Brick-and-mortar retailers go cross-channel for a 360-degree view
By Lindsay Carpen, [email protected]
A significant number of those in the retail industry have heard of multichannel retailing. In fact, it’s not unusual for a brick-and-mortar store to have an online store or even an account on a social media site. However, what tends to be the missing link is the retailer’s ability to gather a 360-degree view of the customer across all of their sales channels. By achieving the migration to a cross-channel strategy, retailers can improve how they identify and respond to their best customers, growing loyalty and walletshare.
Having a customer-centric strategy such as this requires a balance between the realities of supply chain efficiency and the needs of your “best” customers. Understanding who your best customers are and making sure you stay relevant to them is the key to success.
This is not an easy task or everyone would be doing it. One interesting way to get answers is to compare how two very different retailer types approach identifying their best customers. On the one hand, we have “direct marketers.” Direct marketers have traditionally had a customer-centric strategy from the beginning. On the other hand, “brick-and-mortar” retailers have had an indirect understanding of their customers at best. If modern brick-and-mortar retailers can combine the sales power of the physical store with the 360-degree view many direct-marketing retailers enjoy, then they can experience significant value to their business in terms of how they attract and retain a greater number of their most profitable, loyal buyers.
Multi-channel retailing helps the brick-and-mortar retailer understand how to identify their customers. Integrating a view across the channels takes that piecemeal view and creates a complete picture of behavior, buying patterns and trends.
Most customers today have a buying cycle that crosses channels. An example is a customer that researches a product online, goes to the store to investigate and then either purchases in the store, online or via the retailer’s call center. The key is to encourage and enhance this cross-channel behavior by making the same information (product details, fulfillment options and price) available regardless of the channel. Making multiple connections with a customer across as many channels as possible, and ensuring a consistent and easy buying experience will enhance customer conversion rates, build brand loyalty, and improve margins. Armed with this information, brick-and-mortar retailers can achieve assortment and promotional performance that direct marketers have enjoyed for years.
This “cross-channel” experience will be the platform for making innovations in customer-centric retailing for years to come. Successful brick-and-mortar retailers will use cross-channel buying behavior to gather not only customer data but customer preferences and trends. This information will be used to drive more relevant assortments and promotions in every channel. Imagine if store associate knew what customers were “most viewing” online or even if they could pull up a customer’s wish list in the store and talk to them about it on the phone or in the store!
This is not merely a “touchy feely” concept. In fact, there is real and significant money at stake. Think of supermarket retailers who have access to extensive customer information through loyalty cards. According to The Neilson Co., supermarket retailers with loyalty programs found that the top 30% of customers accounted for 65% of sales. This means that 70% of their customers were relatively unprofitable. When combined with share of wallet data, they found that their top 30% of customers only gave them 50% of their business. Do you think that there is a relevancy issue here? This is pretty basic information but you can already see how this data could shape an entire strategy for a business. How can modern retailers survive without it?
Cross-channel buying behavior is here, now. Lessons can be learned from Direct Marketers that have traditionally looked at their business through a customer-centric lens. As more customer data becomes available, brick-and-mortar retailers will be able to unlock top line growth as they see their top customers become more loyal and spend more money with them across all channels. They will also be able to engage them in a more meaningful way regardless of what channel they interact with them in because they will have a true, 360-degree view — and therefore greater understanding — of their customer.
Lindsay Carpen, is retail practice director at Junction Solutions, a leading provider of ERP software solutions for the mid-market retail and consumer goods industries. He can be reached at [email protected].
More exec changes at Lowe’s
MOORESVILLE, N.C. – Lowe’s personnel changes are becoming hard to keep up with. At the end of last month, the company announced the retirement of long-time president and COO Lary Stone — along with the news of several executive changes in the areas of merchandising, store operations and strategic planning — then yesterday announces another round of executive promotions, including a replacement for the post vacated by Robert Gfeller Jr., who was recently promoted to EVP merchandising.
Troy J. Dally has been promoted to Gfeller’s old job — SVP and general merchandising manager-hardlines/building products. Dally joined Lowe’s in 1999 and has served as merchandising VP millwork for nearly five years following seven years in other areas of the building materials division. He has nearly 20 years of home improvement experience.
Lowe’s also announced Maureen K. Ausura was promoted to EVP human resources, having served as SVP in the same capacity since joining the company in 2005. She oversees all aspects of human resources, including employee recruitment and benefits for Lowe’s approximately 238,000 employees in North America. Ausura has more than 25 years of human resources experience.
Gaither M. Keener has been promoted to EVP, general counsel, secretary and chief compliance officer, having served as SVP in the same capacity since 2006. He began his career at Lowe’s in 1985. Keener directs and determines all legal and compliance matters for the company and its subsidiaries.
Ausura and Keener will continue reporting to Robert A. Niblock, chairman and CEO.
Lowe’s announced two other promotions:
• William L. (Leroy) Allen has been promoted to SVP logistics, replacing Rick D. Damron, who was recently promoted to EVP store operations. Allen joined Lowe’s in 2003 as VP logistics flow and support and served more recently in the corporate supply chain organization as VP logistics planning and forecasting.
• Everett B. (Britt) Dayton has been promoted to SVP IT business management, after previously serving in store operations support as VP store delivery fleet operations. In his new role, he will work across Lowe’s business areas on IT strategy, architecture, program management and prioritization to ensure successful delivery of technology to support the company’s business objectives. Prior to joining Lowe’s in 2003, Dayton worked for more than 20 years in retail supply chain development and information systems.
It remains to be seen how the executive changes at Lowe’s will impact its financial performance in the future, especially considering that it has no plans to fill the president and COO position following Stone’s retirement in June. The company is expected to report it fourth-quarter results on Feb. 23, calling for diluted earnings per share of 16 cents to 19 cents and same-store sales growth of 0% to 2%.
Whole Foods Q1 income jumps 79%, same-store sales up 9.1%
Austin, Texas — Whole Foods Market’s first quarter net income surged 79% to $88.7 million, on an increase in customer visits and a rise in average transactions. The natural and organic foods grocer raised its 2011 profit outlook on strong results, which beat expectations.
Sales for the quarter, ended Jan. 16, increased 14% to $3.0 billion. Same-store sales were up 9.1%, the highest level in four years. On a conference call with analysts, Walter Robb, Whole Foods’ co-chief executive officer, said average weekly sales per store for all stores increased 9% to $621,000, translating to sales per square foot of approximately $856.
"We are proud that we are continuing to gain market share at a much faster rate than most public food retailers," Robb said.
Whole Foods opened three stores and expanded one store in the first quarter. It expects to open three new stores, including one relocation, in the second quarter. The company also recently signed leases in Ottawa; Danbury, Conn.; Jamaica Plain, Mass; Lynnfield, Mass; Marlboro, N.J.; and San Antonio. These stores currently are scheduled to open in fiscal year 2012 and beyond.