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Retail Trends

Capitalizing on the Digital Enterprise

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Midmorning of the first day of NRFtech, a panel convened to discuss “Capitalizing on the Digital Enterprise.” The conversation was led by Todd Michaud, founder and CEO of Power Thinking Media, a consultancy that focuses on the convergence of social media, mobile and retail technologies. Taking part were Gary Penn, director of global e-commerce for True Religion Brand Jeans, and Bill Tucker, vice president of technology for Nordstrom.

“Within our organization … the answer to ‘what is digital’ is still being formed,” said Penn. “Marketing owns a piece of it, merchandising owns a piece of it, IT owns a piece of it, e-commerce owns a piece of it. I think it’s a question of understanding that no one piece is going to be the ultimate piece. They all have to work together.”

Tucker agreed, noting that digital technology simply provides a new mechanism for engagement — with customers, employees, partners, the vendor community and every other constituency of a retail company. Of these groups, he said that Nordstrom tends to focus most on customers. “We have found that the answers to all these seemingly very difficult questions get a lot easier to find when we ask ourselves, ‘What would the customer want?’”

The customer experience
This concern inspired Nordstrom to pull together what had been separate online and in-store technology groups. “You don’t have the option of saying, ‘Oh well, we can ignore X or Y or Z in the store and just deal with it in e-commerce,” Tucker said. “I saw some very frustrated customers in our Michigan Avenue store a few years ago, holding their phones up at a salesperson … and saying, ‘I can find it. Why can’t you?’ That was really a wake-up call for me to go back and say, ‘We’ve got to look at the customer, and whatever they want to do, we have to help them do it.’”

“We were in several meetings with members of the Nordstrom family,” Tucker recounted, “and I think it was Pete Nordstrom who said, ‘We choose to make the problem of integrating the experience a technology problem. We will not allow it to become the problem of our salespeople.’”

Some of the challenges of integrating technology, Penn suggested, come from the difficulty of doing a lot of things at the same time. “The future of many brands is online, because it’s growing faster than bricks-and-mortar sales — we’ve all seen the numbers,” he said. “So you advertise more, then you put more money in the Google budget, and then multi-channel is the logical next step. But the tie-in is harder to do than one might think. There are a lot of very complex integrations. I think the key is tackling technology integration at the same time you’re improving the customer experience.”

The legacy issue
Michaud commented that for many of his clients, choosing which technologies to focus on was hampered by earlier decisions. “Maybe it was the budget-conscious decision that let a technology flow past its useful life, or maybe it was a decision to purchase the basic version vs. the bells-and-whistles option, which was okay then but inadequate now,” he said. “I call this ‘technical debt.’”

Nordstrom began what Tucker characterized as a “modernization initiative” about 15 years ago.” This was before mobile, before opening up the enterprise to the customer, before any of these issues,” he said. “We did it strictly to take on an amount of technical debt that had gotten too great to allow us to continue to grow. We evaluated all the technology we owned and found that … during those days of having a CIO in every area, we accumulated four, five, six solutions all capable of doing the same things. We set standards and retired a lot of it. I still have my mainframe, but its purpose is … holding all the data and making it available.”

Goals and strategies
Turning to the relationship between technology and business strategy, Michaud asked the panelists how digital activity is prioritized within their organizations. Is it part of overall enterprise technology? Is digital part of IT? Is it separate? Do they compete? “If you had an initiative to do a big data listening project for your marketing organization, could an accounting finance project outrank it?”

“A lot of it comes down to what’s generating revenue,” Penn said. “The last three organizations I’ve been in, there is an IT organization, there’s an e-commerce organization and there’s a marketing organization. The e-commerce organization tends to have the resources that lead a consumer-facing organization, whether it’s revenue-generating or not. That organization will immediately fail without a strong IT partnership. The entire e-commerce ecosystem, from 2005 [forward], is based on some sort of enterprise architecture integration. Unless it’s really well integrated, it’s going to fail.”

Tucker put it in even starker terms. “Over the past six years, our bricks-and-mortar stores have completely dropped off the top 10 in customer experience and customer satisfaction. We said, ‘How can that be? The touch we offer in our stores — the customer service — is there.’ What we concluded was that the digital experience is very important for some part of the customer experience, and we weren’t enabling that part of it.

“That’s where we changed our scoreboard and said, ‘We have to win in both games,’” he said. “We thought we were already winning in multi-channel. … we discovered that no, we have to be the best in e-commerce and we have to be at the top of our game in the bricks-and-mortar stores. If we do, then we have an advantage over the e-commerce retailers — but if we’re underperforming in e-commerce, we’re not going to get there.”

Looking ahead
The digital imprimatur may be pervasive throughout retail organizations, Michaud acknowledged, but is digital strategy “siloed into e-commerce vs. social vs. store associate vs. something else, or is there an overarching structure?”

“I think,” said Penn, “it depends on the complexity of the organization. We recently made a change that both e-commerce and IT report to the CEO. That helps bridge the gap between the various parts of everything that falls under digital. As long as those department heads are cooperating with each other, by default digital ends up being a strategic partnership. I can’t say it’s all that well-planned in our organization. It’s collaboration and being under one leadership that’s important.”