Yesterday s Cross- Channel Goal is Today s Cross-Channel Must:

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1 Issue 2 Yesterday s Cross- Channel Goal is Today s Cross-Channel Must: Offer a consistent shopping experience across all retail touchpoints Featuring research from

2 Welcome 2 Welcome 3 MICROS-Retail Top Software Solutions 6 From the Gartner Files: Multichannel Retailing: Customers Want Consistency in Cross-Channel Shopping Processes 10 About MICROS-Retail MICROS-Retail is committed to being the global leader in multichannel retailing technology and business solutions. Our focus is helping our clients businesses grow: rapidly, flexibly and in any direction where opportunity awaits them. Our strategic vision rests upon four driving principles: 1. Comprehensive multi-channel retailing: MICROS-Retail is organized to create state-of-the-art technologies and applications that deliver a complete multi-channel solution for the retail market. With an exceptional base of talented and experienced technical and retail business professionals, we are ideally positioned to leverage these technologies and assist clients to maximize their revenue and profitability across any channel and optimize each customer interaction. 2. Innovation: We are committed to having a world-class R&D organization that utilizes best practices in technical innovation which envelop field learnings to create cutting edge solutions that are far more intuitive to retail users and maximize the productivity of our clients resources. We also have specific plans to continue to incorporate consumer behaviors and buying patterns that are captured through burgeoning technology like social networking and Web 2.0 applications. Our ability to converge our retail clients specific priorities and business strategies with this newfound ability to extrapolate consumer insights from social networks and multi-channel interactions will be a key aspect of our R&D innovation approach. 3. Globalization: Many MICROS-Retail clients are already operating, building or preparing for global retail business operations. We leverage our technology and services and the global leadership of MICROS Systems, Inc. to deliver solutions that drive more profits and customer loyalty from their international operations across their web, in-store, service center and direct fulfillment operations. Yesterday s Cross-Channel Goal is Today s Cross-Channel Must: is published by MICROS-Retail. Editorial supplied by MICROS-Retail is independent of Gartner analysis. All Gartner research is 2011 by Gartner, Inc. All rights reserved. All Gartner materials are used with Gartner s permission. The use or publication of Gartner research does not indicate Gartner s endorsement of MICROS-Retail s products and/or strategies. Reproduction or distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity on its website, 2

3 4. Customer Service: We take a focused approach to support our customers and the technology we provide to enable our customers to support their consumer base. MICROS-Retail emphasizes its customer service operations as a key vehicle for thriving in the competitive retail software landscape. We will continue to leverage our technology and service approach to deliver a sustainable competitive advantage in this critical business area. MICROS-Retail appreciates its role as a business advisor and facilitator of subject matter expertise. To that end, we developed and distributed this newsletter to reinforce the value of sharing insights with our current and future partners. Source: Micros Retail MICROS-Retail Top Software Solutions XSTORE JAVA POS MICROS-Retail s Xstore Java Point-of-Sale (POS) is an elegantly simple solution, yet ultimately flexible, fast and powerful. It also offers a wide range of services at the point-of-sale while securing your customers sensitive data and helping you comply with industry privacy standards. Mobile Capabilities Mobile solutions offer full POS functionality with connectivity to your complete suite of back office applications. MICROS-Retail offers several mobile POS solutions offering advantages and choices to retailers for: Line-busting POS speed and convenience Mobile POS and inventory lookup capability for Improved customer service Shipping/receiving and inventory OPEN COMMERCE PLATFORM Platform Development The Open Commerce Platform framework is an organized collection of Java packages, optimized for electronic transactions, that provides a flexible and robust toolkit for building ecommerce sites. Built on Fry, Inc. s 17 years of ecommerce success, the Open Commerce Platform framework incorporates best-practice design. A custom site design ensures the overall experience captures your brand and speaks to your customers. A J2EE-compliant framework that can run on a number of application servers, Open Commerce Platform integrates with multiple systems and databases. Its robust feature set includes targeted merchandising and site management with workflow and scheduling that can be extended to meet your unique business needs. The platform also includes the ability to implement a flexible, intuitive mobile-optimized website that can be easily managed by the website s site management tool. Services Business Consulting Leading retail and manufacturing organizations are constantly seeking ways to generate more value from their ecommerce/multi-channel capabilities. Fry has a successful track record providing business consulting services to help companies achieve these goals. We offer comprehensive business advisory services to address the variety of complex elements associated with formulating, launching and sustaining a powerful multi-channel experience for the end consumer. Creative Fry works with client brandkeepers to identify core brand characteristics and examine marketing efforts across all channels. Our resulting design supports these brand efforts while also accounting for the unique requirements of interaction design. In other words, Fry s creative is dedicated to usability and performance as well as good design. 3

