Turning Challenges into Opportunities: Five Key Omnichannel Integration Points for Grocery Executives

Transcription

1 A RIS News ebook Turning Challenges into Opportunities: The supermarket industry is facing new levels of uncertainty. Between mergers, acquisitions and aging systems, grocers need to replace their technological infrastructure if they want to remain competitive in an increasingly complex omnichannel world. Armed with integrated, end-to-end retail platforms, grocers will be in a stronger position to prepare for industry mandates; improve the store-level experience; better engage shoppers; and foster long-term loyalty that drives revenue.

2 2 The omnichannel world is changing the retail landscape industry-wide, and grocers are clearly along for the ride. Currently, one fifth (20%) of retailers across all markets reported that digital or e-commerce is their primary business or revenue model a steady climb from single digits in 2013 when sales only topped out at 7%, according to RIS News The 26th Annual Retail Technology Study. This milestone shows just how far digital merchants have penetrated the mainstream, multi-trillion-dollar retail industry. However, when it comes to wallet-share of online sales, supermarkets still claim the smallest piece of the omnichannel pie ranking the lowest out of nine retail categories, according to The Global Omnichannel Retail Index, a report from PwC. Specifically, supermarkets weigh in at an index of 31, compared to the highest vertical, consumer electronics and appliances, which ranked at 51. This doesn t mean grocers don t want to bolster their omnichannel efforts. Brands are eager to enable consumers to make their purchases via their preferred channel or combination of channels whether via conventional options, such as physical stores, smartphones, tablets, and call centers, or emerging touch points, including wearables and social media. The more ways a retailer can interact and engage a consumer throughout their path to purchase, the stronger the chance they will foster long-term relationships and drive consistent revenue. 5 Key Challenges on the Road to Success MERGERS AND ACQUISITIONS #1 The supermarket industry is considered one of the most active segments affected by market consolidation. It is a factor that is leveling the playing field among some of the heavy-hitters, but it is also taking a toll on companies 20 % Retailers report that digital or e-commerce is their primary business or revenue model. SOURCE: RIS NEWS, THE 26TH ANNUAL RETAIL TECHNOLOGY STUDY

3 eager to use omnichannel retailing as a competitive or differentiating niche. The key challenge: an increasing amount of disparate systems. Whether merging companies operate on different platforms, support diverse point solutions, or lack services entirely, consolidation efforts keep brands two steps behind the competition when it comes to supporting cross-channel retailing. THE INTRODUCTION OF EMV #2 The retail industry is still working toward EMV Mandate compliance, in an effort to protect shopper s valuable financial data. As of October 2015, retailers are required to be able to accept and process microprocessor chip-enabled payment cards. These smart cards authenticate the card and process transactions and are reportedly nearly impossible to duplicate. Retailers that don t meet these benchmarks are potentially on the hook for any credit card fraud committed in their stores. Where grocers struggle however, is the investments required to test and install remediated software on point-of-sale (POS) terminals. While this is an industry-wide issue, grocers razor-thin margins make theses updates a tougher pill to swallow. Our real-automated ordering process is so accurate that it helped us more than double our profits this year. Jeff Clark, president, Clark s Nutrition and Natural Food Markets CLUNKY LEGACY SYSTEMS STYMIE #3DATA SHARING EFFORTS Companies have learned to master the collection and manipulation of structured data, or fixed records stemming from transaction data originating in POS systems, and financial information filtering through ERP systems. However, they are still overwhelmed by unstructured data entering from digital, interactive sources, including: e-commerce sites, social media, kiosks and mobile devices. Making matters worse, a lack of tight integration between existing legacy systems and newly created omnichannel systems are hindering data sharing efforts enterprise-wide. In fact, a lack of systems integration hindering the view of items, orders, inventory, and customers can cause lost revenue and sales, inefficiency merchandise distribution, and increased costs related to carrying too much or too little inventory, as summarized in Order Management is the New POS, a report from Boston Retail Partners. 3 A LACK OF A SINGLE VERSION OF THE TRUTH #4 As disparate and legacy systems continue to multiply across grocery companies, so does the ongoing struggle to pinpoint a single version of the truth. Following consolidation, it is common for grocers to adopt point solutions as a Band-Aid in the journey toward integration. This practice however, is only creating new silos and redundant information streams in an already disjointed infrastructure. It tends to be more expensive to maintain, waste critical storage space, and overall, hinder analysis needed to compete in an all-channel marketplace. AGING WEB CART FUNCTIONALITY #5 In a digital retailing world, e-commerce and its supporting solutions is a pre-requisite to survival. Operating a singular, or unintegrated e-commerce channel within an omnichannel operation however, makes it impossible to drive consistent pricing, marketing and customer engagement.

