With the holiday shopping season in full swing, retailers are facing significant increases in demand. While the traditional preparation such as hiring more casual staff and ramping up inventory have all taken place, retailers also need to ask themselves: what have I done to prepare my other "non-traditional" channels? How will I connect any shopper with any merchandise through any device?
For those who answered "not a lot" to that question, don't fear. One of the biggest issues for retailers in thinking about an e-commerce strategy is treating it as just an e-commerce strategy! Retailers should be looking at placing the consumer at the central focus of all activities, rather than focusing on the online channel itself.
With the rapid increase in mobile devices, the relationship between the retailer and consumer is becoming simpler for the consumer but more complex for the retailer. Retailers need to be able to connect with consumers in every way they are interacting with the retail sector. As e-commerce and omni-channel retailing continue to grow and become more important, organizations need to integrate online into all of their overarching strategies.
Ultimately, retailers need to understand their customers. There is a power struggle with traditional retail organizations fighting to remain the most powerful component in the value chain, but the reality is that consumers today are the ones with all the power — they are the ones that are really driving the bus. Retailers need to figure out how to engage with their potential consumer base in order to continue being competitive.
Zara is a good example of a retailer that is doing a great job of listening and interacting with its consumers. Zara has a very popular Facebook page with 19.5 million fans worldwide where the brand posts official content rather infrequently (perhaps once a week) and then lets its clothes do the talking by posting photos of the latest collections.
It's no longer about winning over consumers and trying to control the supply chain, but listening to the consumer and collaborating with the supply chain. Retailers need to understand what it is the consumer is looking for, rather than trying to seduce and surprise them. For the supply chain, it's not a matter of control by the bricks-and-mortar channel, but a matter of collaborating and sharing information so all channels are in sync. Every element in the value chain should be pointed towards getting products into the hands of the consumer — whether they choose to shop via their smartphone, iPad, interactive television, the internet, or even a vending machine.
Too many times we see an item of clothing sold out in store, and then find the same garment not only online, but at a discount! This is an example of bad channel management which can easily be avoided through different software applications and better management of the supply chain. There is no point having too much inventory in one channel and having it on sale when retailers could have been selling the product at full price in the store. The objective is to fulfill the desire of the consumer and to maximize the profitability of the company as a whole.
When there is clear ownership of each channel, retailers lose visibility of what kind of inventory exists in the other commercial sectors. The use of an ERP or another software system allows retailers to get a holistic view of all inventory, rather than simply what's in store. Implementing these systems will bring them up to another level of visibility.
One of the reasons why organizations struggle to integrate different channels is that employees get hung up on managing only their own departments, as key performance indicators are often separate for bricks-and-mortar vs. online stores. To improve overall performance and avoid this emotional separation of inventory, retailers need to set KPIs without separating their different channels.
Although organizations are starting to reduce their physical stores as they move online, it's important to see why both channels are essential in the consumer decision. Unlike 20 years ago when bricks-and-mortar stores were the only option, there is now a strong recognition of the difference between shopping and buying. Shopping is research. Consumers use everything at their disposal to find the product they're after — they will go in store, go online, search blogs and engage with social media to find information and opinions that will lead them to a decision. This decision will in turn get them to buy.
Given consumers can decide to buy in many ways, including placing their orders by e-commerce, going into a store, or a combination of both, it's essential the experience offered through both channels is integrated.
So instead of asking "what have I done to prepare my online channels for Christmas," maybe you should be asking "what have I done to make sure my customers get the products they want, how they want them?"
Robert McKee is global fashion industry strategy director for Infor.