Behind-the-scenes IT that ensures retail success

Understanding the customer experience is critical for retailers looking to win and keep shoppers. How IT can help.

IBM recently hosted “Retail As Theatre”at The Second City in Toronto, an event that presented customer serviceinnovations and best-in-class technologies for the Canadian retailindustry. Four retail experts — from Ryerson University, Wal-MartCanada Corp., Gartner Inc. and IBM Canada Ltd. — led a panel discussionon the customer experience, which centred around three audience polls.

Catering to retail customers

Thefirst poll, which looked at customer attitudes, labeled 30 per cent ofcustomers as indifferent, 30 per cent engaged, 22 per cent fans and 18per cent antagonists.

You can deal with antagonistic customers, said Elizabeth Evans, director of the Ryerson Schoolof Retail, because it was probably you who made the mistake.Indifferent customers are the most dangerous, on the other hand, astheir attitude could be directed to all retail in general, she said.

But according to Hung Le Hong, senior retail consultant at Gartner,fans and antagonists may be outside of the retailer’s control. Ifopinions are based on experience, fans and antagonists will spreadtheir opinions to more people, making it difficult for retailers tochange. Hong pointed to social media as an example, which can go eitherextremely well or extremely poorly from a retail point-of-view.

Inretail consumer electronics, antagonists and fans play an even strongerrole. “I think the percentages play out probably the same,” said Hong.“The loudest of the voices are the antagonists and the fans are much,much louder than other categories.” Consumer reviews are also moreprominent in consumer electronics, compared to other categories ofretail, he said.

Thesecond poll focused on the drivers of customer experience. Merchandise,including breadth of selection and stock, reigned first at 56 per cent.Well trained and attentive staff followed at 35 per cent. Store loyaltyprograms and tailored offers saw a meager two per cent, while storelayout and appearance seem to have no impact at zero per cent.

Evansagreed with the poll results, pointing out that loyalty programs oftenfail to take the consumer in mind. Frequent purchase cards are a hasselfor customers to use and rarely accomplish what they intend, she said.

Limiting the selection of merchandise is also important, said Chris Johnston, vice-president and general manager of apparel at Wal-Mart.Customers want to experience a feeling of value, he said. Bypre-selecting merchandise, retailers can provide value to customers bysaving them time.

“Pretailing”is happening more and more, added Hong. Customers are showing a lot ofinterest in local searches, he said, such as visiting a retailer’s Website to find information about a particular physical store and whichproducts are in stock.

Retailersmust keep the after-store experience in mind, said Hong, as whathappens when the product gets home also influences the customer’sexperience. Post-store experiences are easily found in the consumerelectronics space, he noted, in the form of online consumer reviews.

Thefinal poll was directed at barriers to creating compelling customerexperiences. Not understanding the customer experience won the majorityat 46 per cent, followed by the lack of a customer-centric focus at 36per cent. The remaining three categories each shared six per cent ofthe vote: employee turnover, outdated technology and other businesspriorities.

Accordingto Hong, the biggest deterrents for consumer electronics customers arecommonly found in big-box stores. “The whole big-box, hard-to-findhelp, loud environments can be intimidating and upsetting to a lot ofcustomers. I think that’s probably number one…the store environment…theway that it is loud…a ton of selection, but nobody to help you withthat.”

But despitethe annoyance factor, big-box stores still lead in retail consumerelectronics sales. “Merchandise comes first in electronics,” remindedHong. Wal-Mart, which offers less selection and limited staff, alsoremains a leader in the consumer electronics space. These stores caterto a different market, said Hong. “They don’t really know much aboutTVs, they just know [customers] want a flat panel TV and they want itat a good price…When Wal-Mart ups its assortment to something that’soverlapping with a Best Buy, for example, we’re actually going to startseeing some very interesting things happening.”Independent electronics retailers versus big-box stores

Thebig challenge for small, independent electronics retailers ismerchandise selection and price, said Hong. “If you are a small mom andpop or just a local electronics provider, you don’t have a PlayStationlet alone one that is at that price. That’s your first problem. The bigbox stores, of course, have a lot of leverage with the manufacturersthemselves, so they can say, ‘Well, I’m going to sell the SonyPlayStation only if I have 95 per cent of the stock.”

Togain an edge, small retailers have to specialize, suggested Hong. “Ifyou’re just offering the exact same products, you’re going to have ahard time competing with the big-box because they can probably outsellyou from a price standpoint.”

IT managers play an important role

ITis especially important when retailers are growing at a rapid pace,said Rob Garf, retail strategy consultant for IBM. “[IT] wastraditionally looked at as a services organization that took orders andreacted to the business based on specific functions or capabilitiesthat the business needed…what we’re seeing as an evolution and where ITmanagers can really play a vital role in the operations and becomingmore of a partner with the business. Not necessarily reacting, butacting,” he said.

Masterdata management is one example of IT’s role in retail, said Garf.“Consumers are becoming more and more knowledgeable about the productsthey are purchasing before they go into the store…if the storeassociate doesn’t have that data at their fingertips, if they haven’tbeen trained properly, the consumer is going to be a lot moreknowledgeable than the sales associate, which is going to causedissatisfaction.”

Garf highlightedthree IBM technologies that IT managers can employ to help consumerelectronics store associates and the home office: WebSphere Commerce, Cognos (a tool retail clients are using for business intelligence) and the Store Integration Framework.

WebsphereCommerce started off as an e-commerce software product for sellingonline, but more and more IBM clients are using it as a platform forseamless multi-channel interactions, said Garf. “Retailers areconnecting it directly to the point of sale. They’re using theapplication to drive interactions at the kiosk. Even call centre agentsare using [it].” The Integration Framework solution is a combination ofproducts, Garf explained. “Retailers by and large have a mix of bothhomegrown and best-of-breed packaged applications in their technologyportfolio. The retail integration framework integrates, connects thesedisparate systems, and creates a common user interface to manage thedata and the processes among these disparate systems, whether thesesystems are IBM systems or not.”

In consumer electronics, it’s important for retailers to be online and take advantage of the multi-channel shopper, said Garf.

“Consumersactually shop across channels most when shopping for consumerelectronics. That puts the onus on the retailer to cater to what wecall the ‘information omnivore’ — the consumer who craves and needs andrequires vast amounts of information before making any purchase.”

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Jim Love, Chief Content Officer, IT World Canada

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