehouse. The use of Twitter was at times far more cumbersome in communicating with customers than the phone ever was, he commented. As for the cost argument, while there are examples where Twitter has brought savings, the business case for it still needs more work. “For those companies willing to take part, Twitter may well be one of the most important tools it has to engage directly with customers right now,” he said. “It is an extremely crude form of communication: 140 characters. It forces brevity of expression, and in doing so, forces a company to confront and decide how it wishes to engage with its customers.”
Stephens told delegates about a Carphone Warehouse customer who tweeted that he had received poor service. He then went onto blog about his experience. “I got in touch with him via my Twitter account at the time and although he was going to leave The Carphone Warehouse, he blogged the following in his own words: I turned to Twitter to try to penetrate what felt like a huge, uncaring behemoth that was Carphone Warehouse. And I found Guy Stephens, who appeared to be tackling customer rage in a passionately empathetic way on Twitter. I tweeted him at 8pm; by 8.07pm, I had a reply, rendering me unconditionally blown away. Three months of periodic call centre torture had got me nowhere, but via social media I felt listened to within minutes. True, I was a departing customer, but not before being turned from a ‘hater’ to a fan.”
The final three presentations of the morning session came from SpeechStorm, Sterling Commerce and Maginus. Damian Kelly, director, sales and marketing at SpeechStorm, asked: can your customers reach you in the way they want to? It’s important to remember that the real multi-channel experts are your customers. “Customers don’t think about multi-channel - they just do it,” said Kelly. “Why? It is how they shop every day - in stores, on the web, at home, at work, on the move and on the phone.” He then explained why effective service over the phone is at the heart of multi-channel success and showed how leading organisations including Dixons, Comet, AIB, and Vodafone are meeting this challenge.
David Hogg, industry marketing director - retail/CPG, EMEA at Sterling Commerce, talked about changing cross channel retail consumer behaviour: how to improve their experience and loyalty; how cross channel consumer shopping preferences vary by retail sub-sector, geography. He also looked at what can most improve consumers’ shopping experience in each channel and told delegates why “save the sale” is such an important opportunity.
Russell Dorset, sales and marketing director at Magnius, has over 20 years’ experience in the software industry in a range of senior sales, marketing and operational management roles. He joined Maginus from K3 Business Technology Group where he was chief operating officer. Prior to this, he was a divisional director at Misys. He concluded the morning session with a presentation on channel integration - using technology to connect with your customers. Once again, it was stressed that retailers need to provide a seamless buying experience. A transaction has a beginning, a middle and an end and the customer can conclude things on various channels.
Dorset also highlighted the need to invest and innovate, even if, in testing times, the temptation is to retreat and slash investment budgets. “A focus on cost cutting and efficiency has helped many organisations weather the downturn, but this approach will ultimately render them obsolete. Only the constant pursuit of innovation can ensure long-term success.”
The afternoon session kicked off with K3’s Tony Bryant and Glynn Davis (freelance journalist and Retail Systems contributor) presenting the results of their 2010 multi-channel movers and shakers study. We ran an exclusive on the top 20 in the last issue of Retail Systems but at the conference the top 70 big hitters were named for the first time. A full rundown can be found at the end of this review. Fret not if you haven’t made it into the top 70. The hope is that this will become an annual thing and will be extended to a top 100 in 2011.
This was followed by Steve Haworth, CEO at TeleWare, who presented on:
Unified Communications and mobility in the retail sector. This presentation highlighted the strategic importance that Unified Communications can have for organisations in the retail sector. Haworth examined the key drivers and benefits that are inspiring large retail organisations to adopt a strategy and provided examples that demonstrate how it can help retailers significantly improve performance and customer service.
The catalogue element of multi-channel retailing was next up for discussion. Phil Randles, managing director at Catalogue Development Centre Marketing, has been a board director of several media companies and major advertising agencies but more specifically he has been an independent multi-channel marketing consultant for the last 15 years. In that time, he has advised dozens of businesses at all stages of development from multi-million pound businesses to fledgling start-ups, from UK niche companies to US launches, in both consumer and business to business fields.
In a presentation entitled ‘Keeping the wolf from the door’, he observed that most multi-channel businesses have moved into areas of operation that are unfamiliar and potentially financially dangerous. His session covered the main reasons why direct businesses falter, the dynamics of how multi-channel businesses integrate their differing routes to market and how to spot the signs before it is too late. “Companies make the mistake of not realising the vital role of fulfillment,” said Randles. “It’s a case of paying lip service to customer service and showing disdain for the ‘punter’.”
Last speaker of the day was Steve Bolton, managing partner at multi-channel retail consultants, Retail Pragmatist. His experience includes 10 years at GUS Home Shopping where he was director for merchandise planning and solutions director for the Reality Group. He has undertaken both multi-channel strategy and operational performance improvement work and is currently working with a major High Street retailer on its new distribution network implementation and a European click and collect service provider.
Bolton’s session revolved around the challenges of managing customer orders as retailers extend the range of products that they offer online. It’s an area where many retailers are falling down. Even a company like Amazon, often praised for its range of products and delivery options, can get it wrong. Bolton mentioned a recent order he placed with the e-tailer, involving five items that were all dispatched separately, causing him a great deal of inconvenience as he attempted to take delivery. New technologies and approaches are emerging, but in many respects technology is outpacing many companies’ ability to implement it, he commented.
“As retailers are we in danger of going back to the bad old days?” he asked. He also questioned why many retailers have left it so late to make the push into cyberspace. “We’ve talked a lot about it today but it’s staggering to me that some retailers are only just waking up to this - for instance, Gap, Zara and Morrisons,” Bolton added.
Conference chairman, Martin Newman, then gave his closing remarks, commenting that one of the major messages of the day was: think through the customer journey - how convenient is it? Retailers need to think through all the channels with particular focus on the last mile. “This needs to come from the top. The vision has to come from the CEOs etc, it has to be realised from there,” Newman said. “It’s expensive but you don’t have to implement everything at once. You could be implementing some quick wins that could drive future growth.”
As for social networking and m-commerce, the former will continue to play an ever-increasing role in driving the purchase decisions of consumers whilst the latter is perhaps not quite ‘there’ yet, although smartphones such as the iPhone have created the right browsing experience that for the first time enables consumers to really enjoy going online via their mobiles.
Ultimately, the retail sector has been talking about integrated multi channel retailing for the past couple of decades. And yet here we are approaching the end of 2010 and there are still very few, if any, truly integrated or cross channel retailers in the UK. With that thought in mind, Newman concluded with the question that he posed at the beginning of the conference, namely: “If by this time next year you are not cross channel, I am going to ask you: why not?”
Roll on September 2011 and the next Retail Systems Multi-channel Summit.
All of the presentations from this year’s Summit can be downloaded at: https://www.retail-systems.com/conferences/multichannel2010
Joining the dots
Scott Thompson reviews the 2010 Retail Systems Multi-channel Summit, which took place at the IoD Hub in London on Wednesday, 15 September.