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Q&A With Forrester Analyst Brendan Witcher on the Future of Retail

By Manhattan Staff,
Q&A With Forrester Analyst Brendan Witcher

Manhattan Associates sat down with Forrester analyst, Brendan Witcher at a customer roundtable during NRF 2018 to discuss the future of retail and how to improve the customer experience.

What must a retailer prioritize today to win a customer’s loyalty and regain a competitive advantage in the market?

Too many retailers think of their stores as liabilities, when in truth they are assets. People ask me all of the time, “How do we beat pure plays?” Well, what have you got that pure plays don’t? You have stores! Learn to use them! Create value through them. Find ways to attract customers, and offer perceivable value that solves pain points in their path to purchase. The reality is this: the majority of retail shopping still occurs in physical stores, and as people are creatures of habit, it takes a lot to change their behavior. If a customer moves from offl ine to online shopping, it’s not because it feels natural to do so – it’s because a retailer has failed so badly to add value to the offl ine experience that online shopping is the only path the customer fi nds useful anymore.

How are retailers shifting their ways of thinking about the purpose of a physical store?

To use stores in a way that adds value to the customer, many companies are investing in things like buy online for in-store pickup, ship to store, ship from store, and even endless aisle or omnichannel returns. However, this is an evolution, not a revolution. Those aren’t Monday to Friday projects, so lots of companies are still in the early stages of launching them, let alone really optimizing them. Why are they making these investments? They’re doing so because it’s the objective of today’s leading retailer to transition its stores from places to shop into places to engage. Stores must be part of the equation. Think about this: 14 percent of consumers use buy online, pick up in store when the service is available, and e-commerce sales typically represent around 14 percent of a retailer’s sales. In other words, omnichannel shopping can be as popular as e-commerce shopping when both options are offered to customers.

What impact does the billboard effect – having a store in a local community – have on consumer behavior?

We find that many customers choose to buy online from a retailer because the retailer offers the option to return an item to a local store. What happens when a retailer closes that local store? Guess what. You just got rid of the reason customers were buying online from you in the first place. It’s that connectivity between these things and understanding that nobody wakes up in the morning and says, “I’m an online shopper for the rest of my life!” We’re not like that. We buy the way that works for us that day. Sometimes it’s in a store…sometimes it’s online. It’s important to understand the shopping journey for customers today is rarely single channel. It is omnichannel, it is cross-channel, and shoppers are looking for value to be delivered at every step along the way.

What’s the biggest area of opportunity for the store?

Building experiences around the customer - I started to look at this topic in 2014, and since then it has surprised me how many retailers still fail to optimize experiences within the omnichannel shopping journey. For example, I’m amazed how many retailers have combined their in-store pick up location with their service desk! Imagine a customer standing in line at the service desk to pick up an online order, waiting behind someone returning a bunch of items, watching customers walk into aisles, grab items, go through the checkout line and then walk out of the door. What is that customer going to think? Likely, the customer is going to feel like a chump – like a fool for using a buy online, pick up in store service. And guess what happens next? The customer never uses buy online, pick up in-store again. And unfortunately for that retailer, in the reporting it looks like the customer tried it but didn’t like it. No, the customer tried it, and you messed it up by creating a negative experience, and now the customer is going to find somebody else who delivers that experience properly!

How important a role does tech play in a successful omnichannel program?

Culture and organizational changes are usually the most difficult things to adjust when going from multi-channel to omnichannel as a retailer, but tech is probably the biggest thing to focus on when it comes to improving the store’s omnichannel capabilities. Why? Because the misconception about tech is that all a retailer needs is a way to route orders to a store. But when a retailer builds a warehouse, for example, it puts millions of dollars of technology into that warehouse, right? Sending orders to a store and suddenly calling it a mini-warehouse isn’t practical or realistic! That’s not how it works! Retailers need to put digital tools in store associates’ hands for service, picking, packing, and shipping, and they need to provide proper labor management for that store to operate effectively and efficiently as a warehouse would.

What is the right way for retailers to empower store associates - to enable them to provide outstanding customer service?

Store associates must have the right tools and technologies to properly support all aspects of omnichannel retailing. This includes capabilities like managers being able to assign pick-up orders to specific associates and associates being able to service online orders within the store environment. It also includes sales - the ability of associates to make product recommendations at the pickup window, enabling customers to leave the store with every item they might need. There are many parts and pieces to that story line – to using labor properly, or even having proper labor in place. For example, store associate job descriptions rarely require pick, pack, and ship experience. Similarly, stores often lack the tech required to enable those same associates do their jobs, their new, omnichannel jobs, in a very optimized way. It’s also important to note that metrics play a key role in helping monitor, manage, and maintain standards between customers and associates. How much time does someone stand in line when picking up an order? How long does it take for a store to send a ready notification to a customer? How many customers are coming in and adding on to their orders? Those kinds of metrics tie directly to how the store is operating. How much labor is the retailer spending to support pick-ups? When are associates doing picks, and how much time is it taking? How many customers are being helped through endless ordering? One of my latest reports highlights nearly a hundred of these new omnichannel metrics that organizations need to utilize in order to understand how well store associates are able to help support new fulfillment programs.

Which technologies are most important for retailers to have to make their stores profitable?

Remaining profitable requires retaining customers, so removing pain from the customer journey should be retailers’ top priority. The mistake retailers make is investing in technology that doesn’t solve a problem which causes lost customers. If it’s not important to the customer, it should not be important to that retailer. For example, if customers expect a certain level of service with omnichannel orders and you can’t operationally meet those expectations, it’s not time to chase a shiny object like virtual reality or a chatbot. You never want to fall behind customer expectations, but you also don’t want to invest in the next big thing if you haven’t got the core of what customers expect nailed down. In other words, if you can’t get the basics of what customers expect right, you shouldn’t be innovating on these things that today’s customers just aren’t looking for yet.

Are there long-term ramifications when customers walk into a store with access to more information (product and inventory data) than the store associates trying to serve them?

When we look at the data revealing why consumers choose one retailer over another, it often has to do with trust. We hear things like, “I trust this brand will…provide me with good service/offer me the best price/help me find the products I want/save me time.” At the core of what creates trust between a consumer and a retailer is the ability of that retailer to deliver perceivable value. Many retailers today still feel that their store associates are one of the highest quality touchpoints in the shopping journey. Yet, when we ask consumers why they use in-store tech, one of the top three reasons they give is that doing so is easier than finding a sales associate to help them. Consumers don’t trust that associates are going to be able to help them more than consumers can help themselves. But data also shows that when an associate is armed with a mobile device, consumers are far more likely to engage with that associate. Why? Because the consumer equates digital with the ability to add value, creating a sort of halo effect on the associate holding the device…in other words, the digital device promotes trust in the consumer trust in the associate.

What are the key strategic investments in technology retailers must be committed to when deploying omnichannel strategies in order to deliver services profitably?

There are two components of tech investment that are needed to support omnichannel: those that create great customer experiences and those that tie directly to operational excellence – even though the latter often impacts customer experiences. Retailers must consider how tech that supports omnichannel can either help or hinder new capabilities. For example, having in-store devices with interfaces for pick, pack, and ship that are user friendly (operational excellence), and having these same devices support endless aisle shopping (great customer experiences), is a strategic way to scale a single tech investment. But the term “investment in tech” goes beyond financial investments – retailers must commit to investing in change management and training as well. Continuing with the example, those devices with an array of great capabilities are worth very little if associates are not empowered and motivated to actually use them to execute their jobs.

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