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Strategies for abetter customer experience

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OMNICHANNEL RETAIL:THE CUSTOMEREXPERIENCETechnology and retail are converging toblend into a seamless shoppingexperience

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MILLENNIALS ON TARGET The most technologically savvyconsumers annual spending power tops$600 billion

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CARTWHEEL UP CLOSE Target’s social and mobile app allowsconsumers to “build their own sale”

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MASTERING THE OMNICHANNEL ERAConsumer preferences for researchingand purchasing will continue to evolve

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MOOSEJAW MADNESS An outdoor retailer’s need to leverageinventory led to omnichannel solutions

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BEST PRACTICESTips for communicating withconsumers seamlessly across channels

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OMNICHANNEL LINEUP Think of omnichannel solutions asextensions of customer service

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EVEN FASTER (AND DON’T FORGET, FREE) SHIPPINGWhy consumers will continue to demand this perk

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ALEX AND ANI’S CUSTOMERDATA TARGETING How this accessory retailer usessecond-party data-sharing

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CURBSIDE PICKUP The Container Store’s “click and pickup” service

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ADVERTISING AGE SEPTEMBER 15, 2014 · 3

OMNICHANNEL RETAIL

This document and information contained there-in are the copyrighted property of Crain CommunicationsInc. and Advertising Age (Copyright 2014) and are foryour personal, noncommercial use only. You may notreproduce, display on a website, distribute, sell orrepublish this document, or the information containedtherein, without the prior written consent of AdvertisingAge. Copyright 2014 by Crain Communications Inc. Allrights reserved.

Meredith Derby Berg is a freelance writerand editor from greater Boston who has writ-ten about the business of the retail industryfor over 12 years. Her retail-related coveragehas appeared in Advertising Age, Women’sWear Daily, Footwear News, TheStreet.comand Banker & Tradesman. For several yearsBerg taught college-level writing and report-ing journalism courses at Boston University;she is now pursuing a master’s degree inmedia innovation at Northeastern University.

This report is available for free to Ad Age readers thanks to the support ofglobal digital marketing and technology services company, Rakuten Marketing.

For more information please visitwww.rakutenmarketing.com.

Published September 15, 2014This is one in a series of research reportspublished by Advertising Age. To see otherAd Age reports and print additional copies ofthis one, go to AdAge.com/trend-reports

INSIDE

CVS AMPLIFIES EXTRACARE VIA PERSONALIZATION How myWeekly Ad harnesses data from the drugstore’s loyalty program

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THE ‘APP GRAVEYARD’?Don’t use an app to deliver an ad, turn it into a shopping tool

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OMNICHANNEL HASONLY JUST BEGUN Personalization will grow in importanceto the point where consumers willexpect marketing to accurately reflecttheir specific interests

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4 · SEPTEMBER 15, 2014 ADVERTISING AGE

OMNICHANNEL RETAIL

OMNICHANNEL RETAILThe customer experienceBy Meredith Derby Berg

DEAR RETAILERS: Are you “omni,” or are you “out”?Omni, or “omnichannel retail,” refers to supporting con-

sumers how they prefer to shop, whether that’s on e-commercewebsites, in physical stores, via tablets, smartphones or physicalcatalogs or brand engagement over social media. The main prem-ise is that consumers expect to shop for whatever they want,whenever they want, across multiple platforms, or channels,online or offline. Retailers are now tasked with ensuring seamlesscustomer service and marketing to attract customers and explainshopping’s new iterations.

If it sounds complicated, it is. On top ofthat, omnichannel retail is evolving every day.The not-so-distant future may include drive-thru pickup windows (for non-quick-serviceplayers) or crowd-sourced shipping optionswith which purchased goods arrive at a cus-tomer’s home via other shoppers who happento live in the same neighborhood. Those aretwo ways retail giant Walmart is testingomnichannel retailing, for example, showinghow imaginatively technology and retail canconverge to ease—and speed up—shopping. It’scertain more change, some of it surely experi-mental, will come out of retailers as they navi-gate consumers’ buying preferences. Retailersnow must be all “omni” or risk being “out” offavor completely when it comes to commerce.

“I like emphasizing what serves the cus-tomers. I like just saying all these experienceson [digital] touch points are just part of what e-commercemeans today. There’s not an option not to do it,” sums up JasonGoldberg, VP of e-commerce at interactive agency Razorfish.

This idea of 24/7/365 purchasing power also implies retailerswill shift to providing items purchased via digital channels to con-sumers within hours, rather than days or weeks. Retailers knowthat if a wanted item is not available from physical or digitalpoints at that exact moment a consumer decides to buy, it mostcertainly will be purchased from a competitor, and possibly forthe same, or lower, price. That’s why many retailers have rolledout omnichannel efforts called “ship to store” or “reserve instore” features, giving consumers the ability to pick up items ontheir way home. It’s the new normal of improving inventory man-agement to meet consumer expectations—retailers not only risk

losing a sale on any given day, they risk impacting already finickyconsumer loyalties if they do not embrace these new ideas heavi-ly influenced by technology that’s matured over the past 15 to 20years.

Stores and online are now forever intertwined. “The twochannels complement each other,” noted Macy’s Chief StoresOfficer Peter Sachse at a Citigroup investment conference in lateMay. “We don’t think of them as separate anymore.” The buyingchannels have to work together and serve each other, but retail-

ers must also break down the walls that determinewhich channel gets the credit for a sale; retailis now one commerce, fulfilled via manyexecutives collaborating across platforms.

Meanwhile, affiliate sites, blogs, socialmedia, social shopping websites and retailaggregators are other interesting componentsof omnichannel. They provide retailers andbrands new ways to reach consumers whoare prone to Googling a wanted item or ask-ing for friends’ recommendations instead ofseeking out retailers first. Retail marketersare aware of these methods and aim to reachconsumers via fashion or technology blogpartners and websites like WaNeLo.com,Svpply.com and Polyvore.com to be the firstto get their attentions.

This is the world of omnichannel retail.But there’s a curious catch that’s infiltrating

the evermore technologically savvy world:Retailers must not neglect the in-store experience. The

majority of consumers, hovering around 90%, still purchaseproducts in person, even if it means they’ve reserved the itemahead of time to try on in store, or if they are simply picking upan item already purchased via tablet. According to Goldberg,behind the digital scenes, it’s considered “the happy path” to havecustomers research online and go to stores to buy; at stores, con-sumers are far more inclined to make impulse purchases, uppingtheir purchasing power and boosting retailers’ status with WallStreet’s favorite benchmark: the bottom line.

“By the time they walk into the store [consumers] know whatthey want to buy,” says Forrester Research VP and e-business andchannel strategy analyst Peter Sheldon. “They’re spending hoursresearching via digital channels, so by time get to the store,

90%OF CONSUMERSstill purchase products in person, even it it meansthey’ve reserved an itemahead of time to try on in

store, or are in store pickingup something already

purchased online



OMNICHANNEL RETAIL

they’re using the store as a collection location.” Retail experts say in-store interactions, often heavily influ-

enced by web research, are another way retailers and brands cansolidify consumer loyalty via capable customer service. “Thevalue equation for a customer isn’t just about the transaction, it’sabout the experience. If you can use the digital channels andknowledge and data to make the experience better, then youwin,” says Drew Panayiotou, president and CEO of advertisingagency BBDO Atlanta. He cites an idea that past-purchases datacollected by retailers could in the future generate more than justpromotions geared to spur buying, but also more personal shop-ping experiences, such as pinging sales associates when their bestcustomers walk in the store otherwise unannounced.

Across categories, in-store sales influenced by digital channelsdoubled to 36% in 2013 from 14% in 2012, according to an Aprilreport from Deloitte Digital called “The New Digital Divide,”based on a poll of 2,000 consumers. Meanwhile, mobile nowinfluences over half of digitally influenced in-store sales. And bythe end of 2014, Deloitte predicts that digital channels will influ-ence 50% of offline retail sales across categories.

All told, the omnichannel retail stakes are high. Forresterexpects combined online and web-influenced retail sales to reach

$1.8 trillion by 2017, up from $1.3 trillion in 2013. Total U.S. retailsales are $3 trillion, with a forecast of $3.7 trillion by 2017, perForrester data. The web will influence more than half of retailsales by 2017, according to Forrester predictions. Experts saytotal online sales for many big retailers make up about 2% to 10%of total revenues.