4 User Experience Fry designs sites that meet the needs of audiences without diluting the brand or sacrificing overall business goals. We see user experience as way more than ease-of-use. We see it as the means to the successful end; user acquisition, conversion, and loyalty. To that end, our user experience process often includes customer research, field research and usability testing to make sure we really can please all of the people all of the time. Managed Services Fry hosts, monitors, supports, maintains, and provides reporting for high-traffic, high-performance websites. We ensure that sites are available 24 hours a day, 365 days a year through proactive security and systems monitoring, on-going capacity management, application updates, site administration, and custom reporting. OPEN COMMERCE EXPRESS Open Commerce Express (OCX) is an ecommerce solution designed for midmarket retailers looking for a reliable, robust, powerful platform that can be rapidly deployed. Out-of-the-box, OCX delivers all of the functionality your customers expect from an ecommerce site, including an interactive user experience. On the back end, intuitive catalog and content management tools enable business users to update the site. CWSERENADE JAVA ORDER MANAGEMENT MICROS-Retail CWSerenade is a powerful software solution that enables multi-channel retailers and direct marketers to interact with and support their customers at all points of service. It provides an integrated suite of applications that manage the entire retail transaction lifecycle from attracting and informing customers to merchandising, warehouse, fulfillment, and customer service. Integrating these key functions streamlines the data flow, building efficiency and providing a single, accurate source for order information and performance reporting. LOCATE CROSS-CHANNEL INVENTORY MICROS-Retail Locate provides real-time visibility of inventory availability across all sales channels and distribution centers from any point of service. Locate connects disparate inventory sources and integrates easily with your existing retail software applications. XSTOREPLUS XstorePlus is designed specifically for chains of fewer than 100 stores. The solution unifies all mission critical functions and presents them in an easy to learn, easy to support environment. Its customerpleasing POS functions rival those of large chains, but do not require constant maintenance and customization. It organizes and simplifies assortment planning, purchasing, pricing, and delivery. The reporting tools use drag-and-drop functionality to customize the information, so your reports can reflect your status today, trend recent events, and plan for the future. RELATE RETAIL CRM Relate Retail CRM unifies marketing planning and management while providing the tracking tools your marketing team needs to effectively manage your marketing initiatives. From the initial analysis, through implementation, execution, an evaluation of results, Relate lets you build and manage an unlimited number of campaigns and promotional activities from your corporate headquarters to store level. EONE WEB COMMERCE MICROS-Retail s eone solution offers retailers, manufacturers, and distributors the platform and functionality required to be a successful online and cross-channel company. The eone integrated applications suite provides all of the functionality you need to deliver a world-class website, plus gives you the tools to easily interface with your back office applications. 4

5 XBR LOSS PREVENTION AND STORE ANALYTICS MICROS-Retail s XBR solution is the world s most widely used loss prevention and store data analysis tool. It goes into action quickly, using exception based reporting methods to easily identify, track, and respond to store events everything from highest sale by an associate to a potentially fraudulent return. It can be used by corporate staff and field personnel alike through flexible access. BALANCE SALES AUDIT MICROS-Retail s Balance is an exception based sales auditing tool that improves productivity, accountability, and data integrity of your retail operations. Balance improves the speed and efficacy of transactional data audits by identifying daily problem areas for each store. ENTERPRISE MERCHANDISING MICROS-Retail s Enterprise Merchandising provides a real-time platform for the extended distribution chain through a 100% Javabased environment. Enterprise facilities and integrates merchandise planning, open to buying, purchasing, automated replenishment, inventory receiving, store distribution, and in-store receiving. Source: Micros Retail 5

