Omni-Channel Demand Execution: Bridging The People/Practice Gap

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1 What does the next generation of store-level omni-channel execution look like? Better data enabling refined people processes for bigger profits. Brought to you by: Sponsored by: 2014 Integrated Solutions For Retailers and Reflexis Systems, Inc.

2 Omni-channel consumer demand has come to full fruition. Soon-to-be-released data from CFI Group paints the picture: More than 80% of consumers say it s important that retailers give them the opportunity to place a website order while in the store. Nearly 80% want the option to pickup orders placed online in stores. And almost all consumers want the ability to return merchandise to the store, regardless of which channel fulfilled it. For practical intents and purposes, that s everyone. The writing is on the wall. Bridging the gap between digital selling strategies and brick-and-mortar store operations is critical to retail success. Enabling that success calls for data processing technology that produces anticipatory intelligence on myriad sources of demand. It also requires the store-level operational prowess necessary to execute on that demand. Data Visibility Is Only Half The Equation While the consumer mandate for omni-channel shopping has reached fever pitch, new research from RIS News tells us that on the whole, retailers are nowhere near meeting their expectations. Slightly more than a third of retailers surveyed by RIS say they re up-to-date on the technology necessary to enable buy online/ship from store. Only 26% say they have the proper technology chops to facilitate buy online /pickup in store. And more often than not, even those early adopters who turned on omni-channel activities aren t equipped to do it profitably. Early iterations of the solutions that enable store-level fulfillment of digitally-driven orders, for instance, have been built almost solely on retailers relatively newfound cross-channel inventory visibility. But just because you can see it doesn t mean you can sell it at least, not profitably. Inventory visibility alone provides Many a retail staffing and talent manager has been rocked on their heels by the inability to meet an influx of unanticipated omni-channel activity.

3 no insight into the anticipated demand for specific merchandise, nor does it provide clues as to where the demand was generated. Buy online/ship from store and buy online/pickup in store operations have largely rolled out on a rudimentary find it and ship it basis, offering little opportunity to optimize in-store allocation and presentation stock based on actual and future demand. The approach makes a mess for merchandisers, compliments of unanticipated stock degradation and difficulty crafting accurate store-level allocation plans. This is to say nothing of store-level associate and operational preparedness for hard-to-predict omni-channel demand. Many a retail staffing and talent manager has been rocked on their heels by the inability to meet an influx of unanticipated omni-channel activity, resulting in an unsatisfactory experience for customers and associates alike. To achieve the appropriate competitive balance between the customer/associate experience and profitable omni-channel fulfillment, retailers need technology that helps them anticipate and prepare for demand at its source, be it social media buzz, a high-profile sporting event, celebrity exposure of a brand they carry, a weather anomaly, or any other number of unstructured, hard-to-anticipate influences. The Store Performance Impact Of Omni-Channel Demand While good data is foundational to meeting consumers omni-channel inventory expectations, so is ensuring the right associates are available in stores, at the right time, and in the right numbers. Connecting the data-based understanding of unanticipated cross-channel demand (or lack thereof) with store-level staffing, talent, and task management is the Holy Grail of store-level omni-channel retailing. But traditional workforce management solutions weren t built to accommodate the incredible fluctuation in store-level demand generated by modern cross-channel phenomena, such as buy online/ pickup in store, buy online/ship from store, and the influence of social media trends. Their forecasts are built exclusively on historical data, not the unplanned, unstructured events of the future. Driven by IBM s Watson (see sidebar, next page), the Reflexis StorePulse real-time customer engagement platform offers a timely shift to the retail store performance paradigm. By analyzing structured and unstructured data from virtually any source in real-time, StorePulse both facilitates alerts to events and trends inside and outside the store and provides direction to the appropriate executive or manager on the most intelli- Traditional workforce management solutions weren t built to accommodate the incredible fluctuation in store-level demand generated by modern cross-channel phenomena.

4 Systems, Merchandisers, And Schedules In Sync gent reallocation of store associates ensuring customer service levels are maintained when they re needed most. That s important in cross-channel retailing, where any number of factors can have an immediate and unpredicted impact on store traffic. To keep tabs on those factors, the solution continuously monitors and/or integrates with: Social media analytics applications Near Field Communication-enabled smart phones and loyalty cards Video surveillance Customer traffic intelligence systems RFID, inventory control, and POS Workforce management, supply chain, and business intelligence/analytics applications Artificial Intelligence applications Weather, traffic, and local news With this infrastructure in place, retailers can appropriately pair store-level operations with real-time customer demand from making sure the shelves are stocked to maintaining customer service levels with an appropriate and affordable associate schedule. Watson, IBM s artificially intelligent computer system and the namesake of the company s first CEO, made big news in 2011 when it beat Jeopardy champions Brad Rutter and Ken Jennings in a contest pitting human intelligence against QA (question answering) computing. To be fair to Rutter and Jennings, it s worth pointing out that Watson had access to 200 million pages of structured and unstructured content consuming 4 terabytes of disk storage including the full text of Wikipedia during the contest. That advantage aside, it was the speed with which Watson processed that data that put its commercial practicality on the map. The computer is reportedly capable of processing 500 gigabytes the equivalent of a million books per second. How many terabytes (or petabytes) of data the human brain can hold is debatable. Respected academics and computational neuroscientists argue a wildly broad range, from 1 terabyte to 2.5 petabytes depending on their algorithm of choice. How much faster than the human brain Watson can process data, however, is not debatable. Experts agree that our brain s neurons operate at a speed measured in kilohertz. Watson s Jeopardy brain, by comparison, was comprised of nine Power 750 servers, each equipped with a 3.5 GHz POWER7 eight-core processor. Reflexis Systems recently announced that Watson is lending its natural language processing, hypothesis generation and evaluation, and dynamic learning power to its StorePulse application. With Watson at the wheel, Reflexis says StorePulse better positions Reflexis customers to react at the store level to the nuances of local markets, as well as larger global influences like social media. Retail demand triggers are often hidden deep within terabytes of constantly-growing unstructured data. Watson s ability to read, hypothesize, and learn on the fly enables retailers to find those triggers and prepare inventory, merchandising, and staff for them in real-time or even in advance. In cross-channel retailing, any number of factors can have an immediate and unpredicted impact on store traffic.

5 About Reflexis Reflexis helps retailers turn strategy into action and increase sales. Reflexis customers have reported dramatic improvements in store-level compliance with corporate strategies; higher productivity of merchandising, field, and store management; and increased sales and profitability. Reflexis solutions enable retailers to drive excellence in their corporate, store, and vendor operations by employees, suppliers, and third party service providers. Reflexis Systems, Inc. is privately held and headquartered in Dedham, Massachusetts, with the Customer Operations Group in Kennesaw, Georgia and international offices in the UK, Netherlands, and India. Contact Reflexis Reflexis Systems, Inc. 3 Allied Drive, Suite #400 Dedham, MA Phone: +1 (781) Fax: +1 (781) info@reflexisinc.com Brought to you by: Sponsored by: 2014 Integrated Solutions For Retailers and Reflexis Systems, Inc.