Communication Breakdown: Consistent Shopping Experience Affects In-Store Sales
By Greg Van den Heuvel, senior VP, customer engagement solutions, Pitney Bowes
Black Friday traditionally marks the first day of the holiday shopping season. During the most recent holiday season, millions of Americans have participated in the shopping frenzy, which according to CMO.com, accounts for nearly 40% of all annual sales. Black Friday weekend alone accounted for 133 million American shoppers, diving deep into discounts, hoping to land the best deal and get a head start on their holiday shopping.
My friend, Chuck, had been looking for a new desktop computer for some time and was thrilled to see it advertised on Black Friday for half the price by a national retailer, which had a store in his town. Despite the freezing temperatures (and snow in the forecast), he waited outside for two hours before the doors opened. Finally, he made it inside and scanned the store for the computer.
It was nowhere to be found.
Clearly, there was a communication breakdown in what was advertised and what ultimately was offered in store. Unfortunately for my friend, the breakdown resulted in a wasted, and cold, two hours. When he told me the story, he couldn’t wrap his mind around why he would receive an advertisement for a product that his local store wasn’t actually selling. And quite frankly, I couldn’t either.
The promise of technology today is that it offers consumers another avenue to enjoy a quick and easy shopping experience. For years people have been buzzing about the omnichannel — a term that describes a seamless shopping experience for consumers accessing information through multiple channels, both physical and digital. Yet, few retailers have successfully achieved this state of shopping nirvana.
You would think the communication breakdown in this story was due to a lack of customer and location information, but the reality is that businesses aren’t lacking in data. Quite the opposite is true. They have too much data and that data is fragmented across a business. Data online and in-store is collected, stored and analyzed separately.
For example, in Chuck’s situation, the national retailer created an advertisement for all the products they were marketing for Black Friday, but they didn’t take into consideration that not all of the physical store locations were going to be receiving a shipment for all the advertised products. So instead, the distributors sent the printed ads out to every household in America — regardless of product availability.
This year, collective, coordinated communications began gaining traction among businesses to prevent situations like these. Multiple departments within a company are now using technologies to see the same set of data around a customer, not just the data relative to their given department to gain a 360-degree view of their customers. But in 2015, this kind of seamless communication and data visualization will be a necessity, a new business practice, to maintain a loyal customer base and to finally offer customers a real omnichannel experience.
Each year, retailers and analysts await the results of one of the holiday season’s biggest showdowns: in-store vs. online. The CMO.com report calculates that in-store sales were up 4 percent from last year ($790.6 billion in 2014 vs. $759.9 billion in 2013) and e-commerce sales were up 15 percent from last year ($72.4 billion in 2014 vs. $62.1 billion in 2013). While most expected higher growth for in-store sales, this year surprised us all — Black Friday sales alone were down 11 percent, while Cyber Monday sales were up 8%, according to a report by Business Insider. The numbers were still lower than predicted, but I don’t think the question is around why less people shopped during this timeframe, but rather why online sales grew at such a higher rate than in-store sales.
I believe it boils down to collective and coordinated communication and the lack thereof between the physical world and the digital world. Consumers are becoming accustomed to experiencing service differently dependent on which channel they’re in. They’ve caught on to the fact that what they experience online is not going to necessarily translate to their experience in the store. And for most, the online, digital experience is the most consistent. Consumers know that if they see a product online, it will be available for them to purchase online, at the stated price. But, seeing a product online doesn’t guarantee it’s available, for the same price at your local store. Even seeing it in a printed ad doesn’t make it a guarantee.
I predict that by this time next year, our shopping experiences are going to feel a lot differently and online and in-store sales are going to fall more in line with one another. Retailers can no longer afford to deliver inconsistent shopping experiences. Customers will view the omnichannel as a given, not an expectation. We live in a global marketplace — the competition is a finger swipe away, both domestic and abroad.
Customer information management technologies are vital to finally figuring out what the omnichannel should feel like. Big Data is a good thing — you just have to leverage the right management and analytic technology to close the gap between the physical and digital worlds and deliver the right communications, to the right people, regardless of channel.
The retailers that take advantage of available technologies to create a true omnichannel will come out on top, and you’ll know exactly who they are because they’ll have loyal customers happily waiting in line outside their front door.
Greg Van den Heuvel is president of Americas, Pitney Bowes Software.
Target to exit Canada
Just six months after being named chairman and CEO of Target, Brian Cornell is pulling the plug on the retailer’s 133 unit Canadian operation and will incur a $5.4 billion pre-tax loss in the fourth quarter to do so.
Target said it plans to discontinue operating stores in Canada through its indirect wholly-owned subsidiary, Target Canada Co. and that it had filed an application for protection under the Companies’ Creditors Arrangement Act (the “CCAA”) with the Ontario Superior Court of Justice in Toronto.
“After a thorough review of our Canadian performance and careful consideration of the implications of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” Cornell said. “Personally, this was a very difficult decision, but it was the right decision for our company. With the full support of Target Corporation’s Board of Directors, we have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business.”
Target currently operates 133 stores and employs 17,600 people throughout Canada. The company is seeking court approval to make a voluntary $59 million cash contribution into an employee trust that would allow employees to receive a minimum of 16 weeks compensation.
“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests. We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance,” said Cornell. “There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way.”
Online returns set to surge in New Year
Retailers set more online sales records this holiday season and that means UPS will be busy in early January.
UPS is projecting its highest volume for return activity will be Jan. 6 when the carrier expects consumers will ship more than 800,000 packages back to retailers and merchants. By the end of the first full week of January, return volume is expected to total roughly four million packages.
“We have successfully completed two of three phases of the peak holiday delivery season,” said Alan Gershenhorn, UPS executive vice president and chief commercial officer. “Our Cyber Weekend and pre-Christmas performance helped retailers take advantage of holiday demand. We are now preparing for a surge in volume driven by returns week beginning next Monday.”
Ease of returns – in addition to free shipping – has become a key influencing factor of consumer behavior on the digital path to purchase, according to UPS.
“Our research shows online shoppers care about returns convenience with 66 percent reviewing a retailer’s return policy before making a purchase, and 68% said they would complete an online purchase if the retailer simply offered a free return shipping label,” said Gershenhorn.
Not surprisingly, easy and free returns are key drivers of overall return volume which has increased dramatically the past few years along with overall sales volume. In 2014, 62 percent of shoppers returned a product they bought online, compared to 51 percent two years earlier, according to UPS Pulse of the Online Shopper Study.