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Making the Customer Connection

BY CSA STAFF

Getting closer to the customer has always been important to retailers, but never more so than it is today. Chain Store Age spoke with SAP’s Lori Mitchell-Keller about the transformational shifts that are shaking up the retail model.

All the buzz today is about how retailers need to get closer to the customer, but what exactly does it mean?

It means understanding customers for who they are, what they want to buy, what they already did, how they want to interact with the retailer, which channel they prefer, and what motivates them to spend their money with you.

It’s really about experience management. The experience that a customer has should be the same whether its in-store, on the website or via a mobile device. They should feel comfortable with the brand and with their ability to find what they need, access assistance when needed and make a purchase easily. Underneath all this are the tools that harness the customer knowledge and drive the experience, including big data and social network analysis tools.

What is it about the current environment that makes getting closer to the customer so important?

Every so often we see a significant shift that really shakes up the retail model. We all remember the days where retailers and advertisements told consumers what we wanted. Now, as consumers, we have the power to demand what we want from retailers. We’ve just started to work our way through another significant shift prompted by the increase in transparency of pricing and offers. Customers not only demand specific items; they now demand those items at certain price points, via specific channels, delivered via the method they want. To stay in the game, retailers must use the customer knowledge to match these demands. If they can’t, the consumer will simply move on to another retailer that can.

What is the biggest challenges retailers face in becoming more connected to the consumer?

Understanding the shopper and providing products in the right place, at the right time and at the right price. By utilizing big data tools and feedback from consumers, retailers can more easily meet expectations.

How can technology help retailers in this regard?

The right technology tools can help retailers pare down and analyze customer data, get more granular and then define proactive campaigns to maximize customer interactions across all channels — a true multichannel approach based on real data. This strategy — combining the power of predictive analytics with the ability to personalize the shopping experience for individuals — is the key to getting closer to the customer, driving purchases and increasing revenues.

What type of solutions/tools does SAP Retail offer for helping retailers connect better with customers?

SAP Precision Retailing is a new cloud-based enterprise solution, powered by SAP HANA, that helps retailers influence consumer shopping behavior at the point of decision by delivering one-to-one personalized offers in real-time across channels, such as mobile devices. Using customer data and geo-location, retailers can share customized offers with consumers at the exact point when the consumer is primed for purchase. Also, mobile tools, such as the SAP Retail Store Ops Associate app, can empower sales associates to close more sales. It provides real-time insight to product information and inventory, in order to answer nearly any question a customer might have.

What role do things like personalized promotions, m-commerce and social analytics play in this?

Social analytics help retailers define consumer trends in order to maintain an optimal inventory. Personalized promotions then help inform the consumer about offers and availability based on their individual demands. Finally, m-commerce enables customers to pay, buy, bank and remit money from mobile devices, offering the ability to buy how and when it suits the customer.

How does SAP see all this evolving?

We envision retail without boundaries, where technology continues to evolve as consumer demands change. As consumers rely more on technology tools, especially social and mobile ones, the information available to retailers will grow, and interactions will become more personalized.

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Multichannel Growth

BY Deena M. Amato-McCoy

When UGG Australia began evaluating how shoppers wanted to engage with its brand, the footwear company — best known for its popular sheepskin boots — decided to augment its wholesale channel and digital presence with freestanding brick-and-mortar stores.

“Retail [freestanding stores] allows Deckers to showcase the UGG product in ways that many of our partners may be unable [to do],” said Yul Vanek, VP information technology for Deckers Outdoor, the Goleta, Calif.-based parent of UGG, Teva and other banners.

Realizing the IT platform that served its wholesale direct-to-consumer business was not efficient enough to support a network of stores, UGG implemented a retail platform to manage all store-level transaction operations. But stores were just the beginning. With the advent of 24/7 retail, UGG shoppers now often seek information before making a purchase, and will jump online or pick up their mobile device before making a decision.

“Consumers want to interact with a brand like UGG on their terms, not anyone else’s,” Vanek said. “It is our responsibility to ensure that a premium brand experience is delivered consistently, and with ease across all potential touchpoints.”

The company started opening freestanding stores in 2008, and by 2010 was opening five to 10 locations annually. It picked up the pace in subsequent years, and also added units in Asia and Europe. (UGG currently operates 77 stores, including 22 outlet locations.)

It quickly became evident that a wholesale operating platform, supported by ad-hoc queries, manual spreadsheets, a homegrown e-commerce platform, basic point-of-sale capabilities and fulfillment driven by Oracle EBS (Redwood Shores, Calif.-based Oracle’s E-Business Suite), was not scalable enough to support this new business endeavor — especially as Deckers expanded the geographic reach of UGG and considered retail for its other footwear brands.

Since UGG is a global operation, the company needed a proven, centralized solution that provided operational consistency, and that could be applied across country borders without many customizations or replications. It also needed to deliver a low total cost of ownership.

The company chose the Oracle Retail platform, leveraging its merchandising, point of sale, planning and central office solutions, among others. Using a single centralized instance, the company integrates customer and transaction data, which is shared across planning, pricing and the RMS system. The integrated solution helps the brand manage its global operations, “and it sets the stage for the company to quickly deploy additional capabilities globally rather than support regional solutions on siloed platforms,” Vanek explained.

UGG went live with planning functionality during the first quarter of 2012, followed by store-level merchandising during the second and third quarters. By the third quarter, all stores across North America and Europe, the Middle East and Africa (EMEA) operating region were live on the complete functionality of the Oracle Retail platform. China and Japan will join these ranks early this year.

During the Black Friday holiday weekend, the platform delivered strong results, including “less inventory stock outs, a double-digit increase on conversion rates, and healthy sales across our full-price and outlet stores compared with the same shopping period last year,” according to Dave Powers, president, global direct to consumer, Deckers.