MELDING BRICKS AND CLICKS Some say the breadth of online marketplace Amazon.com,

and to an extent Ebay.com, has forced prominent brick-and-mor-tar retailers like Walmart, Best Buy, Lowe’s, Kohl’s, Walgreens,Target, CVS Caremark, Macy’s, Neiman Marcus, Home Depot andNordstrom to experiment and analyze new ways to stay on thetechnological forefront of shoppers’ purchase journeys. For theseretailers, it’s about giving consumers what they want, the maintenet of customer service, no matter how consumers choose toacquire goods.

“My job as CMO is to get you engaged. If you choose to do thatonline, if you choose do that in store, terrific. If you do it in bothplaces, that is nirvana for me,” says Martine Reardon, chief mar-keting officer at Macy’s. She adds: “We don’t think, one mediaversus another, to communicate messaging. We go where thatconsumer is.”

To compete, retailers are required to make intense invest-ments to accommodate their shoppers. The smartest retailers,which typically have a host of technological resources and plat-forms making their backends function, embrace simplifying pre-existing systems and upgrading. And these are the retailers thatare often communicating their platforms’ abilities and messagesmost effectively. An effective marketing campaign can make orbreak technological advancements if no one understands how touse a new program or technology. Many retailers use a combina-tion of broadcast ads that are also displayed on their YouTubechannels to explain new omnichannel initiatives. They alsoinclude information on websites and emails.

In addition, testing marketing efforts regarding new technolo-gy, such as mobile applications or coupon services, are all themore imperative in the omnichannel world. At Macy’s, “We dohave so many messages, and it’s very careful crafting and editingso that you’re still communicating the right message,” Reardonsays. Macy’s constantly tests beforehand the exact language usedin marketing messages, such as TV spots, via a panel of 3,000 to5,000 customers across the country, says Reardon. “We takethem apart, frame by frame, and we get people’s motivations: Dothey learn something new with that spot? Would it motivate themto now come in and try that on?” Reardon explains.

OMNICHANNEL EVOLUTIONLooking at the evolution of omnichannel in the past four to

five years, it used to be that “multichannel” or “cross channel”were the buzzwords. Retailers would have physical stores, an e-commerce website and perhaps a mobile application; they wouldtrack different sales transactions, with each segment of the com-

OMNICHANNELBY THE NUMBERS

By 2017, 60% of the expected $3.7 trillion in U.S. retail sales will takeplace on PCs, phones or tablets or be influenced by research on devices. That compares with 46% in 2012.

35% of mobile device owners who said they were not recent shoppers accessed mobile phones while in stores to check prices.

71% of online shoppers would pay a premiumin stores of up to 5% more than theonline price to get a product right away.

3% of online shoppers would pay up to a 10% premium above the online price to receive the product immediately.

Source: Forrester Research

60%

46%

2017 2012



OMNICHANNEL RETAIL

pany getting credit at the specific purchase point. But this systemkept channels “siloed,” according to Razorfish’s Goldberg; it didnot give credit to, perhaps, a store associate who pointed a cus-tomer toward a different color of a shirt only available online. Orthe e-commerce team would not get partial credit for a saledespite providing something as simple as the store locator func-tion, Goldberg points out.

Kohl’s CFO Wes McDonald admitted on the firm’s May 2014earnings conference call that once the retailer rolls out more ship-from-store capabilities and buy online,pick up in store (“click andcollect” the retailer calls it), sales tracking is “going to becomevery blurred. So it’s going to be all just kind of in the total salesnumber,” McDonald said. The mindset of tracking total salescould be considered progress to help alleviate executive infight-ing across all kinds of retailers, as analysts alluded to, about whichchannel gets credit for a sale.

As Macy’s Reardon acknowledges, it does come down to “totalsales” as an important number, indeed as a factor of the all-important total profit. But she notes that if retailers don’t trackfrom which channel sales originated, they won’t know whichchannels to market to consumers. This information helps retail-ers nimbly shift to promote ease-of-use shopping tools at theappropriate time.

Of course, for many apparel shoppers, seeing how clothing fitsis a point of distinction a retailer has between making a sale ornot. So Reardon says she believes it’s still important for con-sumers to get to physical stores: “What we’re finding is that a lotof the researching is being done online on our website or mobiledevices. In the end, she really likes the physical plant, to touch[the merchandise], feel it, try it on.”

This Macy’s example, in fact, describes one of the earliest,most well-known and important omnichannel retail attributes:retailers accommodating consumers who want to research onlineand go to stores to buy. At Macy’s, 75% of consumers visitmacys.com before going to a store, the $28 billion companyreports. This so-called webrooming is a basic but prominentapproach similar to older cousin “showrooming,” first brought tothe forefront in the sales battle between Best Buy andAmazon.com, whereby consumers research items in person atvarious competing retailers, implying an ultimate purchase beingmade at the retailer with the lowest price, which at the time hap-pened to frequently be Amazon.com. Showrooming and web-rooming also acknowledge that consumers have smartphonesand often can even be more knowledgeable about an item, itsspecs and price, than a store associate. That’s not somethingevery retailer likes, and it’s on many marketers’ lists to improve.

CUSTOMER-CENTRIC APPROACHRetail analysts and experts agree that omnichannel retailing

truly conveys what “commerce” means today. Since it amplifiescustomer service, whether online or in person, retailers are tak-ing a more customer-centric philosophy as they meet demand.Omnichannel also means taking the Apple approach of offering

Millennial shoppers, or people age roughly 18 to 33—oth-erwise known as Gen Y or the boomerang generation—aresome of the most technologically savvy consumers out there.They are the definition of digital natives. Mobile devices areconnected to millennials’ palms 24/7, epitomizing the wayretailers view the “want it now, get it now” culture of theomnichannel world.

“Millennials are the most important generation to comealong in the last 100 years, perhaps ever,” Adroit Digitalwrote in a study of 2,000 self-identified millennials completedin January 2014. At more than 80 million people and withannual spending power more than $600 billion (topping babyboomer spending of $400 billion annually), “Millennials cameof age in the wake of massive advancements in technology,

unparalleled communicationaccess, and media exposure thatallowed people to spread infor-mation faster to a wider, morediverse audience than in anygeneration before them,” thestudy said.

Adroit Digital suggests thatmarketers will communicateeffectively with millennials viatesting, testing and more testing.“It will require evaluating new adunits, including social, native, and

video as well as the associated created and messaging,” thestudy said.

Macy’s Chief Stores Officer Peter Sachse says thatpiquing the interest of consumers about his department storechain when they are in their 20s ups the possibility they willbe customers when they reach their 30s and 40s. It’s impor-tant that they fall “in love with Macy’s in their 20s and thenbe with us for the balance of their lives,” Sachs said at a con-ference last May.

According to Macy’s Chief Marketing Officer MartineReardon, the retailer pushes messages about new productson mobile devices to this group, though she acknowledgesthat millennials still like to see product in store.

Another avenue millennials embrace to learn about newproducts are blogs. “They take that content more to heartthan they do about reading a specific ad,” says Reardon.

Macy’s also completed two recent campaigns gearedtoward millennials that Reardon says reached “a tremendousamount of eyeballs” by “incorporating fashion and new prod-uct into fun videos.”

MILLENNIALS ON TARGET

REARDON



OMNICHANNEL RETAIL

store, try it on and then decide to buy it—in the store. It alsomeans that retailers are shipping product from stores because it’sfaster and cheaper for both the company and the consumer. Incertain cities such as Miami, Boston and Minneapolis, Target istesting a $10 rush delivery service, whereby shoppers can orderas late as 1:30 p.m. and receive delivery the same day between 6p.m. and 9 p.m.; the company is also rolling out one- to two-daydelivery as standard shipping.

Other major retailers are using the mounds of previously col-lected shopper data and putting it to use via personalized offersright in their email inboxes to use at the point of sale. CVSCaremark, for example, has created myWeekly Ad, which pro-vides shoppers with personalized coupons that can be added totheir ExtraCare savings plan right on their phones and present-ed at checkout. Walmart, Macy’s and Kohl’s are also testinglocation-specific offers pushed to shoppers’ phones.

