Omnichannel_Retail.jpgDavid Marcotte is Senior Vice President, Retail Insights, for Kantar Retail. He leads cross-channel understanding and research into core retail processes, international retail, and retail-related technology, along with omnichannel operations.

UnboundID: Getting omnichannel right means in many cases investing a lot of money into integrating operations and systems. Given the current uncertain economic climate, will this trend grow?

Marcotte: Companies that have been investing in technology for a while will see a pay-off. Kroger did not have an eCommerce site until last year, but in the last year they made a commitment to omnichannel. What is going to help the company is that they have excellent back-office IT capabilities already in procurement, inventory, supply chain and distribution not to mention loyalty. That foundation gives them a big leg up.

If a company hasn’t invested much in IT over the years, transitioning to omnichannel is going to be a lot harder. Staples is another retailer that has always invested heavily in integrating its stores and online properties so that everything is seamless. But they have been working on this for 20 years. Their competitor, Office Depot, hasn’t been in the cash position to invest in technology so you can see the seams, so to speak, in their approach.

Companies like Nordstrom, Walmart and Macy’s have invested heavily in overall IT capabilities over the years, not just omnichannel, and by doing so they can be much more innovative. On the other hand, convenience stores have never had much IT investment until recently. But now they have leapfrogged companies with legacy systems to create a great experience for customers with apps.

UnboundID: What do consumers really want from omnichannel integration?

Marcotte: The word again is seamless experience. You can interact with the retailer online or through an app or using a touchscreen in the store–having a lot of different channels to use is nice. But it’s also about having employees who are well-trained to help you. I walked into a big electronics store recently to find a product I bought online, and it took a long time for the staff to find it and for me to be identified properly so I could take it home. Everything was actually working on the backend but the employees destroyed the experience because they weren’t trained in the last 50 feet of the process.

UnboundID: What digital strategies will be important this year for large retailers?

Marcotte: The cost of technology such as digital display and motion detectors are all dropping in price, so it’s viable to integrate those technologies into your back-office systems. The question is, what do you get out of it? If a retailer puts up a 5” x 3” LED display, will it close the deal or simply become background noise? On every rack in the Kohl’s store they have a digital display, but for shoppers, that is too much.

Similarly, most retailers would agree that direct messaging, social media, and other online communications pays off in the form of reminders or coupons. This is much more effective than print media and of course it’s enormously cheaper. But you still have to be concerned about the attention span of the consumer and not send a dozen messages a day.

Retailers also need to consider audience. Text and Twitter work best with specific audiences, and primarily, with people under the age of 50. Apparel shoppers are classic in wanting to share the moment and the find with an audience. Location-based technology is another one but it’s best for immediate consumption, such as when a shopper is looking for something to eat or to get some medicine. They are within a decision space which may not be well defined, so location-based technology could be useful to help guide consumers to an offer.

UnboundID: Technologies like beacons and location-based mobile apps allow retailers to identify and target consumers at the “moment of need.” But what are the concerns when it comes to privacy?

Marcotte: I think reality is catching up for many people around the notion of privacy. For better or worse, people aren’t shocked anymore about what a government agency or company knows about them. That said, how the retailer handles that knowledge is extremely important. It’s not necessarily smart to reveal everything that you know about the shopper. Keep in mind that a lot of this information is already public, so it’s not like the retailer’s doing something wrong, but it may upset someone if they think you have too much information.

Focus on the customer, not necessarily their family. It’s probably not a great idea when you are working with a male customer to bring up what his wife bought last week. Some of this is also regional. For instance, consumer privacy concerns are higher in the Northeast than in the Southwest. We are a big country and we have different cultures.

UnboundID: On that note, how can retailers do a better job of protecting and respecting consumer privacy, whether through consumer identity management solutions or other tactics?

Marcotte: Most customers have no idea of the role of encryption in protecting their information, other than it sounds good. A retailer should have two or three data points to validate a customer’s identity and that’s usually okay because customers are more patient when it comes to security than they used to be. Think about a bank, we don’t mind having to answer some extra questions to get access to our account. The trick is, when is it too much? I think anything more than about three steps is too much.

There is also the fact that it is hard to change consumers’ habits. Most people don’t realize that using a service like Apple Pay is a lot more secure than using a swipe card. We are as a nation much more trusting than anywhere else. A few years ago when we were seeing a lot of massive breaches with large retailers, people would go back the next day to that same store and use their credit card. Meanwhile, I knew a retailer in Chile that experienced a credit card breach and within a week, the company was almost out of business. The good news is, these breaches did change retailers’ habits. When C-Level executives leave a company after a data breach, that tends to create a shift in industry thinking.

What’s important to note today is that almost all retailers have internalized the need to invest and enable digital capabilities to be competitive. But that is far more than putting up a Twitter account. It includes integration of systems, training, store culture and respect for the digital lives of their shoppers. There’s also the realization that no matter how up-to-date those capabilities are, technology and shopper habits will change even faster.

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