4 4 Setting Integration in Motion: 5 Opportunities As the industry approaches the post-omnichannel era, grocers are evaluating how to move beyond these challenges to improve the shopper experience. This requires a new mindset to gain a novel perspective on how to streamline and support better services for convenience, product selection and fulfillment. For some grocers, this requires tapping technology vendors as trusted business partners. Driving change and gaining a competitive advantage in a constantlychanging digital marketplace requires expertise. Grocers need the in-house talent to establish themselves as a competitive omnichannel operation. As the digital evolution continues, gaps in skill sets and capabilities become more apparent. For these companies, technology partners can become trusted business partners. In an era when retailers must be able to add new services and respond to customer demand in a heartbeat, third-party partnerships could be the catalyst needed to drive flexibility and scalability, especially during peak demand time-frames when efficiency and customer service is paramount. Third-parties offer expertise and resources, and creating an ecosystem of mutually beneficial partners is a key success driver. In fact 49% of retailers believe these partner-ships are most valuable in gaining a competitive advantage over pure play companies, according to Forrester s Mastering Omnichannel B2B Customer Engagement, report. The first advice that these partners will often share is that the days of stitching together point solutions to build a cross-channel experience are over. Besides being a short-term solution to a long-term need, these systems are typically dis- 94 % Retail sales still taking place at the store level. SOURCE: DELOITTE, THE NEW DIGITAL DIVIDE

5 5 jointed and manual, making them expensive, cumbersome and difficult to sustain. Most importantly, these poorly-coordinated systems are the fastest track to a poor customer experience. This is also the catalyst prompting grocers to transition to a fully-integrated, end-to-end solution. Integrated platforms drive simplicity and data transparency between operations, streamline training, and reduce friction across the enterprise when it comes to scaling operations, and adding functionality. Unified platforms are gaining wide-scale acceptance as a means of controlling operations, garnering stronger support from technology partners, and becoming a catalyst that can scale operations seamlessly. The industry is quickly transitioning to the unified concept, with 35% of retailers either currently upgrading their digital platform, or starting an upgrade within 12 months, according to RIS News The 26th Annual Retail Technology Study. Armed with the right partners and the ideal underlying platform, grocers are ready to make their jump into the omnichannel world. For grocers to get a leg-up among competition and drive innovation, the following five solutions should be the highest integration priorities among supermarket chains: EMV COMPLIANCE AND P2Pe SECURITY #1 Keeping a keen eye on data security and industry compliance, EMV and P2Pe are must-haves in any next-generation omnichannel platform. Customers want to know their favorite brands are protecting their sensitive information both at store-level, as well as behind the scenes. By leveraging an integrated solution s hardware and software updates, especially those applied automatically, grocers are proactively benefiting the customer, protecting their brand, and driving customer loyalty. Direct EMV integration is key to better managing complexities and failures associated with gateway connections. 49 % Retailers believe that third-party partnerships are most valuable in gaining a competitive advantage over pure-play companies. SOURCE: FORRESTER, MASTERING OMNICHANNEL B2B CUSTOMER ENGAGEMENT 90% Total sales generated from loyalty program participants. SOURCE: FOOD MARKETING INSTITUTE, FINANCIAL AND STRATEGIC INITIATIVES IN FOOD RETAILING STUDY 2016

6 LOYALTY SOLUTIONS #2Grocers have more competition than ever, forcing grocers to step up loyalty efforts, and personalize the experience as much as possible. Grocers have made shopper loyalty programs a cornerstone of their segment, with an average customer penetration of 82% and an average of 90% of total sales generated from program participants, according to the Financial and Strategic Initiatives in Food Retailing Study 2016, a report from the Food Marketing Institute. However, grocers must remain on their game if they want their program to be a key differentiator in the highly saturated retail marketplace. It is a means of tapping the unified platform s business logic to automatically execute promotions, loyalty, e-coupons, taxes and prices consistently online as well as in-store. La- Bonne s Markets is leveraging this process and seeing significant returns. The grocer is using its platform s integrated loyalty module to create a weekly e-newsletter personalized to their preferences. Every week, these customers receive an ed newsletter that includes a link to a weekly flier, as well as a personal note that signs off asking them to hit reply with any feedback or questions, explained Robert LaBonne III, the chain s vice president of marketing and IT. This engaging can produce up to 100 replies, and I get back to every one, he said. By tapping information in our loyalty database, we were able to create this campaign, import loyalty customers, and create a seamless connection. 65 % Grocers that offered some kind of online ordering in SOURCE: FOOD MARKETING INSTITUTE, FINANCIAL AND STRATEGIC INITIATIVES IN FOOD RETAILING STUDY 2016 INVENTORY MANAGEMENT #3The digital marketplace has conditioned shoppers to have access to inventory levels across a brand, whether it is in specific store locations or online. However, this is a difficult task for grocers that lack insight into inventory levels. Without this insight, the average out-of-stock level continues its upward climb to 3.3%, up from 3.0% in 2013, according FMI s Financial and Strategic Initiatives in Food Retailing Study 2016.