Omnichannel strategies give companies an advantage in thedigital world, thanks to this collected customer data. “Inomnichannel, you can develop relationships and blow themaway and lock them in as customers. The value of loyalty can betransformed,” says BBDO’s Panayiotou.

Target has taken the mobile application business a step fur-ther by offering a coupon service called Cartwheel (seeCartwheel up close, p. 11), accessible via smartphones and with“offers,” or coupons, redeemable in stores—“the happy path” inplay. As Cartwheel passed its first birthday, in summer 2014, itmoved out of beta and the company began testing the redemp-tion of Cartwheel offers online, too.

Target also recently announced it’s testing an image-recogni-tion app called In a Snap. The app allows consumers to shopitems off magazine pages and printed ads without scanningcodes or looking up links or by searching for products in storesusing the built-in camera of the iPhone, iPad or iPod.

EVER EXPANDING PICKUP OPTIONSCircling back to present and future omnichannel iterations,

drive-thru pickup has been offered, of course, by quick-servicerestaurants and, more lately, some grocery stores. And whileWalmart tests its drive-thru service in its Denver store, somemainline retailers are now offering curbside pickup. Sears andthe Container Store are among two non-grocery retail chainsoffering such service.

Sears, despite its financial troubles, acknowledgesomnichannel is the current way to connect with consumers,influencing its decision to invest in what it calls “in-vehicle pick-up,” which launched in March and promises prepurchaseditems will be brought to customers’ vehicles within five minutesof arrival.

“We believe that retail in the future will be about transactingwith customers on their own terms, whether it is in stores, in-home or on the go,” said Sears Chairman Edward Lampert onthe $36.2 billion company’s quarterly conference call earlier

in-store checkout via tablets, personalized service and onlineappointments, but a bit of a step further, too. In essence, everyretailer needs to think like the industry-leading tech company didfive years ago, or expect that it will leave consumers’ preferencesbehind.

“In the really long-term future, because your product list islimitless the retailer becomes purely an advertising vehicle,” saysPaul Swinand, a retail analyst at Morningstar. “So if your storesaren’t fun, if they aren’t a good experience, if the [sales associ-ates] aren’t nice, if there isn’t a lot of cool stuff there, you’re goingto miss out on sales. You need some overarching reason why peo-ple shop you anyway, like low price, convenience, exclusivity.There has to be some reason you exist.”

Now omnichannel means that consumers who shop at Gap,for example, are able to reserve an item via the website, go to the

MILLENNIAL VIEWSON MARKETING

60% of millennials say social advertisinghas most influence in how a brand and its value are perceived.

24% say they are more brand-loyalthan their parents.

39% of respondents say they think brandsthat don’t advertise via mobile channels, smartphones and tablets are outdated and undesirable.

35% say TV is the most influential advertising channel.

32% say social advertising lends the mostcredibility to influencing their branddecisions.

26% say social is the channel most likelyto introduce a new product they will consider for trial.

55% say a recommendation from a friendis one of the strongest influencers in getting them to try a new brand.

Source: Adroit Digital January 2014 study

CONTINUED ON P. 10


Which advertising medium influences you and other people your age the most in how you percieve brands?

TV 70%

Magazines 60%

Freestanding kiosks 31%

Billboards 21%

Radio 21%

Online display 42%

Online video 39%

Mobile 33%

46% Women38% Men

66% Ages 18-2573% Ages 26-33

66% Women55% Men

MILLENNIALS INFLUENCED MOST BY ADS SEENON TV, SOCIAL AND ONLINE

Source: Adroit Digital, January 2014


OMNICHANNEL RETAIL



OMNICHANNEL RETAIL

U.S. CONSUMER ACTIONSStores still go-to purchase points but digital has rising impact

84% of consumers researching clothingin 2014, said they spent less thanthree hours online doing so.*

28% of consumers interested in consumerelectronics spent between three and10 hours researching online in 2014.*

5% of consumers spent 10 hours or moreresearching products online for all categories spanning health insurance, clothing, government, consumer loans, electronics, and food and beverage.* 3% clothing

2% electronics

Purchases via mobile devices:

16% In both 2012 and 2014, the percentage of purchases consumers made online remained the same.

35% Consumers who shopped both onlineand in stores was flat for both years.

Clothes purchases in store also dropped:

2012

82%

2014

76%

Consumer electronic purchases in store are also shrinking:

2012

55%

2014

47%

Store purchases in last 12 months for all categories dropped slightly:

2014

36%

2012

39% Across categories, consumer shopping preferences:

In store

Online

20142014

45%

19%

2012

21%

2012

44%

Source: EY 2012/2014 survey data from 2,000 consumers. *Data not available for 2012



OMNICHANNEL RETAIL

collaboration of omnichannel, possible because Sears HoldingCorp. owns both retail chains.

In the end—or perhaps it’s still the beginning—retailers mustkeep abreast of changing technologies to keep up with users whoare increasingly comfortable online. The most dominant con-sumer group retailers will likely focus on are millennials, whogrew up connected to screens, says Tony Zito, president ofRakuten Marketing and CEO of Rakuten MediaForge, an ad tech-nology company.

“When I think about the way I use technology versus the waymaybe a high school student uses technology, it’s probably verydifferent. When that 18-year-old turns 25 and they’re looking atbuying a car and house, they’re going to behave differently as aconsumer. They’re open to different marketing channels than Iwould be or, say, my parents,” he says.

this year. One-half of Sears’ business is “cross channel,” henoted, acknowledging that consumers research or interact withthe retailer via online channels no matter where they ultimate-ly make a purchase.

In other omnichannel endeavors, the firm was ahead ofpeers, launching “buy online, pick up in store” 12 years ago.The retailer currently uses its social shopping platform, ShopYour Way, to send personalized coupons to consumers; onlymembers may use the new free curbside pickup option by sign-ing in to the mobile app, enabling location services and initiat-ing in-vehicle pickup upon store arrival.

In July, Sears also introduced the ability for Shop Your Waymembers to pick up orders from sears.com or kmart.com at anySears or Kmart store, 2,000 locations in all. This is a fresh cross-

Source: The New Digital Divide, Deloitte Digital. Note: The survey was commissioned by Deloitte and conducted online by an independent research company between Nov,. 15-22, 2013. The survey polled a national sample of 2,006 random consumers. Data were collected and weighted to be representative of the U.S. Census for gender, age, income, and ethnicity. A 90% confidence level was used to test for significance. Below are the margins of error for specific sample sets in this study: • National Random Sample – 90% confidence, margin of error 2-3% (+/-) • Device Owners – 90% confidence, margin of error 2-3% (+/-) • Smartphone Owners – 90% confidence, margin of error 2-3% (+/-) • Tablet Owners – 90% confidence, margin of error 3-4% (+/-)

*Kiosk, Digital Display

Own device 52% 51% 48%59% 47%

Unmanneddevice* 28% 27% 28%24% 33%

Salesassociate 20% 22% 24%17% 20%

WHERE CONSUMERS PREFER TO GOFOR ASSISTANCE INSTORE

Get product information

Check item availability

Checkout/make a payment

Look up itemprice

Navigate to an item

CONTINUED FROM P. 7



OMNICHANNEL RETAIL

T ARGET LAUNCHED Cartwheel inMay 2013 after deciding to reachcustomers seeking deals in a “con-

textually relevant” (for example, withsocial media and mobile) and personal-ized way. Cartwheel effectively allowsusers to “build their own sale,” SarahPeterson, Cartwheel product lead, tellsAd Age. Now with more than 8 millionusers, Cartwheel has saved its users$96 million and counting. Further, whenmembers come to stores, 20% of thembuy more items than just their Cartwheel“offers,” Target reports. More than half ofguests use Cartwheel again after the firstuse, with active Cartwheel users increas-ing their spending at Target by about30%.

“Target’s core guests are digitally con-nected families who love to shop anddemand great value. Cartwheel hits thesweet spot with these guests. It’s a greatway for Target guests to save money.Plus, it’s easy to use and it’s fun,” saysJeff Jones, Target chief merchandisingofficer.

Target developed Cartwheel in closepartnership with Facebook, and thedevelopment idea dates back to summer2011. By January 2012, developmentbegan in house at Target, and severalmonths later, aTarget team spenttime at Facebooklearning and coding;after hitting a few snags,some regarding simplicityof the application and oth-ers related to personnelorganization, the team begantesting by April 2013.

