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Omnichannel Has Arrived



Retailers are at last beginning to flex their omnichannel muscles.

Omnichannel will become more than just an overused buzzword this holiday season. A series of technological advancements look to link the online and offline experiences in a real way — and this means a lot more than just arming sales associates with iPads. 

Black Friday is expected to be less of an event this year, as price promotions have started earlier and earlier. Amazon and Wal-Mart unleashed holiday deals on Nov. 1 and, according to a study of chief marketing officers conducted by BDO and Market Measurement Inc., more than a third of retailers will have offered the bulk of their holiday promotions by the time consumers sit down to Thanksgiving dinner. 

Online will also touch more than three-quarters of all holiday shopping experiences, per research conducted by location-based mobile platform Retale. Of those surveyed, 54 percent said they would shop in-store and online, 22 percent said they would shop online only and just 24 percent said they will do all shopping in brick-and-mortar stores. 

Forrester expects online holiday retail sales to reach almost $89 billion this year — $10 billion more than the period saw last year — comprising 14 percent of overall holiday retail. 

Until now, the word omnichannel has largely referred to the ability to fulfill product demand through any of a retailer’s distribution channels — and for most firms that is still the case, according to Kurt Kendall, partner and retail strategist with Kurt Salmon. This means that companies’ efforts center on satiating demand for product, such as buying online and picking up in-store or turning stores into warehouses by shipping from stores.

The key this holiday season will be to extend the in-store experience in a way that’s engaging to a customer, as well as one that gets them to come in and spend more money. Given the plethora of price promotions out there, retailers’ omnichannel efforts will stand out this season only if they serve a purpose — whether it provides promotions targeted at a particular shopper or removes friction points from the shopping experience, like at Nordstrom or Rebecca Minkoff’s new Manhattan flagship in which a shopper has the ability to flag down a sales associate and swap sizes without leaving the confines of a dressing room. Even Twitter said on Tuesday that it would start to test its second commerce product, Twitter Offers, where advertisers could offer card-linked promotions that could be redeemed in-store. According to the microblogging platform, advertisers can measure return on investment every time a redemption occurs, whether on or offline.

Kendall won’t go so far as to say that the term omnichannel is overused — but “it’s certainly used a lot.” 

“Its uses reflect the importance to retailers of learning how to operate in a new way. What they haven’t learned yet is what the new model is, and for lack of a better word, they refer to this as ‘omnichannel,’” Kendall said. 

EBay is betting that the in-store technology it will roll out in Nordstrom stores next week will completely transform the way people shop. EBay already implemented similar technology, including the Connected Fitting Room in the Rebecca Minkoffflagship, which opened earlier this month.

“You have to put something in front of someone that actually has a value proposition,” Steve Yankovich, eBay vice president, innovation and new ventures, said of Minkoff’s flagship, located on Greene Street in Manhattan’s SoHo neighborhood. “It’s the Uber-fication of the retail shopping experience.”

Connected Fitting Rooms are equipped with Kinect sensors that not only track every item brought inside (via RFID chip), but allow you to request a different color or size (brought over by a sales associate ASAP) and even text yourself the items you tried on so that you can purchase at a later date. All actions are done through the mirror. 

“Now, if you’re in a fitting room and something doesn’t work — unless you have a friend with you, it won’t be as efficient. You’re likely to put your clothes back on and go out, and it’s unlikely you’ll come back,” Yankovich said. “Now the dressing room becomes the place you experience all the product that you want to spend time on, and the success rate will go through the roof. My prediction is that everyone will want this; every store will need this kind of experience to compete.” 

It will cause consumer expectations to skyrocket — and Yankovich predicts that it will become commonplace to be able to request items via touchscreen inside of a dressing room. Another Rebecca Minkoff store employing the same technology will open in San Francisco later this year and in Los Angeles in the first quarter of next year. 

Kendall acknowledged that Minkoff is at the “forefront of where the retail experience is going,” but the industry is still at the early stages of understanding what the future of the in-store experience needs to look like. 

Two Nordstrom doors, in San Jose and Seattle, will pilot the Connected Fitting Room, which, instead of Kinect sensors and RFID chips, will be equipped with a laser bar-code scanner to scan items manually. Yankovich said the main feature is that shoppers can initiate getting help from an associate, ensuring that one’s time in the dressing room is maximized. And when a shopper is done trying on, they can request a sales associate to assist with checkout (there’s also an associate app that helps establish a dialogue between retailer and consumer).

Target’s app now has indoor mapping that shows where items are located via pin so shoppers can get what they want in-store as quickly as possible in all of its U.S. stores, and come Black Friday it will offer more robust, interactive maps that show where sales and dealbusters are. On the retailer side, the largest to embrace omnichannel initiatives thus far is Macy’s, which revealed a slew of digital-facing initiatives in September. Buy online, pick up in-store was rolled out to all Macy’s and Bloomingdale’s doors and both retailers have begun to use Apple’s mobile point-of-sale system, Apple Pay. Sephora has started to use Apple Pay as well, and mobile POS system Square said it will start to use Apple’s payment option next year. 

