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OPERATIONS

The Future is Unified — and You Should Be Too

BY CSA STAFF

Customer experience is everything. In fact, Accenture found that 45% of customers are willing to pay more for a better customer experience. It’s also what gets customers into the physical store. With more consumers turning to the ease of online ordering and straight-to-door shipping, retailers are in a bigger crunch than ever before to not only increase footfall, but to keep customers coming back.

So what can retailers do to turn first time visitors into loyal customers? Get unified.

Build the Digital Experience

Smart homes, autonomous cars, the internet of everything. The digital age is not only all around us, it’s advancing rapidly. And retailers are taking notice.

To get shoppers through the doors, retailers should be committed to bringing the digital experience in-store. For example, connected dressing rooms with interactive touchscreens can create customer convenience, comfort and the ability to reach sales associates without ever having to leave the fitting room. Arming sales associates with mobile devices give them instant access to point-of-sale data, customer loyalty programs and even inventory visibility, allowing them to provide insights to customers accurately and immediately. And beacon technology gives retailers the ability to push meaningful promotions to customers in-the-moment, as soon as they walk in the door.

Bringing the digital experience in-store, however, doesn’t mean ignoring your online presence. Far from it. In fact, shoppers are already accustomed to getting a personalized experience online. Whether its recommendations for products that match your shopper’s buying preferences or complement items they already own, digital platforms and physical stores must create a parallel environment that enhances the customer experience.

Bridge the Connection Gap

Today’s shoppers browse in store, look at websites, and scroll through apps on their phone. They expect retailers to be everywhere they are, and they want every channel they touch to be inter-connected. For example, if a customer buys online, they want the option to receive anywhere and return anywhere. And if the shopper goes into a store to purchase a product and finds out it’s out of stock, they want a sales associate to be able to order it for them online and have it shipped to their door.

Additionally, shoppers expect accurate inventory when shopping in-store and online. And it should be available across all of the retailer’s locations and be consistent across channels. Whether shopping in-store, online, on a mobile app, kiosk or even across social channels, product descriptions must be consistent, and personalized recommendations must be relevant and timely.

While this level of retailer knowledge and customer experience can be difficult to achieve, technology advancements are helping retailers stand out from the crowd.

Get Unified

The key is applying technology that is both unified and flexible. Every customer journey is unique. It can be simple or demanding. And it can change with every interaction and purchase a customer makes. So creating a technology infrastructure that gets to “know” your customers and can react in real time to behaviors is important.

One way to do this is through unified commerce (UC) solutions. UC can centralize inventory management, streamline order management, integrate CRM capabilities and provide real-time data reporting, analysis and predictive analytics. But most importantly, UC platforms provide visibility into the complete customer journey by eliminating siloes and disconnected systems and unifying all interaction and information channels under a single technology platform.

UC also empowers sales associates and managers with behavioral insights – not just purchase data. Giving retail associates access to a customer’s interactions across channels provides them with the knowledge of past purchases, browsing history and even promotions that have already been sent. In turn, this empowers sales associates to make even more informed sales decisions, cross-sell and upsell confidently and provide personalized attention. Additionally, providing consistent information across channels improves communication between retailer and customer. This becomes especially important when making purchases across channels, and ensuring returns are hassle-free.

Today’s brands live or die by their customers’ experiences. And retailers that want to make a splash must get unified. Connecting channels allows retailers to create more meaningful connections with customers, tailor the shopping experience to the way of the future, and cater to every customer’s needs and expectations – all without any extra effort.


Brad Fick is president of Direct Source, a nationwide technology solutions provider that offers hardware and software solutions designed to help retailers maintain a competitive edge, while improving productivity and customer service.

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AMAZON Featured Partner
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Analysis: Amazon’s growth, success will continue to come at expense of bottom line

BY CSA STAFF

Although Amazon’s sales advanced by a respectable 23% over the quarter, the pace of growth at the online behemoth remains much slower than it was over most of the prior fiscal year. Some of this is the result of a less favorable exchange rate diluting contributions from the international business. However, some is also down to a more challenging demand environment in North America which has limited spending uplifts on products within Amazon’s core territory.

While retail sales growth has slowed, Amazon’s retail service revenue — which includes Prime subscription fees – jumped by almost 50% over the prior year. A rise in subscriber numbers in North America and the roll out of Prime to new territories like Mexico have both underpinned this trend.

More modest product sales uplifts combined with high Prime subscription growth has resulted in a significantly narrower gap between shipping costs and shipping revenues; this boosted operating income within North America, albeit only to a small degree.