Consumers initially wereasked to log invia Facebook, arequirement lifted

in November 2013 after feedback fromusers; now they can create accountswith just an email address. Two monthsafter beta launch, Cartwheel had 1.25million installs. The most widelyredeemed offers are in the grocery cate-gory, with baby and apparel offers garner-ing high redemption rates, too.

Here’s how Cartwheel works: Eachweek, Target offers specific coupons forcertain items, such as 5% off housebrand Circo leggings for toddler girlssized 12 months to 5T, for example. Ifinterested, consumers select the offerand add it to their offer cart, either viadesktop, mobile website or iOS orAndroid app. Users initially get 10 offersand can unlock more through use of theapp, helping them earn “badges.”

When shoppers go to stores, theyfind the items and scan them via mobilephone into the Cartwheel app. Shopperscan combine one manufacturer’s coupon,one Target coupon and one Cartwheeloffer. The retailer also includes offersfrom its weekly ad, providing consumerswith a “double dip” of savings. Typically,up to four items may be purchased fromone offer per transaction, but the entireCartwheel list can be used up to sixtimes a day. In July 2014, Target expand-

ed Cartwheel to the webwith five offers, an initiative itis testing, and the offers areavailable for redemption instores, too.

At checkout, shoppersmust provide any other

coupons first, then scan in theirpersonal Cartwheel barcode to receive

the savings. Badges areunlocked with use and

allow more offer spots onusers’ Cartwheel lists; each

badge earned allows one

more spot.According to Peterson, Target wants

to make it even easier for consumers tofind offers and recently added “scan tosearch” because the retailer found con-sumers added offers while in store.Target may also automatically re-addoffers or make recommendations basedon what has been redeemed, she says.

In terms of marketing the couponservice, Peterson acknowledges thatTarget pondered whether communicatingwith consumers might be tricky but saysthe retailer quickly learned Cartwheel iseasy to use. “Just as we focused on mak-ing the experience simple when we builtthe app, we focused on keeping ourexplanations and marketing equally sim-ple and straightforward,” she says.

The retailer says it uses the data col-lected via Cartwheel to send marketingcommunications and other information onproducts, promotions or services. Duringthe first year of beta testing, Target didnot put paid marketing behind Cartwheeland instead relied on a public relationsand word of mouth. Now the retailer pro-duces in-store marketing, digital advertis-ing in its weekly ad and marketing withinits NASCAR sponsorship.

“As we move into the next phase ofCartwheel marketing, we can becomemore segmented with our messagesbased on new and existing users, and ifmessages are presented in or out ofstore,” Jones says.

CARTWHEEL UP CLOSE



OMNICHANNEL RETAIL

MASTERING THE OMNICHANNEL ERAConsumer preferences for purchasing and researching will evolve from yearto year, and the in-store experience will need to keep pace

nishing retailer Ikea acknowledges, based on market research,that 60% to 70% of consumers are going online and researchingbefore making purchases. But as far as Ikea is concerned, saysRich D’Amico, deputy marketing manager, “The best experiencetoday is still going to be in the store,” based largely on the typicalIkea customer’s desire to touch and feel merchandise. That’s asentiment true for many traditional brick-and-mortar retailers.

“The ease of the digital shopping experience, though, does notalways tip the scales in favor of online purchases. True, it’s moreconvenient, but what makes shopping individual and unique arethe emotional and tactile elements that help shape the store expe-rience—the feel of the fabric, the fit, the color, the satisfaction ofrewarding yourself,” wrote Glenn Murphy, Gap Inc. chairmanand CEO, in his 2014 letter to shareholders.

Another big issue retailers acknowledge is that consumers shop-ping in stores can often have more knowledge of an item’s specsthan store sales associates. Some retailers provide mobile devices toassociates in order to “level the playing field,” as it were. Somestores have shown progress here but it’s largely challenging because“these tools have to be simple to use because of the high turnoverof retail staff. They have to be simple and formulaic,” Forrester’sSheldon says.

But Sheldon contends there are bigger problems retailers like-ly need to focus on than providing store associates with shiny, cut-ting-edge devices. Figuring out the process before customers getto stores is imperative. “By the time they walk into the store, theyhave a good idea of what they want and are buying it. A lot ofretailers have no metrics or measurements put in place to under-stand the influence the web has,” Sheldon asserts. “The web isthe biggest lead generator of foot traffic.”

Retailers often do not fully understand this path to purchase,which relates to the outdated view of specific attributions for eachsale, even if it means a shopper simply used a retailer’s store-loca-tor feature on the website to get directions to a physical location.This idea of what Razorfish’s Goldberg calls “the happy path” isn’tyet ingrained into all retailers, for the happy path is highly inter-twined with happy customers who think of specific retailers whenseeking an item.

EXECUTIVE REFRAMINGManagement and personnel issues are a big factor in

omnichannel success, experts say, so retailers can focus simply

RETAILERS ARE NOW TASKED with setting themselvesapart by allowing consumers to swiftly shift from retail channel tochannel during all phases of the purchase journey. This omnichan-nel approach entails providing easy online research tools, facilitat-ing and blending in-store and online buying processes connectedto accurate product availability, easing research in stores via QRcodes or other mobile research-based technologies, offering rec-ommendations in store and online, providing the same productinfo and ability to buy or reserve online and pick up in store, or byeasing the ability for consumers to purchase via mobile devices.And don’t forget about finding ways for consumers to interact viasocial media to help build brand awareness.

Yes, the omnichannel order is getting bigger. The kicker isthat it will keep changing based on customer whims—and no onecan truly predict how preferences for purchasing and research-ing will evolve from year to year. “So much goes into creatingand making [omnichannel retail] seamless. The challengingthing is that we don’t know what the next expectation is.Everything is moving and changing so quickly,” says JohnThrailkill, VP-store systems, customer support and businessdevelopment at the Container Store.

Yet, it’s important for retailers to acknowledge the fact thatsales online are growing, and sales in stores are still increasing,though at different rates for different retailers. Big-box home-fur-

GAP LETS CONSUMERS CHOOSEONLINE, THEN TRY ON IN STORE

CONTINUED ON P. 14



BEFORE RETAIL WAS cross-chan-nel, multichannel or omnichannel, aforward-thinking technological mind-

set placed Moosejaw Mountaineeringahead of the curve.

Robert and Jeffrey Wolfe founded theoutdoor sport and apparel retailer in1992 with one store in Keego Harbor,Mich. They were early web adopters,launching a website in 1995. Sevenyears after its founding, the company’sfirst online sale took place.

About a decade ago and out of sheernecessity, Moosejaw implemented “shipfrom store” capabilities, well before manyretailers now trying it. “When we firststarted on the internet, [orders shippedout of] a closet in our Birmingham [Mich.]store. Whatever was on the [selling] floorwas online. We quickly outgrew thatstore. By 2002, online sales were biggerthan retail sales. We needed to leveragethat inventory. As we grew the footprint[ship-from-store] became more strategic.I’m not going to say it was some incredi-bly brilliant thing. It was really strategic,”CEO Eoin Comerford says.

Comerford credits the success of theretailer, now with 12 stores and revenues

“slightly below” $100 million, with thisomnichannel mindset. The Wolfes “werealways very willing to try the latest thingand put the customer first,” Comerfordsays. “The customer wants to be able tointeract with you in multiple different waysand get the same answers and have it bea seamless experience.”

In stores, Moosejawemploys what Comerford—andother retailers—call “endlessaisle,” whereby sales associ-ates via iPad minis can accessitems only available online butin stock at its 80,000-square-foot warehouse. Sometimesitems are not available to seein stores so associates will ship an itemor, in the case of footwear, various sizesto stores and have a customer comeback to view or try on before purchasing.

“Those sorts of things make the in-store experience special,” saysComerford. “The in-store experience takesthe ‘madness,’ as we call it, to a wholenew level. It drives customer loyalty.”

That’s why physical stores remain ahuge component of the company’s strat-egy, too, despite success selling online.

To that end, Moosejaw is careful to hire“people who are fun,” Comerford says—people who can be trained to be salesassociates and make memorable cus-tomer experiences. “If it’s purely transac-tional, online is going to kick your assevery day of the week.” Incidentally,Comerford said the retailer has even hadsuccess with a store recently opened inbankrupt Detroit, a location where a pop-up store was first tested.