Bryan Yeager, an analyst at eMarketer, said this season will be about building brand awareness for payment options like Apple Pay. Getting consumers to make the switch from using traditional credit cards to a mobile wallet won’t happen overnight, and difficulties also loom for retailers, such as incorporating branded store credit cards and loyalty programs. He called this a trial year for Apple Pay — projecting that although 2015 will be a much bigger year for mobile payments, this will be integral in getting initial adoption from merchants and consumers. Similar mobile payment options like Google’s mobile wallet and Softcard, the joint venture between AT&T, T-Mobile and Verizon, may have failed to gain traction with shoppers in a meaningful way, but Apple’s brand recognition could likely change this. If anyone can make mobile payments happen, it’s Apple. 

“We can’t distinguish any more what is a store sale or a mobile sale. It’s blurred. We know customers are online shopping and looking at specific items and we know that same customer used his or her Macy’s card to purchase the item in a store,” Terry J. Lundgren, chairman and chief executive officer of Macy’s Inc., told WWD in September.

Through a partnership with Shopkick and its ShopBeacon technology, consumers shopping in Macy’s that are Shopkick app users will get more personalized deals and discounts. Promotions offered on the app are only redeemable while in-store.

Similarly, StepsAway ceo Allan Haims wants to use mobile to influence in-store purchasing in the mall environment with his three-month-old app that’s currently available in six shopping centers across the U.S., including Twelve Oaks Mall in Novi, Michigan and Cherry Creek Shopping Center in Denver. 

StepsAway, which only works in malls that opt in, lets consumers know about promotions via their mobile device — but here’s the catch: They can only be redeemed in-store. 

When a shopper enters a mall, they’re redirected to log on to the mall’s Wi-Fi and prompted to download the StepsAway app. The user can then select what type of promotions they want to see; it’s a pull, not a push model, according to Haims. So if someone sees a deal for a Guess dress on the app, for instance, they have to go to the Guess store and present this to a sales associate to access the special price.

“They are more likely to make a purchase in brick-and-mortar because they are there,” Haims said. He also thinks that the app’s “pull” model takes away retailers’ worry that they’ll inundate consumers with e-mail. “It’s the customers’ choice to opt in every single time they walk into the mall. The stores have a qualified customer because they are in the mall and they [the shoppers] are pulling offers specific for something they are looking at.”

The single platform that creates and delivers promotions is all cloud-based, so retailers who wish to post on the app don’t need any infrastructure to be active on the app. And for stores like Sephora that don’t offer promotions, there is opportunity to use StepsAway to post in-store events or tutorials to drive traffic. 

The venture has raised $4 million in private investments to date and will soon roll out in additional locations. 

This holiday season’s greater push on omnichannel comes when Black Friday and Cyber Monday will garner more global attention than ever before — from London, where retailers are joining the price-promotion fray, to China, where Alibaba will roll out aggressive marketing initiatives next week.

Just as Alibaba founder and chairman Jack Ma said he wants Chinese online holiday Single’s Day to become a global event — the one-day holiday saw more than $9 billion in e-commerce sales — the same holds true for Black Friday and Cyber Monday extending their reach to China. 

For the first time, Alibaba’s recently launched AliPay ePass is pushing Black Friday in China for its retailers in a big way, bringing Chinese shoppers to U.S. Black Friday — and working with select merchants through partnerships with Borderfree and Shoprunner to help drive traffic and sales from China to the Web sites of Saks Fifth Avenue, Ann Taylor, Gilt, American Apparel, AĆ©ropostale, Macy’s and Bloomingdale’s.

Black Friday isn’t entirely unknown in China. Chinese consumers who have been shopping overseas are aware of it, but ePass really wants to ramp up the attention that American e-commerce sites are given during this period. It will use several marketing channels to raise awareness that the American shopping season has begun.

Among the Alibaba channels that will promote the American blockbuster shopping days are eTao, a shopping comparison site; G.TaoBao, the global TaoBao channel, and Alimama, Alibaba’s digital advertising company. These merchants will also use digital red envelopes, a popular way to attract Chinese consumers that’s a play on the red envelopes that are given out during the Chinese New Year. Red pockets will be placed all over these channels with specific deals and shoppers can grab them, put them in their account and use them at check-out. Alipay will tap into direct marketing to reach account holders and work with Alimama to create social mediabuzz.

“The big difference [this year] is that in the past, people were aware of Black Friday or Cyber Monday almost by word of mouth, but this time, it’s being focused on by the main player in the Chinese e-commerce market,” said Michael DeSimone, ceo of Borderfree, a platform that has five retail customers live on the Alipay ePass solution.

He noted that the Middle East — including Saudi Arabia, Kuwait and Dubai — has seen huge growth when it comes to purchasing from American e-commerce sites. “It shows that the world is aware that we’re heading into a massive selling season — even if it’s a market that doesn’t celebrate Christmas.”


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