6 From the Gartner Files Multichannel Retailing: Customers Want Consistency in Cross-Channel Shopping Processes Customers expect retailers to provide a consistent cross-channel shopping experience. This research identifies what customers see as the most important elements of defining a good cross-channel shopping experience. Key Findings Cross-channel consistency is important for two-thirds of customers. For customers for whom cross-channel consistency is important, 70% believe that charging the same price for the same product in all the channels is the most important aspect of consistency that defines a good shopping experience. Always having the same products in stock and having identical return policies were ranked as the second and third most important aspects that these customers believe define a good shopping experience. Recommendations Design processes for centralized planning for cross-channel consistency, in particular for pricing, product assortment, returns and promotions. Improve cross-channel price execution strategies by implementing workflowcontrolled pricing processes for key decision makers. Focus on improving real-time inventory visibility, customer ordering, order picking, and return policies and processes for cross-channel processes. Start with processes that rely heavily on in-store execution, and focus on improving in-store staff scheduling for task management. ANALYSIS Cross-channel shopping is gaining traction, and customers now expect retailers to provide a consistent experience across all channels in which the retailers have customer-facing operations that is, in traditional channels (such as the store, the Web and catalogs) and emerging channels (such as mobile and social networks). It is, therefore, imperative that retailers understand what customers expect of them when shopping across their channels. In 3Q10, Gartner conducted a multichannel consumer survey in Brazil, Canada, China, France, Germany, India, Japan, the United Kingdom and the United States. We asked retail consumers the following question: When you are shopping for each of the following types of products, how important is it to you that a retailer is consistent across its channels that is, that they offer a consistent set of products, promotions, prices, product descriptions, delivery charges and return policies, regardless of which channel you are shopping at? Top-Line Results of the Survey In a multichannel consumer survey conducted by Gartner, two-thirds of customers said that cross-channel consistency was important. Customers ranked the following three aspects of consistency across a retailer s channels that they personally thought were most important in defining a good shopping experience with a retailer: Charging the same price for the same product in all the channels Having the same product in stock in all the channels Having identical return policies, regardless of which channel the item was purchased through Cross-Channel Consistency Is Important for Two-Thirds of Customers In the survey, we asked customers the following question: When you are shopping for each of the following types of products, how important is it to you that retailers are consistent across channels that is, that they offer a consistent set of products, promotions, prices, product descriptions, delivery charges and return policies, regardless of which channel you are shopping at? Customers were asked to select one response from a 7-point scale, where 1 = consistency across the channels is not at all important, and 7 = consistency across channels is extremely important. Table 1 shows the results of customers responses. Key Take-Away 1 Cross-channel consistency is important for around two-thirds (66%) of customers. It is clear from the results that the majority of customers interacting with the retailer in and across many touchpoints expects a consistent cross-channel shopping experience. To this end, retailers are looking to upgrade their multichannel infrastructure and applications to deliver more-agile and flexible cross-channel capability. Operational IT cost savings and efficiency gains may be had through newer ways of development and delivery, such as serviceoriented architecture, software as a service and cloud. However, failure to gain a comprehensive understanding of customers cross-channel shopping behavior will result in the failure to deliver the necessary IT support needed to enable revenue-growing, cross-channel customer processes. Customers are pushing emerging channels into the mainstream. Mobile, social networks and cross-channel shopping such as order online and pick up in the store, pretailing online or mobile are all activities that are becoming commonplace in the shopping experience. As a result, customers already view cross-channel shopping as business as usual. It is, 6