The “madness” refers to the retailer’stagline “Moosejaw Madness,” intended toconvey whimsy and a not-so-serious atti-tude. Videos on the retailer’s YouTubechannel (http://www.youtube.com/user/MoosejawMadness) play to this theme,like testing a T-shirt’s resistance toabsorbing pickle juice’s odor. When itcomes to marketing, Comerford says thecompany has often made funny choicesto get consumers’ attention, such as oneeffort meant to encourage “buy two pairsof socks, get a third free,” which he admitsis not a typically exciting promotion. Tomarket it, the company’s creative teamturned out a giant animated Godzilla sockpuppet with flames coming out of its

mouth. Was the promotion a riv-eting success? “We sold somesocks,” he says modestly.

In another example, thecompany decided, “It’s notenough to say ‘summer clear-ance,’” during a promotion thispast summer. Comerford usedwhat he calls “the squint test”to decide that a giant Popsicle

would show consumers that the promo-tion involved summer merchandise. Ifone squints at a proposed campaign,what’s the first thing he or she sees? Ifthe main message isn’t immediatelyclear, the marketing team goes back fornew ideas. Comerford calls his compa-ny’s general approach to marketing as“retail as entertainment.” To keep thepromotion consistent, consumersreceived a Popsicle stick along witheach order.

MOOSEJAW MADNESS

OMNICHANNEL RETAIL

MOOSEJAW’S T-SHIRTTEST: CAN IT FEND OFFPICKLE JUICE ODOR?

MOOSEJAW MADNESS



OMNICHANNEL RETAIL

touch points—in-store kiosks, desktop computers, mobile devices,tablets or “endless aisle” abilities—in order to be most successful,says Forrester’s Sheldon.

In the past, retailers tracked purchases by creating structurearound each individual touch point, with specific e-commerceand in-store divisions, he says. They had separate marketingefforts with deeply rooted divisions that did not collaborate.“That’s dead these days. That’s confusing,” says Sheldon, whocites Neiman Marcus as a recent example of a retailer appropri-ately focused on an omnichannel reporting structure. LastApril, Neiman Marcus merged its stores and online executivestructures into a single team led by Jim Gold, chief merchandis-ing officer, who reports to Karen Katz, president and CEO ofNeiman Marcus Group.

Target, meanwhile, took omnichannel dedication a step fur-ther earlier this year when it created a digital advisory councilmade up of four external technology industry executives whowill meet quarterly with Casey Carl, president of omnichannelat Target. The council’s intent is to guide omnichannel strate-gies and “push Target to innovate faster.”

The CEO should spearhead this change in organizational execu-tive thinking, Sheldon says. “If not from the top down, it’s nevergoing to work to be successful. The senior VP of e-commerce, offline,supply-chain people, CIO, CMO, everyone has to come together. Thebiggest challenge isn’t technological. It’s people and process.”

TECHNICAL CHALLENGESThe goods, what consumers want and how they want to

retrieve them, is another main sticking point for success inomnichannel retailing. “The foundational layer of an effectiveomnichannel business comes down to making inventory availableacross the entire enterprise,” says Sheldon. In fact, more than 70%of consumers expect to view in-store inventory online and 50%expect to buy online and pick up in store, according to Forrester.

With the knowledge that the bulk of retail sales are still com-pleted in stores, perhaps most important, retailers today musthave on hand the items consumers came to the store to collect inorder to complete sales efficiently. Point-of-sale and inventorymanagement technologies, however, can be complicated, andretailers’ aging infrastructures aren’t as fluid as the digital con-sumer. “Today’s point-of-sale systems are on their knees,” saysElana Anderson, senior VP of worldwide marketing atDemandware, an enterprise cloud commerce provider that runsmore than 900 retailer e-commerce websites globally. “These sys-tems cannot scale to the change. They’re not agile enough tochange to enable retailers to adapt.”

Abilities like swiping credit cards from iPads for payment areelusive for many retailers. Improving their systems or going withan e-commerce player who can ease the upgrade “enables retail-ers to look at a consumer across all interactions they have withthe business and continue that interaction from the digital chan-nel into the physical channel,” Anderson says.

When it comes to how consumers pay for merchandise, the

on “commerce.” Executive management teams must be able tomove away traditional—the so-called siloed—retail organizationalstructure and become one team headed by the CEO. Retailers arebest served by setting in place an omnichannel-centric organiza-tional structure focused on the purchasing power of the digital

➜ Consistency Have a consistent brand voice,says Moosejaw Mountaineering CEO Eoin Comerford.For example, don’t outsource customer service.Everything from Moosejaw’s truck to its call center anddelivery trucks displays a “Moosejaw Madness” attitudewith phrases used across channels like “Don’t useknives, use teeth” or packages that are “Sealed with akiss.”

➜ How-to info Rather than sending email offersand promotions, send consumers how-tos on usingproducts, including videos, to deeper the understandingof a certain product that’s already been purchased,says BBDO Atlanta CEO and President DrewPanayiotou. He calls it “using our data for good versususing our data for ‘I want you to buy something today.’”He says that at Best Buy, where he was formerly seniorVP-U.S. marketing, the company found that consumerslearned how to use their new devices, such as iPhones,for seven to 10 days and then stopped seeking outmore information, translating into lost engagement.

➜ Be relevant “We’re looking at our customers’shopping behaviors in new ways. This means not onlyproviding coupons for items based on what membersare already buying—but also offering more coupons forproducts that members aren’t yet buying at CVS, butthat we know they need,” says Melissa Studzinski, VP-customer relationship management at CVS Caremark.Knowing what consumers are viewing at home andwhat they see when they are shopping is key to helpingthem based on their interests, agrees Panayiotou. “I callthis suspend-and-resume marketing. We can now makethe customer journey more seamless and personalizedfor them. Again, this is about helping them in a real way,not just serving ads and coupons,” Panayiotou says.

BEST PRACTICES Tips for communicating with consumers

seamlessly across channels

CONTINUED FROM P. 12



OMNICHANNEL RETAIL

What are your organization’s top investment priorities for store hardware in the next three years?

Traditional point-of-sale hardware 50%59%

Handheld mobile devices 32%27%

Digital signage 22%31%

Freestanding kiosks 21%17%

Rfid tags and readers 13%7%

Traffic counters 10%8%

Traffic trackers 12%12%

STORE HARDWARE INVESTMENTS RISE TO HELP DIGITIZE THE STORE

Source: National Retail Foundation, January 2014

U.S.Europe

sophisticated systems. “The internet has infinite economies ofscale. The biggest retailers—Nordstrom, Macy’s, Walmart, Sears,Dick’s Sporting Goods, the biggest guy in the category—can affordthe most investment in the country and they will be the ones thatget the online experience and in-store experience, which is theopportunity of what everyone said omnichannel will be,” saysMorningstar’s Swinand.

The cost of upgrading and implementing single systems capa-ble of scaling upward as omnichannel gets more complex doesstop some retailers. But they should look ahead to the benefits,versus the short-term costs, says Anderson. “They’re not thinkingabout the costs in an open-minded enough way. They’re thinkingabout the hard costs as opposed to the opportunity costs from theagility they can get from the new solution. This is exactly whywe’re at the point where openness to cloud is starting to overtakeenterprise software,” she says.

“Yes, it’s expensive,” admits Ikea’s D’Amico of necessary tech-nology to compete in the omnichannel world. “Yes, it takes a whileto roll it out and make sure it works. It’s the road to the future. Thebetter we can get [omnichannel technology], the more seamlesswe can make our transactions.”

future will indeed be via mobile technologies, say retailers andanalysts. “There will be a time, I really believe this, that the entirestore will be mobile,” says Macy’s Sachse. Yet only half of retailerssurveyed use smartphones and only 33% use tablets to accesspoint-of-sale software in the field, according to a National RetailFederation survey released in January 2014.

Further, just one-third of retailers have implemented the basicsof “buy online and pick up in store,” inventory visibility and store-based fulfillment, according to a January 2014 Forrester Consultingreport commissioned by Accenture. Yet these services can result inlower shipping costs for retailers, benefiting the bottom line.“There’s a huge laundry list of things you need to do, to offer toconsumers, to move the needle and be mature,” says Sheldon. “Allretailers are making progress. It’s just there are some who are real-ly offering so many of these capabilities and some are still talkingabout it.”

