Australia’s retail sector is often characterised as a battle between slow-moving traditional bricks-and-mortar retailers and the nimble online upstarts chipping away at their market share.
Online retail has delivered the greatest shake-up to traditional retailing since the invention of currency.
But as the two models evolve it is becoming clear that they will have more in common than anyone might have thought possible, especially as each keeps borrowing ideas pioneered and perfected by the other. Many of these efforts revolve around retailers striving to overcome the limitations of their model, habitually by taking inspiration from the other.
According to the head of the National Online Retailers Association Paul Greenberg, himself the former head of online retailer the DealsDirect Group, the lines between online and offline retail are blurring quickly, especially as many retailers explore ‘omni-channel’ strategies incorporating web, mobile and social media in additional to physical retail and direct marketing.
“A lot of the current exciting initiatives seem to be happening in the so-called offline space, where there is a lot of borrowing,” Greenberg says.
For example, the tracking of customer behaviour that has been a hallmark of online retailing is becoming more prominent in the thinking of traditional retailers.
“In online, tracking customers has been going on for a long time – I guess that just naturally flowed into the offline environment,” Greenberg says. “Some of the interesting technology we are seeing are things like facial recognition, so identifying customers as they come into the store.”
While no retailers are willing to discuss facial recognition today – at least not publicly – there is nonetheless a flurry of innovation and activity happening across the sector. For consumers, Greenberg says the result should be a shopping experience that is more personalised to their specific likes and interests.
“The difference between the greengrocer who knew all his customers personally s this can now be done at scale thanks to digital and big data,” he says.
Gathering and separating the herd
Online retailers gather huge amounts of data on visiting customers, such as what they have looked at, and for how long. This data bounty is more difficult for an offline retailer to gather, which has fuelled interest among many in developing omni-channels strategies, where data can be gathered.
At Myer, this strategy is tied together through the Myer One loyalty card. According to the department store’s general manager for information technology, Anthony Coelho, the goal is to provide a consistent experience to shoppers regardless of which channel that experience starts with. This also means gaining a single view of each customer, rather than regarding each transaction across different channels as a discrete customer.
“Just like we want one view of the customer, we want the customer to have one view of Myer as a brand,” Coelho says. “And whether that is in store, whether that is online or through our customer service centre, we make sure that whatever services we provide are done in an integrated fashion so customers don’t see a differentiation across those channels.”
Critical to this is a new order management system, which Coelho expects will come online later this year and will give customers new options for how they can place orders and have them fulfilled, both in store and out.
Just like we want one view of the customer, we want the customer to have one view of Myer as a brand.
This integrates with its Retek merchandising system, as well as a new $100 million point-of-sale system that has already delivered new flexibility in store. It has also facilitated a partnership with the Commonwealth Bank of Australia, whereby its customers can complete a transaction within Myer by redeeming their bank rewards points.
Together with the loyalty program, Coelho says these new initiatives will deliver full transparency to Myer management across all stores regarding stock movement and customer activity. “Traditionally you would rely on a method like stock take to give you that kind of data and understanding of what’s happening,” Coelho says.
“Our investment into our merchandising system has given us that visibility of what’s happening in terms of our stock levels and being able to react to our customers’ needs.”
Appliance retailer, Winning Group, is also pursuing an omni-channel strategy through its nine appliance showrooms in NSW and Queensland and its Appliances Online website. Chief technology officer, Simon Smith, says the two brands are vastly different and provide different experiences but are united through use of a common commerce platform from US developer, Hybris.
“We are definitely looking to standardise and get the best of both channels,” Smith says. “But we need to ensure that the brands do stay separate, and leverage what we can as a core.”
One of the possibilities of Hybris is to mobilise the point-of-sale experience within Winning Group’s physical stores. The old model of sales staff taking prospective customers back to queue up at a point-of-sale desk could give way to a mobile experience where staff can stay alongside customers throughout the entire sales cycle.
“Ultimately we could deploy tablets to the sales people so they are not tethered to the desk while customers are roaming around the store,” Smith explains. “The sales people will be able to go up to customers and answer their questions.”
The ability to shadow a customer and assist them through the sales process is something online retailers have struggled with. Where a physical interception may be impossible however, a virtual one is becoming more common.
Many online retailers now offer live chat facilities, where a shopper can engage in a text-based question-and-answer session with a staff member. Smith says he is keen to investigate taking this one step further and having staff instigate conversations and offer help when they think a customer needs it.
“It should be like people have been reading their mind, without being Big Brother,” Smith says. “People say they don’t want to be monitored, but they are expecting that experience and expecting information straight away.”