7 7 Table 1. Customer Responses for the Importance of Cross-Channel Consistency Cross-Channel Consistency Is Important (Aggregation of Responses for 5, 6 and 7) Cross-Channel Consistency Is Not Important (Aggregation of Responses for 1, 2 and 3) 66% 20% 14% Source: Gartner (March 2011) Cross-Channel Consistency Is Neither Important Nor Unimportant therefore, incumbent on retailers to put effort into understanding cross-channel shopping behavior, how each channel impacts the others and how each can be optimized to give the best overall cross-channel customer experience. This will involve, among other things, a rethinking of age-old retail models in relation to organization and reporting structures, channel responsibilities, channel revenue attribution models, and channel performance metrics. In other words, in the execution of a multichannel strategy, retailers must accept that the whole is greater than the sum of the parts. For example, although e-commerce and mobile channels are growing at a fast rate and at the expense of stores, we expect the store to remain the largest revenue generator and the hub of multichannel retailing for some time to come. Retailers, therefore, need a good understanding of the interplay of the touchpoints in their own environment in order to be able to invest wisely in technology that will support the overall growth of the business. Customers Ranked Consistency in Pricing as the Most Important Aspect That Defines a Good Cross-Channel Shopping Experience We also asked those customers for whom cross-channel consistency (66% from results in Table 1) was important the following question: When you are shopping for the following types of products with a retailer, rank order the top three aspects of consistency across a retailer s channels that you personally think are most important in defining a good shopping experience with this retailer. Select 1 for the most important aspect, 2 for the second most important aspect and 3 for the third most important. The results are shown in Figure 1. Key Take-Away 2 Seventy percent of customers believe that charging the same price for the same product in all the channels is the most important aspect of consistency that defines a good cross-channel shopping experience. One of the biggest challenges that multichannel retailers face with respect to their cross-channel customer proposition is how to manage pricing across the channels. On one hand, customers want consistent pricing across the channels, while on the other, retailers have to price competitively against pure-play online retailers, especially in categories such as customer electronics or household appliances. All this is also against the background of customers being able to do price comparisons on the Web or on the fly through their mobile phones. FIGURE 1 Customer Rankings of Aspects of Consistency Across a Retailer s Channels Charging the same price for the same product in all the channels Having identical return policies, regardless of which channel the item was purchased from Offering identical promotions in all the channels Providing identical product descriptions and product information in all the channels Charging the same price for delivery regardless of which channel the order is placed through Source: Gartner (March 2011) Having the same products in stock in all the channels Percentage of Customers Who Selected Each Aspect

8 This means that, although customers expect the base price of a product to be the same across the channels, the retailer may be able to offer price incentives, such as discounts, to encourage customers to buy in a certain channel or offer nonprice attributes, such as free service and support if customers were to buy in a particular channel. However, currently and as a general rule, customers expect no discrepancies in base pricing in different store formats or across the channels. Moreover, if and as the demand for order online and pick up in the store increases, customers picking products off the shelf in a store will not appreciate standing in the check-out line with people who had come to collect the same items from the store, but who had paid less because they ordered the products online for in-store pickup. Retailers should, therefore, apply channel- and customer-specific pricing judiciously on carefully selected products, but should constantly evaluate their pricing strategies for consistency across the channels. Customers Ranked Consistency in Product Availability and Return Policies as the Second and Third Most Important Aspects That Define a Good Cross- Channel Shopping Experience Key Take-Away 3 Always having the same products in stock in the retailer s channels is the second most important aspect of consistency that 54% of customers believe defines a good shopping experience. The responses for this question refer to retailers giving their customers access to the same products in all the channels. More and more customers expect to have access to the retailer s full product and service set through all the channels. However, merely exposing the full stock file is not enough. The products must also be available for the customer to buy on the spot, or at least the customer must be given the wherewithal to be able to order and purchase the stock quickly and easily with convenient delivery options. Previous Gartner surveys have confirmed that stock availability in each of the retailer s major selling channels store, Web and catalog is almost always the top basic requirement for customers. It therefore follows that customers will also expect this to be a key requirement when shopping across the channels. Moreover, customers now also take for granted the ability to look up products information on products and availability in real time and on the go. Ensuring that customers always have access to the full product set through all the channels and also ensuring product availability are tall orders for retailers. However, it is a fundamental part of the shopping process, and getting it right hugely increases the likelihood of customers completing the shopping process with a purchase. Key Take-Away 4 Half the customers ranked having identical return policies, regardless of which channel the item was purchased through, as the third most important aspect that they believe defines a good shopping experience. Cross-channel customers expect to shop across the channels in a seamless way and according to their convenience. Not having cross-channel consistency of return policies or not having clear visibility of the policies is bound to be a cause of shopper frustration and disappointment. For example, not all retailers clearly display their return policy on their websites, and some retailers still do not allow cross-channel returns, or they let their customers do so, but on a restricted basis. Moreover, as sales from direct channels, such as e-commerce and m-commerce, rise, retailers must expect the level of returns in store to rise too. It is, therefore, clearly in everyone s interest to have consistent cross-channel return policies that must be clearly communicated to both staff and customers. However, the retailer also needs to be clear on cross-channel return processes, with control through workflow management, including clear processes for appropriate disposition of the products being returned. Clarity is also called for on the accounting side, because returned stock, no matter through which channel it is returned, becomes an asset of the business and is, therefore, subject to be accurately accounted for, including finding out the impact returns will have on channel revenue performance metrics. Recommendations Tier 1 Retailers Design processes for centralized planning for cross-channel consistency, in particular for pricing, product assortment and return policies. These are the top three aspects of consistency that are important to customers. Implement a workflow-controlled pricing process for both strategic and operational pricing decisions, ensuring that all the key decision makers across all the channels can participate in the process. Work on improving real-time inventory visibility, customer ordering and order picking for cross-channel processes, making sure to review cross-channel return policies and processes. The store is likely to be the hub of these types of cross-channel processes, so start with processes that rely heavily on in-store execution and focus on improving in-store staff scheduling and task management. Methodology of Survey This Gartner Multichannel Consumer Survey, fielded in 3Q10, was developed collaboratively by a team of Gartner analysts that follows this market. It was reviewed, tested and administered by Gartner s Research Data and Analytics (RDA) team. 8