Of course, it can cost hundreds of million of dollars to reengi-neer backend systems into well-designed, integrated and architec-turally appropriate frameworks to support seamless data flowsbetween online and offline systems, according to Sheldon. So it’sno wonder the larger retailers are the ones able to implement



OMNICHANNEL RETAIL

THERE IS A SPATE of specific omnichannel strategies andinitiatives retailers employ to meet consumers’ shopping needsand get them excited about easily buying products across plat-forms. By extension—and paramount to the definition of retail—omnichannel amplifies the reach of retailers’ customer servicelevels. Here, some ways retailers are improving customer serviceacross channels:

■ SHIP FROM STORE Without a doubt, ship from store isone of the most common ways retailers are getting goods to con-sumers faster—and its roots are deeply intertwined with invento-ry management. This tactic can often be faster than shipping fromwarehouses or distribution centers—and it’s often cheaperbecause local stores are closer to consumers’ homes. Any one ofMacy’s more than 650 stores are fulfillment centers, according tothe company; it first rolled out a ship-from-store pilot in 2010.

This strategy can have a positive impact on gross margins. Forexample, an item that may have previously been markeddown by 80%, perhaps because it’s not seasonably appropriate ata store in the South, can be shipped from that store to a shopperin New York for whom the item is weather-appropriate,Razorfish’s Goldberg points out. And ideally for retailers, it’sshipped before the huge markdown.

In another way of thinking, this tactic helps stores reduce theclutter and appear more like showrooms, easing the overall shop-ping experience for consumers.

■ SHIP TO STORE This is another common method of get-ting goods to consumers quickly. Not every shopper has a secureplace to receive merchandise should it arrive via traditional ship-ping methods. On eligible items, Toys R Us and Babies R Us cus-tomers can have orders delivered to the store of their choice infive to 10 days. This service is particularly useful, according toToys R Us, for “big gift” items like cribs and dollhouses, and forcustomers with mailing addresses that cannot accept large pack-ages, such as PO boxes.

■ RESERVE OR BUY ONLINE, PICK UP IN STORE Macy’shas buy online, pick up in store at 45 stores and the capability wasrolled out further this past summer. It takes about four hours foran order to be ready at Macy’s for pickup, according to Macy’schief marketer Martine Reardon. Other retailers are faster, such asToys R Us, which said consumers who buy items online and select

to pick up in store can retrieve their merchandise in an hour orless. Gap’s mobile and online shoppers can request items at morethan 1,000 Gap and Banana Republic stores with the goal of mer-chandise being ready in an hour after a confirmation email; thecompany first launched reserve online in November 2013 at 600stores after a successful pilot program.

Getting customers to the physical store is valuable, says PeterSachse, chief stores officer at Macy’s. “The most precious thingthat we can ever get in the store is a visit. So we don’t care if thatvisit is something that they’ve already bought and they are justthere to pick it up or something that they already bought and theywant to return it,” Sachse said in May at an investment confer-ence.

■ ORDER IN STORE J. Crew is known for its in-store redphones that have long connected consumers directly to salesassociates for ordering out-of-stock items, but many retailers arenow rolling out in-store online capabilities to order goods viakiosks or sales associates equipped with mobile devices like iPads.This so-called endless aisle capability is made all the easier withimproved inventory management capabilities. Gap says it will test

OMNICHANNEL LINEUPThink of omnichannel solutions as an extension of a retailer’s customer serviceefforts, and always put the customer’s needs first

SHIP TO STORE: FOR ‘BIG GIFT’ITEMS LIKE CRIBS, DOLLHOUSES

PETER FOLEY/BLOOMBERG


OMNICHANNEL RETAIL

order-in-store this year, and Macy’s is piloting kiosks in somehandbag sections.

■ BUY ONLINE, RETURN IN STORE One of the simplest andmost ubiquitous omnichannel efforts is to allow customers to buyitems on the web and return them in stores. This, however,requires sophisticated enough point of sale, supply chain andinventory management technologies that not every retailer hasimplemented yet.

■ RESPONSIVE WEB DESIGN This refers to retailers whocreate websites that sense which type of device consumers areusing—computer, mobile phone or tablet—and optimize the expe-rience to it, making buying and browsing easier regardless ofmedium. It’s a simple concept but one that even three years agowas not enabled on many retailers’ digital channels.

■ INVENTORY TRANSPARENCY Who doesn’t like to be effi-cient? For shoppers, time is often a huge consideration and no onelikes to arrive and not see what they’re looking for. Accurate inven-tory information sets retailers apart from the competition. At Gap,consumers can “find in store” the merchandise they want fromonline channels, while other retailers, like Macy’s, are testing RFIDtags in stores to know how much is available in one place.

Ikea may have been one of the first big-box retailers to provideweb-based displays in order to help consumers plan trips aroundreal-time inventory availabilities. An easy-to-read visual technolo-gists call a “stoplight system” is located below item descriptionson Ikea.com; it shows whether products are going to be in stockat a specific store for pickup that day, or within the next threedays. If green, the item is available; yellow means “most likely”;and orange infers a “small chance.” Sometimes, items are avail-able only online, which the system notes.

The display also lists exactly how many pieces of a particularitem are available in real time that day, with projections for thenext three days based, the website says, on sales data for a partic-ular store.

“It’s a huge opportunity for us to allow the customer to checkout [inventory] beforehand,” says D’Amico. The retailer’s cus-tomer service culture, says D’Amico, encouraged it to make inven-tory counts available in order to improve overall customer expe-rience at the $35 billion global retail giant.

■ PAYING WITH CASH Toys R Us in 2012 launched an initia-tive called Pay in Store, which allows consumers who place ordersvia Toysrus.com or Babiesrus.com to pay for items in store, usingcash or credit. Shoppers must pay in store within 48 hours ofreceiving an order confirmation email. After presenting the confir-mation email either via printout or smartphone, consumers canchoose to pay for items with cash or another method. The item willship following full payment. Toys R Us says Pay in Store is “a con-venient alternative payment option for consumers who do nothave a credit card or do not want to use their credit card online.”


■ LOCATION-BASED PERSONALIZATION Turning tomobile personalization via low-energy Bluetooth beacons, retail-ers like Macy’s, Walgreens and American Eagle and brands suchas Timberland and Kenneth Cole are testing location-based tech-nologies to push targeted offers to consumers when they areshopping in stores. IBeacon lets retailers know exactly where aconsumer is standing in the store, which can make his or hermobile experience more relevant, says Razorfish’s Goldberg.

Taking personalization even further, accessory brand Alexand Ani is also using iBeacon to test a new mobile app, which thecompany plans to roll out by the fourth quarter. It will have “someelement of storytelling” and “daily inspiration,” says RyanBonifacino, VP-digital strategy, in order to get customers using theapp more frequently. And in the future, the app will “take advan-tage of the existing iBeacon infrastructure with personal experi-ences based on their position in the store.”

Consumer expectations are high when it comes to ship-ping orders placed online. Again, they want what they want,when they want it, and while we’re at it, why didn’t it arriveyesterday?

According to Forrester, 59% of consumers say shippingcosts are their biggest concern when shopping online. Tocombat that, many large retailers such as Gap, Target andWalmart offer free shipping on orders over $50.Amazon.com offers free two-day shipping via its Prime mem-bership, which costs $99 per year. Of course, retailers haveto be a certain scale in order to offer free shipping, and nowthe race is on to implement even faster shipping practices.

“There’s no question that same-day delivery is going tobecome the norm,” said Karen Hoguet, CFO of Macy’s, atthe May investment conference. But she admits it’s not justthat consumers need the goods right away—it’s more aboutbeing on the cutting edge of technology. That’s one of thereasons Macy’s started “buy online, pick up in store.” It was“more about getting the technological capabilities in placeso we could do same-day delivery someday,” she said,adding that the company can reach up to 80% of customersthe next day from its warehouses, but not the same day.

Meanwhile, the Container Store is testing same-day deliv-ery in Manhattan called Click and Delivery, which the com-pany plans to expand over the next 12 months, according toJohn Thrailkill, VP-store systems, customer support and busi-ness development.

