KPMG’s Mark Larson: Five New Year’s resolutions for retailers
NRF Senior Vice President and Shop.org Executive Director Vicki Cantrell recently wrote, “Fundamentally, our customer has changed more in the past three years than in the past 30 and the pace of change is poised to accelerate in the coming decade.” It’s this kind of rapid pace in retail that serves as a catalyst for innovation. But in order to build a retail organization of the future, retailers must begin thinking how to consciously build this model today.
It’s this kind of change that KPMG LLP’s Global Head of Retail Mark Larson thinks about all the time. I recently asked Larson for his perspective on the omnichannel evolution as it relates to the Spotlight on Modern Retail report released on the Retail Insight Center, and to offer his five New Year’s resolutions for retailers. Here’s his list.
1. Empower the 21st century consumer. From tech-savvy millennials to increasingly tech-reliant boomers and beyond, the ways consumers gather information about what they want to purchase, their loyalty to a brand or product, and the factors that influence their purchase decisions are all up for grabs. And while the “voice of the customer” has always been important, it has become significantly more powerful. Today’s consumer demands to be engaged and served seamlessly across all touch points regardless of channel. Traditional business models and customer segments no longer apply and the entire organization, not just select departments like IT or marketing, must be aligned to support the omnichannel model to be successful.
2. Build an omnichannel culture and workforce. Not only are consumers changing, but today’s employees value different things compared to previous generations of workers. To successfully embrace omnichannel, retail companies need to be prepared to evolve their technologies and processes to meet the expectations of tomorrow’s consumers and the needs of the next generation of employees. Teams are being assembled with the skills necessary to evolve to an omnichannel model, including experts on IT infrastructure, web operations, supply chain management and marketing. However, because this transformation revolves around providing superior customer service and personalization, it is also critically important to train employees in the stores to operate in an environment in which physical and virtual channels are seamlessly integrated.
3. Become more data-driven. To provide an outstanding customer experience, understanding customer profiles and preferences and potentially predicting future purchases is only the beginning. Harnessing the vast amounts of structured customer data that resides in a company’s database, as well as unstructured data online and on social media, are both proving to be integral to achieve omnichannel success. By examining and analyzing loyalty data, shopping patterns, and online and social media behaviors, retailers can dramatically enhance their connection to consumers. As it evolves in both sophistication and application, data and analytics will be leveraged by all departments of consumer-focused organizations.
4. Enhance both online and in-store technology. Technology has created a retail industry open for business anytime, anywhere and in any way the customer prefers to shop. All platforms need to be linked – physical, digital, mobile and social – and each interaction with the consumer needs to be memorable and meaningful. The possibilities for effectively engaging consumers are limited only by imagination. Retailers can use technology to make modest changes that personalize the shopping experience or they can make changes that wow their customers. Some recent in-store innovations go well beyond interactive displays, such as a whimsical coat hanger that tells shoppers how many ‘likes’ an item of clothing has on Facebook, a virtual mirror where you can try on digital versions of in-store products, and even an intelligent, multisensory, self-serve coffee station that uses analytics, aroma and sound to mimic the coffee shop experience.
5. Find balance. Omnichannel requires unified delivery of product, prices and promotions across all purchase channels. Retailers strive for flexibility in their operations and supply chain in order to service customers in all channels consistently and ensure that the supply chain meets cross-channel needs. To do so, it is imperative to balance several competing tensions: The customer’s ever-increasing expectation of unlimited choice, the need to maintain an efficient and agile delivery system, and the ability to continually optimize inventory levels. This balance can be difficult to achieve due to several factors – navigating volume fluctuations, seasonality, promotions and unpredictable online/mobile purchases – requiring seamless integration and visibility with suppliers across shared distribution networks. While the demands of the omnichannel marketplace are increasing, the benefits for companies who succeed at balancing these interdependencies are equally limitless.
With 2014 just around the corner, it’s a perfect time to plan for what lies ahead. As Larson points out, “Omnichannel is the future of retail and it is arriving at a ferocious pace. Now is the time for retailers to transform their businesses.” If you haven’t done so already, check out the Spotlight on Modern Retail report for insight into how some retailers have started to embrace omnichannel within their companies.