9 9 The questionnaire was fielded by an external vendor under contract with Gartner. Panel members were recruited via invitation, and were directed to a secure website at which the survey was administered. All respondents were informed that the study was being conducted in accordance with Esomar s code of practice, and were assured that their responses would remain confidential and would only be analyzed in the aggregate. On completion of the survey, respondents were given a panel incentive. All surveys were completed between 3 September 2010 and 20 September A total of 5,575 customers, age 18 and higher, who are Internet subscribers, were surveyed in 10 countries: U.S. (N = 1,000) Canada (N = 500) U.K. (N = 530) Germany (N = 500) France (N = 500) Japan (N = 540) Brazil (N = 500) Russia (N = 503) India (N = 499) China (N = 503) The data in the survey pertains to customer responses to the following questions: Q: Retailers sell products across multiple channels (possible channels are store, Internet site [available through a computer or through a mobile device] and catalog, where products can be ordered by mail or phone). When you are shopping for each of the following types of products, how important is it to you that retailers are consistent across channels that is, that they offer a consistent set of products, promotions, prices, product descriptions, delivery charges and return policies, regardless of which channel you are shopping at? Select one response for each type of product. Q: When you are shopping for the following types of products with a retailer, rank order the top three aspects of consistency across a retailer s channels that you personally think are most important in defining a good shopping experience with this retailer. Select 1 for the most important aspect, 2 for the second most important aspect and 3 for the third most important. Gartner Industry Research G , Mim Burt, John Davison,16 March

10 About MICROS-Retail MICROS-Retail, formerly Datavantage, CommercialWare, eone, and Fry, is a global retail solutions company that delivers rich customer experiences by blending world-class strategic consulting and business operations expertise with proven ecommerce, retail store and direct commerce technologies; allowing retailers to attract, convert and retain valued customers across all interaction channels. In addition to the order management, ecommerce, and point-of-sale products, our solution suite includes CRM, loss prevention, and analytics software, as well as web design and consulting services. Java technology, rich functionality, flexible support, and successful experience in demanding environments explain why hundreds of retailers around the world such as Carlton Cards Retail, Charming Shoppes, Chico s, Crate and Barrel, Godiva Chocolatier, IKEA, Jos. A. Bank, The Limited, Payless ShoeSource, Polo Ralph Lauren, Staples, Starbucks Coffee, Talbots, Vera Bradley, and Whirlpool rely on MICROS-Retail to strengthen their businesses and deliver results. 10