EVEN FASTER (AND DON’T FORGET,

FREE) SHIPPING


HYPERTARGETED EMAIL OFFERS AND COUPONSAt CVS Caremark, which has melded the data from its

ExtraCare loyalty program into personalized deals for consumersinto one initiative called myWeekly Ad, hypertargeted electroniccoupons have been widely adopted, says Melissa Studzinski, VP-customer relationship management. Taking it a step further, over80% of ExtraCare members send their email offers and couponsto their ExtraCare cards digitally in order to redeem in store atpoint of purchase.

Some retail watchers aren’t convinced about the reach ofemail when it comes to personalization, though. “Emails don’t getread anymore,” says Forrester’s Sheldon. And to boot, retailersare immature with push technologies in terms of delivery andmarketing them, he says.

Retailers are aware this is the level they need to be at, saysSheldon, but generally, if they’re doing mobile marketing, they’renot doing it at the level of personalization that consumers consid-er marketing innovation.

At Moosejaw Mountaineering, targeted email offers haveproven effective, however. The retailer has personalized emailbroadcasts with names of brands customers already have anaffinity for placed in the subject line to garner attention, saysCEO Eoin Comerford; in other strategies, and as at many retail-ers, an entire email will be dedicated to a brand that’s on sale, oremails are based on what shoppers added to their carts and did-n’t yet buy.

Moosejaw uses customer relationship management to clustercustomers around particular brands or categories. Email opens

and click-throughs tell Moosejaw what types of campaigns aremost successful, according to Comerford. But he says the metricthat shows “where the rubber meets the road” is “sales per thou-sand sent.” This shows what percentage of people with a certainbrand affinity actually purchase something and their averageorder size compared with generic emails without brand affinity.In an email sent this past spring, brand-targeted emails werealmost five times as effective as non-brand-targeted, he says.

Rakuten Marketing’s Zito says consumers are three times morelikely to pull the trigger on purchasing an item if they see a displayad online and also get a personalized email. Zito says his compa-ny specializes in personalization. “It’s more about understandingand refining consumers, bucketing them by intent and behavior,”he says. “We literally have the ability to treat every single con-sumer differently.” He refers to every angle of omnichannel:direct mail, email, display ads, affiliate websites, digital and tradi-tional influences.

EMERGING OMNICHANNEL STRATEGIESAND MOBILE APPS IN QUESTION

If consumers like to interact with brands and retailers viasocial media—as millennials do—marketers have no choice butto interact with them at those points. Social is hot and gettinghotter. The prior cutting-edge way of reaching these consumers,mobile apps, are not as in as it used to be. Once the emergingtechnology du jour, mobile applications are no longer the go-totechnology because purchase conversions are unreliable for


OMNICHANNEL RETAIL

IKEA USES INVENTORYTRANSPARENCY TO SHOWWHAT’S IN STORE NOW

CONTINUED ON P. 22



OMNICHANNEL RETAIL

AT ACCESSORIES BRAND Alexand Ani, targeting shoppers via col-lected data is one avenue the brand

uses to grow its business. By strategical-ly partnering with Nordstrom andBloomingdale’s in what’s called a sec-ond-party data-sharing relationship, thejewelry brand does not compete for newcustomers with the twolarge department storechains, which already sellthe brand, says RyanBonifacino (photo right),Alex and Ani VP-digitalstrategy.

HERE’S THE STORY:Three years ago, Alex

and Ani centralized itscustomer data collection,and now as the data is updated, theinformation automatically syncs with whatthe brand knows about previous cus-tomer behavior. To expand its reach, thebrand connected the time-stamped,anonymous data via server-to-server inte-gration with Bloomingdale’s andNordstrom. The goal of connecting sys-tems is to allow customers to discoverthe Alex and Ani brand but onNordstrom’s platform, for example. It

allows Nordstrom to use its own data toexpose customers who express generalinterest in jewelry to offerings from theAlex and Ani line. Alex and Ani subsidizesthe marketing campaigns to acquire newcustomers, Bonifacino says.

“We get a report that tells us the over-lap and tells us how attractive [certain

consumers] are,” saysBonifacino. Nordstrom orBloomingdale’s “wants tolook at purchase intentacross price points or theyrun their own affinity scoringand see that perhaps one ofour competitors might pro-vide a lot of crossover. Theycould say Alex and Ani has ahigh affinity,” he explains.

This information allowsAlex and Ani to create rules about whichcustomers are reached about particularoffers and how. Contact can be madevia certain devices, social ads onFacebook or promoted tweets on Twitter,for example. In other instances, con-sumers are reached via cookies savedon computers or devices, and some-times contact through email is moreappropriate, based on past behavior.

Alex and Ani sales totaled $250 mil-

lion last year, according to Bonifacino.The brand expects revenues in the high$300 million range this year.

Its data collection process happenedalmost unintentionally at first, Bonifacinosays. In an effort to be a greener compa-ny, Alex and Ani in 2010 implemented amobile POS system, which sent cus-tomers receipts via an email servicesprovider rather than handing out printedreceipts, initially creating a stockpile ofcustomer data.

“That was forward thinking andallowed us to dive deep into who ourcustomers are,” says Bonifacino. Thiscustomer data eventually included whatconsumers were doing before they cameto a store, such as online research, andmore information provided by third-partydata groups. All of this data collectionhelped create a foundation for omnichan-nel success, he says.

“The original strategy hasn’t changedmuch. There has always been this mathe-matical model required with omnichannel,which is the data. It’s to get ahold of thecustomer data all in one spot and try tomake assumptions about where thegrowth is coming from—what’s going tohappen naturally versus what’s truly incre-mental,” says Bonifacino.

ALEX AND ANI CREATEDRULES TO DELIVERRELEVANT OFFERS

ALEX AND ANI’S CUSTOMER DATA TARGETING



OMNICHANNEL RETAIL

C URBSIDE PICKUP FOR theContainer Store happened fairlyorganically, says John Thrailkill,

VP-store systems, customer supportand business development, whoexplains the company had always pro-vided a carryout service to consumers.

By 2008, the Container Store led theplunge in a new type of omnichanneloffer, launching what it calls “click andpickup.” After purchasing online, customers can either come into thestore to get the merchandise or call thestore upon arrival and an associate willbring the order to their car.

“It’s nothing more than fulfillingsomeone’s request in a different waythan what you did in the past,” Thrailkill

says humbly. “The omnichannel[aspect], to me, it’s more about puttingthose choices in front of your customerso they can have the ability to benefitfrom it. It’s making the process morestreamlined.”

About 10 years ago, Thrailkill saysthe Container Store’s chief informationofficer decided to centralize transac-tions, which made inventory up-to-datein real time and aided the eventual roll-out of click and pickup.

Even before e-commerce launched,“we could tell where inventory was andit was exact at any given time,” he says.This meant stores could sell productsnot available at their location and consumers could go pick them up at

another store. “Our stores are more regional.

Typically, [customers] are driving pasta competitor or two to come to ourstores. With that in mind, if that personhas the ability to not get the kids outof the car, they can call us, and thekids can keep watching their TV show,”he says.

For its part, the Container Storesees higher average tickets for itemsthat are purchased online and pickedup in store, which Thrailkill in partattributes to consumers not being bur-dened by a physical shopping cart.Currently, more than half of weborders are picked up in local stores.

CURBSIDE PICKUP

MORE THAN HALF OF WEB ORDERSARE PICKED UP IN LOCAL STORES



OMNICHANNEL RETAIL

SOME RETAILERS have phased outloyalty programs with physical cards,which were once as ubiquitous as

mobile apps are now. Others are still har-nessing and melding that data inomnichannel ways.

CVS Caremark, for instance, has hadsuccess with an initiative it launched latelast year called myWeekly Ad. The pro-gram harnesses data from CVS’ExtraCare loyalty program and targetscustomers with weekly personalizedoffers based on their past purchases.

“We realized through insights fromExtraCare that our customers wanted afeature with more personalization. Wewere able to develop a platform thatmakes it easier for consumers to see themost relevant deals based on their previ-ous purchases and items we think they

might be interested in,” says MelissaStudzinski, VP-customer relationshipmanagement. “Every single consumerenrolled [in myWeekly Ad] receives theirown version of the circular, with offersthat are truly personal to them.”

