February 9, 2018
As was to be expected, the NRF show, held last month in New York, was very exciting this year and very well attended. It certainly looked like retailers were there to make something happen in 2018. While there, I had the opportunity to speak to many retailers, and although there was much buzz about the use of “AI and personalization” to better engage customers, most of them were there with one sole purpose: to find the way to unify all their sales channels and remove friction in that process. What was different between this year and last year was that many of these retailers have seemingly exhausted their efforts to try to make their current systems accomplish that goal.
“I just don’t think we realized how hard it was going to be,” said one retailer I spoke with, echoing the general sentiment. They have invested time and money to partially integrate systems such as CRM, Inventory, Order Management, but the issue for them is that the information is not always accurate and it is not in real time. The real-time visibility in these critical areas is just not available to help their staff service/support the customer, and the sales channel friction is a nagging ongoing issue.
When you are trying to do Unified Commerce, what good is offering “buy online and pick up at the store” when the system says it’s in-stock but the customer arrives and it is not? The opportunities to burn customer bridges and relationships are never greater when customer expectations are not met. Today’s consumer expects and demands a frictionless experience with little patience to the contrary.
Failing to get their legacy systems to play nicely together, many retailers were looking for a technology reset. There are certainly many paths one can take to achieve that “Unified Commerce” end goal, but the core focus center needs to be on the customer-facing applications. It is the touch points across the stores, e-commerce, and mobile where success is achieved or lost.
What was particularly interesting is that retailers were starting to see through the marketing mantra that many large players, such as ERP companies and others, are pushing regarding an end to end “Unified platform” to achieve this goal. They are finding that these large ERP companies are trying to paint this “end to end” picture by having acquired other companies, not developing the solution organically. As a result, there is no actual single platform solution; instead, one must cobble together different solutions that were not designed to talk to each other. Retailers are seeing that when they go down this path they are dealing with a ground-up construction project, not something that is ready to implement.
When they challenge these vendors and say, ok “show me this unified solution”, they see that they are still selling the old software they acquired, not some new “unified” version. So retailers are not only seeing that the “emperor has no clothes”, but are also realizing that the best path is a more curated approach, targeting the best solution for the particular job at hand. In terms of Unified Commerce and eliminating silos between channels, they are understanding that they do not need to spend millions of dollars on consultants and ground up custom development projects when these tools are available largely off-the-shelf if the system is architected for this modern retail environment.
Many of these retailers have ERP systems currently in place and realize that the promise of an end to end approach did not deliver the value they expected. They also understand that these systems are costly to implement and maintain. While there is an obvious comfort with ERP for the back-end traditional applications (such as financials, manufacturing, human resources), there is a realization that the customer-facing applications, the customer centricity, flexibility, and agility are severely lacking. In this retail age, the customer-facing applications are the Holy Grail of success and revenue growth – in fact, for survival itself! Clearly, there is a need to leverage different approaches to technology and look to the more agile, modern solutions for the customer-facing applications, while the old tried-and-true back-end applications, like financials, have their traditional role. However, it is customer facing solutions that will make or break retailers.
Retailers that have had the experience with expensive, monolithic ERP systems are resisting signing on to these recently acquired customer-facing solutions that were not developed organically. They are seeing that all these attempts to integrate customer-facing solutions with these ERP systems are a ground-up construction project that will cost millions of dollars with no guarantee of success. In fact, we spoke to many retailers at NRF who have abandoned projects after spending millions of dollars knowing that the project would take years and millions more to complete. Retailers want to unify their channels and they want to do it now, not wait for these ERP systems to integrate their recently acquired front-end applications on the customer’s own dime.
So what is the answer? It is to keep the back office ERP modules functioning (until there is confidence in a better, cheaper alternative, such as a Cloud ERP that is easier to install and less costly to maintain) and integrate a customer facing, revenue generating front-end technology engine that is designed for the modern retailer. What is needed is a solution that is not architected from the manufacturing world like ERP systems, but one developed around the agility, speed, and visibility needed to service today’s consumer. That can only be accomplished when the customer is placed squarely in the center of the technology stack, where the customer profile is shared across all channels “universally”, which allows for a consistent experience across all channels.
Today, everything needs to center around the customer, not around just inventory or transactions but the customer. When the customer enters the store the staff has to be able to know everything about them, online and in-stores, their preferences, their loyalty points, gift card balances, their current orders, everywhere they have touched the brand. They need to be able to make recommendations to them using AI based on past purchases, be able to personalize the customer experience. To do these things effectively, your front end, customer facing solution needs to be designed with the horsepower to meet these modern retail needs. Older legacy systems were simply not designed to perform in this new fluid channel environment. As a result, bottlenecks and friction abound.
At NRF, retailers were clearly seeing the difference between providers who can talk the talk, and the ones who can actually walk the walk, right now, to deliver Unified Commerce. Rather than just believe the marketing hype, these retailers are learning the two most important words in due diligence are “Show me.” Show me how I can see in real time everything my customer is doing across all channels, show me how I can treat my customers, my inventory and order management as shared assets in real time. These retailers understand that they have no more time to waste and the idea of ground-up construction projects that cost multi-millions and years of implements is a non-starter. There is a better path and they simply need to ask “Show Me”. When they ask that question, they will get the truth.
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