Digital Retail Innovation is Half the Battle

Sears and Kmart recently announced they will allow pickup of or orders at any of each other's more than 2,000 U.S. stores. Customers will be able to select free store pickup and a preferred pickup location for specially marked online items. The retailers are even taking the digitally progressive step of offering online video instruction through the YouTube channel for members of the Sears/Kmart Shop Your Way omnichannel loyalty program.

Sears (and by extension its sister brand Kmart) has actually been a fairly progressive digital retailer for some time. In 2010, Sears partnered with Israeli social media network in a social commerce project that evolved into Shop Your Way. And as far back as 2008, Sears launched an online “good news network.”

Shop Your Way’s ultimate impact remains to be seen and the good news network did not last long. The prospects for in-store pickup of online purchases are also uncertain because no matter how digitally innovative Sears gets, if customers don’t respond to its merchandising and marketing efforts, the innovation will ultimately prove fruitless.

Here are a few suggestions for Sears (or any retailer, really) to follow in order to make sure its digital retail innovation efforts are based on a tangible foundation.

Merchandising is Foundational

Retail at its core is the act of providing goods consumers want at a price and in a manner they find acceptable. Digital retail does nothing to alter this paradigm, but simply gives consumers more control and flexibility in how transactions occur. Thus no matter how sophisticated digital retail technologies become, they will still only work as well as the underlying merchandising systems and strategies supporting them.

Although Sears has had some notable recent growth in omnichannel commerce, its overall financial performance of the past several years suggests its merchandising processes and systems need some upgrading. Until this is accomplished, Sears’ digital efforts will fall short of expectations.

Image is Everything

When it comes to digital retailing, Sears has a bit of an image problem. Millennial shoppers who are most likely to respond to something like a proprietary social commerce network by and large are not part of Sears’ core customer base. Retailers need to understand their image when designing digital retail efforts, and Sears’ image is that of a traditional, price-friendly Middle American retailer. If Sears gets its merchandising operation in order, a digital initiative that is simple and convenient, like in-store pickup of online purchases, actually fits its image nicely.

ROI is Challenging

One of the most difficult parts of any digital retailing initiative can be determining the return-on-investment (ROI). Especially for a financially struggling retailer like Sears, obtaining a clear-cut ROI from digital retailing initiatives is important to ensuring they truly benefit the business.

But while allowing in-store pickup of online purchases can generate a measurable ROI through higher online conversion and transaction rates, the return from efforts like letting customers socially connect or providing online good news is tougher to quantify. Again, provided Sears sticks to its image and rights its merchandising, in-store pickup could prove a huge success. By itself, it will accomplish little more than garner a few headlines and column mentions.

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