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2014: The Year of Customer Disruption

BY Dan Berthiaume

Last week, I looked back at 2013 and how the biggest single trend in retail IT was customers using connective technology to take control of the shopping experience. This week, I look forward to the new year of 2014, when the biggest single trend in retail IT will be customer disruption.

Customer disruption goes beyond customers simply taking control of the shopping experience. Mobile devices, social media, constant connectivity, and a blurring of the lines between once distinct customer service “channels” is creating a situation where retailers can no longer offers their customers the same traditional customer experience they have been offering for the past century. Let’s look at three distinct ways customer disruption will change retail as we know it in 2014.

Channel? What’s a Channel?
“Omni-channel” retailing, where the consumer encounters a seamless and sequential customer experience across all channels, is being disrupted into a new retail model where the idea of distinct channels has become obsolete. Thanks to smartphones, tablets, and wearable connected devices like Google Glass and Samsung SmartWatch, customers can and do simultaneously interact with retailers via three to four channels at once.

It’s no longer a case of a customer looking up a product on their mobile device and later buying it in the store, but a case of a customer receiving a texted personalized discount for a product they reserved online and are paying for in the store via tablet-based checkout. Retailers must align all channels in real time to the point they act as one unified platform.

Social Media Lets Customers Join the Team
Social media is disrupting how retailers develop customer relationships. One of the most disruptive aspects of what has come to be known as “social retailing” is how social media erases the boundary between the customer and the retailer. Social media allows customers to take an active role in product development and assortment selection, become evangelists who play a critical (and usually unpaid) role in marketing and branding efforts, and create an ongoing, real-time (and also usually unpaid) feedback mechanism that is vastly larger and more diverse than any traditional focus group.

Of course, making customers an extension of the enterprise through social media can have its downside, such as when disappointed consumers vent their frustrations in public online forums. Social listening is a disruptive practice where the retailer (or a contracted third party) monitors all avenues of social media for negative or positive comments on a brand or a chain, allowing it to quickly identify and resolve any problems.

A Store without Walls
At least in the short term, customer disruption is not changing the primacy of the physical store as the profit center. What customer disruption is changing is the nature of the store. In addition to the previously described dissipation of the store as a distinct channel, the store is now serving as a physical repository of all a retailer’s offerings. Whether through “endless aisle” systems that eliminate in-store inventory limitations or augmented reality product displays visible via Google Glass, retailers are removing the walls of the store and opening it to a new and unlimited realm of customer experience-enhancing possibilities.

[Editor’s Note: From May 7-9, Chain Store Age is offering the Customer Disruption Conference at the Sofitel Hotel in San Francisco Bay, Calif. Join us at this immersive event where the best and brightest will share the latest ideas, practices, technology and solutions enabling retailers to break through the noise and win the engagement revolution. Visit www.customerdisruption.com for more details.]


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SUPPLY CHAIN

2013 – The Year the Customer Took Over

BY Dan Berthiaume

Looking back on 2013 (and as always, it’s amazing how quickly “look back” time arrived), the biggest single trend in retail IT has been customers using connective technology to take control of the shopping experience. And retailers should be thrilled.

At first glance, retailers taking the seasonally appropriate emotion of joy at relinquishing control of how customers research, select and buy merchandise may seem counterintuitive. But advances in mobile, social and online technology that have put customers firmly in control of their shopping destiny have also unlocked a huge trove of brand new potential for retailers. Here are three reasons retailers should be extra happy about customer-driven retailing as they close out the year.

Knowledge is Power

The same devices and solutions that give customers so much more control also create an incredible digital data trail that retailers can follow to increased levels of customer service and profitability. Although retailers must carefully adhere to basic privacy guidelines, every time a customer posts a social comment, checks in at a location, or views an online product description, they leave behind digital evidence that retailers can collect and analyze to solve the mystery of how to perform one-to-one retailing on a mass scale.

Reach Out and Touch Someone

Now that every customer touchpoint has potentially been moved to the digital realm, for the first time retailers can engage consumers at each step of the customer journey. It was not previously possible to send customers a personalized chat invite when they browsed your product catalogue or jump in when they asked friends for advice on purchasing a product you sell. E-commerce sites and social media platforms make this kind of personalized interaction throughout the customer journey a reality. And more personalization means more sales conversions.

No More Guesswork

Pull retailing, where the customer drives assortment, requires a much more agile and integrated supply chain than push retailing, where a retailer’s merchandisers largely determine assortment well in advance of sales. However, pull retailing adds the distinct advantage of providing much better insight into what customers actually want to buy much closer to the sale.

And the type of customer-driven sales retailers are now experiencing are both a major challenge and a major opportunity. If retailers can align their supply chains to provide the near-real-time fulfillment connected customers are starting to expect (no easy task for sure), they can avoid markdowns, overstocks, liquidations and all the other profit-draining unpleasantries associated with inaccurate demand forecasts.

The customer is telling you exactly what they want, but also telling you how, when and why they want it and who told them about it. A pretty reasonable tradeoff of data for control as retailers enter 2014. Next week, we will look at even more transformational change on the way in 2014, and how retailers can use it to full advantage for themselves and their customers.

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Macy’s, J.C. Penney failing to reach resolution on Martha Stewart dispute

BY Katherine Boccaccio

New York City — On the heels of earlier reports that Macy’s and Martha Stewart Living Omnimedia were able to reach a settlement in their ongoing legal dispute over Martha Stewart sales at J.C. Penney, reports surfaced on Friday that Macy’s and Penney were unable to find their own agreement.

According to multiple sources, talks between Macy’s and Penney fizzled, making it likely that a judge will have to decide the dispute over home goods designed by Martha Stewart.

The Wall Street Journal, citing people familiar with the matter, said that no discussions are currently taking place, despite the fact that both retailers were given the last four months to reach a settlement on their own after completing closing arguments last August before Justice Jeffrey Oing in state Supreme Court in Manhattan.

The same sources also said the two department store retailers have held on-and-off talks since closing arguments but failed to agree on the amount of damages.

Macy’s initially filed a breach of contract suit against Martha Stewart Living in January 2012, claiming Martha Stewart was not allowed to sell branded items at J.C. Penney.

In October 2013, Penney said it would sell a smaller selection of Martha Stewart Living products, like window treatments, rugs and party supplies, categories that are not in contest by Macy’s. Also, Martha Stewart Living will receive fees, royalties and the 11 million shares of its stock that Penney now holds, and Penney also will no longer have representation on the Martha Stewart Living board. In addition, J.C. Penney will terminate its partnership with Martha Stewart in 2017 instead of 2021.

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