7 7 The key to making this transition is to ensure that back-end functionality is in line with what shoppers see through digital storefronts. A demand-driven, suggestive ordering solution is the foundation that grocers need to keep up with customer service levels and ensure merchandise is always available for purchase at the right place and time. Clark s Nutrition and Natural Food Markets automated ordering module allows the chain to make streamlined, rapid changes to inventory levels based on sales and customer demand. The chain is able to balance inventory throughout its stores. We can also quickly transfer excess products to another store so that we can meet demand in another location, or ensure we don t have an over-abundance of merchandise in one store, explained the company s president, Jeff Clark. The solution also enables the company to adjust inventory based on business factors. For example, they can change parameters and adjust product levels based on demand, seasons, or other parameters, such as factors that can reduce shrink levels. Our real-time automated ordering process is so accurate that it helped us more than double our profits this year, he said. MODERNIZED WEB CART SYSTEMS - CLICK AND COLLECT 2.0 #4 As of 2015, 65% of survey respondents offer some kind of online ordering, either for their full assortment, or limited categories and items, such as flowers, cakes, deli and special occasion platters, FMI s report said. Regardless of the offering, grocers are hard-pressed to deliver a unique and consistent shopping experience brand-wide. Thus, unified pricing and inventory levels are prerequisites to a successful omnichannel experience. As grocers jump into cross-channel retailing however, many are realizing their 1st gen 3.3% The average out-of-stock level in grocery. SOURCE: FOOD MARKETING INSTITUTE, FINANCIAL AND STRATEGIC INITIATIVES IN FOOD RETAILING STUDY 2016 web cart systems fall short in the digital world where consumers expect a frictionless Amazon experience. Grocers have only one chance to satisfy digital shoppers. Chains struggling to match online and in-store pricing, or fail to feature real-time inventory levels and up-to-date availability and can not ccomodate loyalty programs, drive consumers into the virtual doors of competitors. A Click and Collect 2.0 web cart system allows retailers to take advantage of business logic and common database that links the enterprise, the store, and e-commerce. Whatever items are featured in-store can easily be added to digital channels. This integration also gives customers access to their historical purchases and loyalty status while shopping. FLEXIBLE, FRICTIONLESS FRONT-END #5 PLATFORMS With 94% of retail sales still taking place at store level, according to The New Digital Divide, a report from Deloitte, the traditional retail store is becoming a hub that merges the virtual and physical elements of the omnichannel model. That said, grocers must adopt a more versatile front-end designed to assist shoppers on their path to effortless purchase. Supporting a more flexible POS, in-store kiosks, accelerated scanning, as well as mobile solutions, customer-driven and associate-assisted integrated suites must support customer engagement as well as frictionless functionality and flexibility. Armed with its integrated retailing platform, LaBonne s streamlined a new POS rollout, including mobile devices, in February A system supported by mobile touchscreen devices enables associates to run the same POS software we use on our conventional systems, Robert LaBonne III explained. Functionality is identical between devices, but the mobile device enables our

8 8 Turning Challenges into Opportunities: associates to assist shoppers in store aisles, or at the front-end. Using mobile devices also enabled the chain to cost-effectively purchase multiple devices per store versus a more significant investment in stationary units, he said. Conclusion With supermarkets grabbing the smallest piece of the digital retailing pie, chains realize it is time for a change. Pushing aside challenges caused by mergers and acquisitions; aging, disparate systems; and new industry mandates, grocers are looking to trusted technology partners for help. As a result, they are finding opportunities from end-to-end retail platforms that integrate mission-critical operations, including EMV, loyalty programs, inventory management, web cart systems, and front-end functionality. By integrating these solutions through a common database, chains will be primed to improve the store-level experience; better engage shoppers; and overall, drive longterm revenue. About ECRS ECRS is a privately-held Grocery Success Company driven by a desire to change the way grocery executives use technology in their operations. We use a value-focused, customer-centric approach to create success stories, not only through comprehensive, Omni-channel technology, but also with our team of highlyexperienced retail specialists who will help you extract maximum value from your investment. In 2013, 2014, and 2015, ECRS was named as the top retail software vendor by the renowned RIS LeaderBoard. ECRS solutions include point of sale, self-service kiosk, mobile POS, accelerated checkout, web-based back office management and dashboard analytics, customer loyalty, ecoupon, inventory and replenishment, warehousing, supplier integration, gift card, membership management, fuel pump integration, pharmacy system integration, consultation, support, and services. ecrs.com