While the platform is still in its early stages of usage, UGG is already planning how it will play a role in the transformation of its business. The company is on the fast track, striving to hit 200 stores, and $600 million in revenue, by 2015. Simultaneously, the brand plans to begin blending its physical and digital channels to create a formal omni-channel operation. The platform will act as a framework for this endeavor.

Deckers plans to merge its online operation with the Oracle Retail suite by the middle of 2013 — a move that will support a seamless omni-channel experience.

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Digital Delivery

BY Amanda Baltazar

The way in which retailers market to consumers has undergone considerable change in recent years, particularly in light of the popularity of social media platforms. Indeed, social media has become essential to retailers’ marketing efforts, according to a recent BDO USA survey, which found that 86% of retail CMOs included social media in their holiday 2012 marketing plans.

Facebook gets the lion’s share of the attention. In the BDO survey, 99% of the CMOs said they were focusing their social media marketing on the popular social platform. Davenport, Iowa-based department store operator Von Maur, which has 27 stores in 11 states, is an example of one retailer that is very active on the social media site.

“We’re building customers’ brand loyalty, and we give them a look behind the scenes,” said Holly Danler, Von Maur’s e-commerce manager. “We try to give them insight and make it interactive. We put different content on Facebook so we have highly active engagement.”

One of Von Maur’s simplest and most effective ways to engage the people who ‘like’ it is to ask “fill in the blank” questions, such as “I like to wear leggings because _ _ _” or “My favorite thing to buy is _ _ _.”

“We have found customers also interact with each other and get more dialog going,” Danler pointed out.

Half Price Books also uses Facebook — for everything from sales and promotions to branding campaigns, blog posts and to feature inventory.

“Facebook serves as a direct communication vehicle with our customers,” said Kathy Doyle Thomas, executive VP of the 115-store Dallas-based brand. “It allows us to respond in real time to our customers’ questions, complaints, comments and compliments.”

The site allows Half Price Books to not only pass on information directly to its fans, but also “allows for brand engagement and loyalty,” Thomas pointed out.

The brand engages by involving its followers with its Facebook page. A recent promotion for a 10%-off coupon had customers vote on whether they preferred zombies or aliens. Once they voted, they were eligible for a coupon.

“People like fun things on Facebook, and you really have to do something different and clever instead of just saying ‘10% off for anyone,’ ” Thomas added.

The value of Facebook isn’t in its ability to sell but its ability to get inside consumers’ heads, according to Wilson Tang, head of digital creative at New York marketing company TBA Global.

Facebook users who see a brand regularly on their wall will become much more familiar and have far greater brand awareness than retailers who are less visible, he said.

“Consumers are being bombarded with brand messages over time,” Tang said. “It makes the brands a little more credible. What [retailers are] hoping is that the next time you walk past their store, or they run a deal, it’s a lot easier to associate with that brand and for them to execute a commerce transaction.”

MOMMY BLOGGERS: Savvy retailers are also utilizing Twitter updates, online contests, and other online forms of marketing and advertising — all of which cost nothing, or virtually nothing, to use. For some retailers, working with “mommy bloggers” is another effective means of communicating with consumers. According to a study by Scarborough Research, 14% of all American mothers with at least one child in their household blog about parenting or turn to blogs for advice.

“A mommy blogger is an excellent resource for a retailer because she’s “an ordinary person, and a peer and someone a lot of these people can relate to,” added David E. Johnson, CEO of Strategic Vision LLC, a marketing agency in Suwanee, Ga. “Readers can interact with them, and that’s key if you want to ask a question or talk about your own experience.”

Target Corporation has been working with mommy bloggers for many years.

“We recognize that mommy bloggers have really large and engaged followers, and they can speak very authentically to their readers … who trust them,” said spokeswoman Dustee Jenkins. “We call them online influencers.”

The chain has 17 mommy bloggers who are part of the Target Inner Circle. The select group of social influencers is given behind-the-scenes access to information relating to the brand to share with their followers. The retailer, for example, might bring a food blogger to its test kitchen, or provide a preview of a new clothing line to a fashion blogger.

Besides facilitating this access, Target is very hands-off with the bloggers. It doesn’t monitor their writing before they publish it, Jenkins said, because “we want it to be credible. We treat them like members of the media. We recognize that they have to be authentic, and they’re not if we write [their blogs] for them and package it beautifully.”

The Inner Circle bloggers are so important to Target that it actively thinks up ways to engage them, so they in turn can engage their readers.

“We have to give them access to behind-the-scenes at Target,” Jenkins explained. “Things go viral because they’re unique so we recognize that for their voices to be effective, we have to give them really good content. They’re going to be interested in Target with or without us, so by playing this role very intentionally we’re just helping them create a better story.”

The Outlet Shops of Grand River in Leeds, Ala., uses about 75 mommy bloggers to create a loyal following and 
get the word out about events and sales, reported general manager Chris Szalay. “They are advocates for the shopping center.”

The beauty of working with mommy bloggers, she said, is that their readers trust them as a peer who is typically in a similar life stage, and who is unbiased.

Working through bloggers allows retailers to deliver information “in a way that you’re not trying to sell them, but inform them,” Szalay added. “Any time you can engage your customers you’ll have a better relationship.”

The Outlet Shops also provides bloggers with unique access — it might be a style seminar or a Twitter scavenger hunt for gift cards (clues were posted to Twitter and bloggers had to find all five and tweet them to win).

An event such as the scavenger hunt is also very experiential, according to Szalay.

“You can walk people around and show [bloggers] the stores, but when you get them to go around and have them participate, it’s a lot more fun,” she said. “When they report on it they’re reporting on their fun, not just what someone else has told them.”

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