Every now and then you come across an analyst report that hits the bullseye with a "twaaannngg" that resonates long after the initial reading. Such is "The State of Online Commerce 2018: High Hopes" from Brian Kilcourse and Steve Rowan of Retail Systems Research.
Why is this one so good? Well, there’s RSR’s methodology. They ask the penetrating questions. And, they separate survey responses into two categories: Those from today’s retail winners (with total, all-channel, year-on-year revenue growth above this year’s benchmark), and those from retail laggards (with revenue growth below).
In addition, despite the title, they addresses what we see as the single largest strategic (and thus, single largest tactical IT) issue in today’s retail: The winning of today’s cross-channel shopper.
A Selection of Key Takeaways
Winners are clearly embracing the merger of digital and physical—and see digital commerce as critical to their futures.
No surprise. For those with eyes to see, that’s how she shops. To quote Kilcourse and Rowan:
Winning retailers don’t merely accept that the consumer shopping journey often begins in the digital domain, they are encouraging it....”
- Are turning stores into multi-capability nodes within a brand-wide fulfillment BOPUS, extended aisle, ship-to-home—the store is closer to the shopper than the regional distribution center. In addition, operational costs can be aggregated in the store—and driven down, over-time, through process innovation and technology investment.
- Agree, by a 5-to-3 ratio, that identifying and enabling customer journeys is critical to digital channel (and I would argue, overall) success. They also agree that “if we don’t offer a digital selling capability, our stores will die.”
- Worry, by a little less than a 2-to-1 ratio, that competitors are ”out-innovating us in engaging with consumers.” And that new consumer digital devices and interfaces (think image and voice recognition) are emerging “faster than we can keep up.”
- See, at a 3-to-2 ratio, that organizational silos are standing in the way of more effective operations across all selling channels. And are calling for both more coordination between stores and digital channels, and the investment in a streamlined technology platform or infrastructure.
- See a much higher value in the technologies that enable optimal omni-channel or unified commerce retail capabilities, such as real-time inventory visibility, personalized search results, and through-the-journey integration of content and product information.
Laggards, on the other hand:
- Are, to a meaningful degree, more focused on the price sensitivity, higher costs per transaction, and resultant lower margins of e-commerce than the opportunities it provides.More focused on wet ankles than preparing a boat to rise with the incoming tide?
Other Important Points
If we take the RSR survey results at face value, it’s clear that industry decision-makers still fail to grasp that retail’s value proposition has changed dramatically—and that product at nearly every price point has been commoditized. Only six percent of survey respondents would admit that their products aren’t exciting any more. Yet 65 percent said that the biggest challenge they face is that “everyone is selling the same product.”
My guess: The 65 percent also know that their products aren’t exciting. Odds are that no one wants to admit it. Corporate heresy is dangerous, even when in the confessional.
Retail metrics need to change. Of course. Traditional “store-for-store” measures simply don’t reflect today’s reality of a digitally-driven shopper journey.
Personalization is high on everyone’s list, but “personalization doesn’t necessarily mean one-to-one, or ‘curated.’” Thank you, RSR – this is a term that the retail tech industry uses promiscuously, but with little understanding of what it means operationally. Coupons in the aisle? Please.
From Kilcourse and Rowan’s perspective, this is all about relevance—and to be relevant to a consumer, the retailer must understand the context of the consumer’s need—a context that can be gleaned from close attention to the path-to-purchase journey.
Thanks, RSR. Very good brain food here.
Tell me what you think.