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Creating Merged-Channel Opportunities

BY CSA STAFF

The retail industry is eager to transition multichannel offerings into a long-awaited merged-channel retail strategy. While each channel often delivers three different shopping experiences, retailers are ready to finally merge these platforms and deliver similar shopping experiences, regardless of the customer touchpoint. Without tightly integrated systems, however, a merged retailing strategy will only remain a pipe dream.

When Brian Carpizo, president of Junction Solutions, Lincolnshire, Ill., chatted with senior editor Deena M. Amato-McCoy, he shared the cultural changes, as well as technology priorities, that retailers need to be mindful of as they make the strategic move into merged channel retailing.

Chain Store Age: We have been hearing about a new buzzword: merged-channel retailing. Can you explain what this is?

Brian Carpizo: Merged-channel retailing describes a strategy that utilizes more than one method of customer interaction. It is also the key to capitalizing on the internal and external opportunities of multichannel retailing.

Today, many retailers are “multichannel,” but have not yet evolved to the point where their organizational structure, operations and systems have “merged” to create efficiencies and leverage opportunities.

 

CSA: Are retailers encountering any challenges with integration as they make the transition from multichannel to merged-channel retailing?

Carpizo: Yes, they are. In fact, there are two large barriers to integrated merged-channel retailing. The first is an organizational structure, or corporate culture, that promotes separation between the channels. The other is non-integrated IT systems that prevent the movement of information across channels.

I think that savvy retailers are making changes within their organizations and systems because they realize that these two areas will build the foundation for improvement going forward.

CSA:  What other challenges do retailers face when embarking on this strategy?

Carpizo: Political, organizational and business-process barriers can be enormously complex. Most retailers’ application footprints are typically comprised of a patchwork of non-integrated systems that run on a variety of hardware, operating systems and database-management systems.

Since the packaged software industry did not offer very many good integrated options in the past, there are still a significant number of homegrown applications functioning within retailers’ operations. While they seem to “fit,” they tend to be very people-intensive and inflexible.

Thus, most retailers have institutionalized single-channel operational practices to the degree that very disruptive changes are now required to effectively implement a merged-channel strategy.

CSA: How can companies like yours ease the transition?

Carpizo: Junction Solutions offers a suite of integrated cross-channel retail software that leverages the standard and modern Microsoft platform. We offer solutions for catalog, in-store and e-commerce retailers to manage their call centers, fulfillment, finance, supply chain, Web store, POS and business intelligence.

Our products are engineered to work together and also plug into other point solutions. As a result, they support a merged-channel operational strategy.

CSA: When choosing software to support merged-channel retailing, what should retailers keep an eye on?

Carpizo: Mid-sized multichannel retailers that are embarking on systems improvement initiatives should keep an eye out for a corporate IT application software platform strategy. We think that a Microsoft platform is an obvious choice because of the technology’s widespread user familiarity and openness.

Another benefit is that Microsoft and its hardware partners make annual investments to improve this computing platform.

CSA: How will integration become a point of differentiation for merged-channel retailers going forward?

Carpizo: Good retailing is defined as the art of getting the right product in front of the right person at the right price at the right time. No matter how much we try to “computerize” everything, it is the truly gifted merchant that has an instinctive feeling for who their customers are and what they really want within each channel of their cross-channel strategy.

Having integrated processes, organizational structures and integrated retail IT systems will enable good execution, and help the retailer build critical brand value and responsiveness in a frequently changing consumer marketplace. After all, the only thing you can count on in the future is your brand and your ability to quickly react to change and fulfill customer demand.

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Lampert, the Eli Manning of retail?

BY CSA STAFF

HOFFMAN ESTATES, Ill. The New York Giants triumph over the highly favored New England Patriots in the Super Bowl earlier this month, has become an example of coming from the bottom to win it all. Sears Holdings chairman Edward Lampert is one of the latest to use the Giants win, even going as far to compare himself, and the leaders of his company, to quarterback Eli Manning.

The Giants analogy, and Eli Manning comparison, is applied mainly to the company’s Kmart division. In a letter to investors, posted on the Sears Holdings investor relations Web site, Lampert said during Kmart’s bankruptcy in 2002, the unit was “like an undrafted free agent who nobody thought had a chance to play in the big leagues.” Lampert went on to say, “Like Eli Manning, we know what it’s like to be underestimated and questioned, but we intend to keep working on our game to achieve our full potential.”

Sears Holdings reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended Feb. 2, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended Feb. 3, 2007. For the fiscal year ended Feb. 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended Feb. 3, 2007.

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Circuit City investor seeks to replace board

BY CSA STAFF

RICHMOND, Va. Circuit City Stores today acknowledged that it has received two proposals from shareholder Wattles Capital Management regarding its board of directors. Wattles holds approximately 6.5% of the outstanding shares of the company’s common stock.

Circuit City reported that Wattles proposed the idea of replacing the company’s Circuit City 12-member board of directors with its own nominees. Circuit City said its board of directors will review carefully the shareholder’s proposals and the qualifications of the nominees in accordance with its fiduciary duties, mindful that the proposal would give the shareholder absolute control of the entire board, which would be disproportionate to its relative ownership of the company’s shares.

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