Unfortunately, such a pattern was not replicated on the international front where an unfavorable exchange rate plus extensive investments in new services and initiatives dramatically increased operating losses.

Ultimately, the rise in international operating losses outweighed gains made closer to home, which resulted in a 6.2% dip in overall group operating income. As disappointing as this is, we do not believe this is a cause for too much concern — if only because the investments Amazon is making will pay dividends over the longer term.

The expansion in India exemplifies the opportunity Amazon has in newer markets. Here, the recent launch of Prime, the development of a Fire Stick optimized to the market, and investment in logistical and selling infrastructure have all helped to make Amazon the fastest growing marketplace in the country. Given the future scale and scope of Indian e-commerce, the investments are prudent and will make an extremely healthy contribution to overall growth in the years ahead.

As Amazon splurges to forge ahead in new markets, greater profit stability in its home market arguably becomes more important. Even though the company’s margins remain thin, a firmer grip on fulfillment costs is currently helping to deliver this.

That said, we believe that there are some future risks in North America — most notably from the more aggressive e-commerce push coming from Walmart and, to a lesser extent, other traditional players.

Against this backdrop, it is essential that Amazon maximizes its potential in areas and categories where it is currently underweight. This includes fashion where we are encouraged by the new development of private labels such as Goodthreads and Lark & Ro. Although these are embryonic, they provide Amazon with the building blocks to develop a much more compelling, and slightly higher-margin, fashion proposition which will help it to grab market share profitably. This will be aided by new technology such as the Echo Look, which will help Amazon to sharpen its fashion credentials and services in a way that is challenging for other players to imitate.

As much as we are encouraged by Amazon’s drive into categories like fashion and home, we are more hesitant about the Amazon Fresh business. As much as we believe this has solid long-term potential, we think the logistical complexities and the low margin nature of grocery mean that it will be an expensive drag on profits for the foreseeable future.

As other players become more aggressive about e-commerce, we think life will become a little tougher for Amazon. While we do not see any significant material damage to the firm, we do think sales and margin growth could be crimped over the medium term. However, we believe that in the short-term damage will be limited by the fact that Amazon has created a very successful ecosystem of content and technology; this will support Prime subscriptions which, in turn, help make Amazon the destination of choice for buying products.

However, sustaining this into the longer term will require Amazon to maintain its pace of innovation. While current trends suggest Amazon is more than capable of doing this from a technical and creative standpoint, we believe that such action will also constrain profit growth.

As such, while the overall outlook for Amazon is extremely positive, we maintain our view that the company’s growth and success will continue to come at the expense of the bottom line.

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AceDC
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Ace Hardware streamlines East Coast distribution operations

BY HBSDealer Staff

In a major restructuring of its eastern U.S. distribution network, Ace Hardware Corp. intends to open a new 1.1. million-sq.-ft. Retail Support Center in Pennsylvania while closing a handful of other facilities.

The moves will play out over the next 24 months.

The centerpiece of the restructuring is the planned opening of a Retail Support Center in Fredericksburg, Pennsylvania in the first quarter of 2018. The facility will service Ace Hardware stores in Pennsylvania, New York, Virginia, New Jersey and Washington D.C.

Also part of the move is the closing of its Retail Support Center in Prince George, Virginia, a small crossdock in the Baltimore area, and the Emery-Waterhouse operations in Portland, Maine and Pittston, Pennsylvania.

“Ace Hardware intends to grow even more aggressively over the next several years,” said Lori Bossmann, executive VP, supply chain, inventory replenishment and retail support, Ace Hardware Corporation. “As a result, we are augmenting our distribution capabilities to be faster, nimbler and stronger than ever before.”

The changes to Ace’s east coast retail support network will take place in phases over the next 24 months, with the new Retail Support Center in Fredericksburg, Pa., and existing, recently expanded facility in Wilton, N.Y., absorbing distribution operations for the region.

The co-op said the restructuring does not change Ace’s strategic direction for Emery Jensen Distribution, Ace’s national wholesale operation which encompasses Jensen Distribution on the west coast, and Emery-Waterhouse on the east coast. “Ace will continue to grow its wholesale business with streamlined distribution and even greater strength,” said Mark Spanswick, president and general manager, Emery Jensen Distribution. “Emery Jensen Distribution remains a valuable division of Ace Hardware. We look forward to growing the business across all regions of the country.”

The co-op said employees at facilities being closed will be provided with a full range of transition services over the next two years. Relocation opportunities will also be provided to qualified team members.

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