CVS targets myWeekly Ad offers atthe top 20% to 30% of its consumers.CVS has 70 million active ExtraCaremembers after more than 15 years. CVSsent 881.6 million personalized emails toactive members last year.

“Through the platform, there is a ‘YourDeals’ section, which features a con-sumer’s individual deals, which are curat-ed from the more than 300 items in theweekly ad, highlighting the products onsale each week that the consumer mostfrequently purchased. Shoppers can alsoview their ExtraCare deals for the week,

in one spot, and send their onlineExtraCare Savings right to their card—eliminating the need to print and carryaround coupons,” says Studzinski

To market myWeekly Ad, CVSlaunched the “What’s Your Deal?” cam-paign in fall 2013 via an advertisementwith far-flung celebrities Nick Cannon,Joan Rivers and George Hamilton, in addi-tion to a handful of regular consumers,each after their own deals in the store.

“Our goal was to depict thatmyWeekly Ad is as unique and differentas each customer,” Studzinski says.“People loved the ad and shared it withothers. It encouraged them to check outmyWeekly Ad to see what it was allabout, resulting in new enrollments andmany customers updating their informa-tion to see their own customized deals.”

CVS AMPLIFIES EXTRACARE VIA PERSONALIZATIONCVS CAMPAIGN ‘WHAT’SYOUR DEAL?’ FEATUREDJOAN RIVERS



OMNICHANNEL RETAIL

W ITHIN THE OMNICHANNELworld, some retailers are movingaway from using mobile apps as

ad warehouses or purchase points andare instead using them to engage con-sumers with a personalized brand story.BBDO’s Drew Panayiotou says retailersshould ponder: “How does the mobiledevice make the shopping better in thestores and at home? How does itbecome a shopping tool? It’s differentthan serving you an ad,” he says.

To that end, a few retailers are dab-bling in augmented reality. Ikea, for one,rolled out a new app in late July thathelps consumers see how specific furni-ture fits in their homes, including a 360-degree perspective on the item. Macy’shas a similar furniture-related offering fortablets, with which consumers can seehow items look in a room of specificdimensions. Moosejaw Mountaineeringhas an app called X-Ray that hasreceived 4 million downloads; by holdinga phone or tablet over the Moosejawprint catalog, X-Ray users can see

through the model’s apparel to his or herunderwear.

Moosejaw is looking into a new appthat will focus on engaging with cus-tomers on a weekly and daily basisbetween purchases, while linking to itsreward program, according to EoinComerford, CEO, Moosejaw. “E-com-merce apps just don’t work for smallerretailers,” he says. “For us, we’re gear andhigher-end outerwear. Average order timeis about once a year. For someone todownload [an app] and only use it once ayear, it’s not sticky enough.”

Razorfish’s Jason Goldberg concurs.If retailers targeted apps to the top 1% ofconsumers who “really love you andwould do what you say,” it would likely bea more fruitful use of apps. Mobile apps“aren’t sexy until that consumer makesuse of it every day,” he says.

Retailers have been obsessed withapps, says Forrester’s Peter Sheldon,“when they should have been invested inmobile web.” Consumers are far morelikely to use a mobile website, he says,

because even if they install an app, oftenthey forget it’s there amid the numerousother apps they have.

“The vast majority of retailers todayhave created mobile applications thatoptimize on-device commerce over in-store experience. Our data shows thatthis is a fundamental miss in terms of pri-orities,” Deloitte Digital reports.

Some very large companies will beable to have effective mobile apps, butother retailers will need to focus on opti-mizing the website experience fromdevices, meaning responsive websitedesign. “That is a must-do to reallyunderstanding where your traffic is com-ing from,” says Elana Anderson, seniorVP-worldwide marketing atDemandware.

Indeed, agrees Goldberg, consumersare likely to buy six times more often ifbrowsing on their laptops. And tabletsare gaining steam as a go-to device forshopping, in part because the screen isbigger than mobile phones and they aremore portable than computers.

THE ‘APP GRAVEYARD’?

many retailers. That hasn’t stopped retailers from experiment-ing with new ways to improve apps, though.

Delving first into social media, retailers and experts agreethat, for now, social-media sites play important roles in posi-tive brand interactions, which is necessary in the omnichan-nel world. Still, it’s up for debate as to whether they should beused for the whole shebang—to push purchasing. Facebook,for example, recently revealed that it’s testing a “buy” buttonconsumers can use to purchase directly from its site throughads and other posts, but retailers aren’t convinced that’s thebest method.

People use Facebook to have fun, engage and create asense of community. “They’re not really there [on Facebook]to shop,” says Comerford. “That’s what websites are for. Thiswhole idea of having to have a store on Facebook really did-n’t work. It’s not cool. It’s like trying to sell insurance at acocktail party.”

At other social-media sites, such as Pinterest and Instagram,consumers like to interact with brands online, though without get-ting pushed marketing or advertising. People post their outfits toshow what they’re wearing, for example, or images of newly deco-rated or refurbished living rooms and kitchens. Viewers get ideasfor items they’d potentially like to purchase. According to an Aprilreport from Deloitte Digital, 75% of consumers said product infor-mation found on social media influenced shopping behavior andenhanced brand loyalty.

“I love when consumers put their before-and-afters out there. Ilove when people say they love this product,” says Ikea’s D’Amico.“But does it meet the consumer expectations? If it does, they’regoing to talk about it.” And if it doesn’t, they might talk about it, too.That’s the reality of social networks.

Regardless of where ideas are posted, sharing is a hugeomnichannel category these days. “It’s a great opportunity to talkabout your brand, and we do that constantly on social media, andit’s connected to customer service and marketing,” says D’Amico.

CONTINUED FROM P. 18



OMNICHANNEL RETAIL

IT’S CLEAR the shopping experience is shiftingand retailers need to invest appropriately in tech-nology and marketing to make their services andbenefits stand out in the marketplace. But the diffi-culty with determining the future of omnichannelis that so many retailers are only just beginning toopen up to the possibilities.

In the future, personalization will be so impor-tant, retailers and experts say, that consumers mayactually find it offensive when they are served adsthat don’t accurately reflect their specific interests.“There’s going to be a day that you’re going to say,‘Why would you ever serve me that ad?’” saysRakuten Marketing’s Zito.

Larger retailers may consider harnessing con-sumer data on their own. Walmart is using a digitaltargeting and buying platform it calls WalmartExchange, or WMX, to buy its own digital and third-party media for suppliers in order to manage dis-play campaigns itself. "We’re going to bring a lotmore tools that our vendors can use with Walmartthat will make their digital marketing a lot moreeffective," Walmart chief marketing officer StephenQuinn told Ad Age in July.

Separately, Walmart’s labs division said in lateJuly that it acquired three-year-old Luvocracy, described as “anonline community that helps people discover cool products rec-ommended by people whose taste they trust, such as familymembers, friends and online influencers.”

For now, time will tell via testing how initiatives and strategieswill shake out. For some large retailers, more modest future goalshave been set when it comes to omnichannel. At Ikea, the poten-tial exists to display lists stored on store walls via smartphones forloyalty program Family members, according to Ikea’s D’Amico.

In another future vision for an Ikea app, D’Amico sees ways tocontact consumers who have added merchandise to mobile shop-ping lists “when you come into the store and give you directionsto the product in the store,” he says. “It’s totally interactive. Andif you signed up for the Family program, we might say, ‘Here’ssomething else that might go with the sofa.’”

No matter the exact future of technology and retail, the furni-ture and home retailer, with annual U.S. sales of $4.37 billion,wants customers to come into stores, in part because Ikea’s prod-

ucts require “personal tactile experiences,” saysD’Amico. The word “inspiration” is a commonrefrain from the marketer—and something he,like most retailers, hopes Ikea can provide assis-tance for via in-person visual cues. As a result, hesaid Ikea’s website will also evolve in the nextcouple years “into a much more dynamic, inter-active website, where we’ll have an even higherlevel of inspiration with a connection to the appsand the store.”

Ikea, too, sees curbside pickup as a futureoption, D’Amico says, but for right now he con-tends that the best value is to allow consumers todo some of the work themselves, such as loadinggoods into their own vehicles, without paying ship-ping. But for those who might want to pay a littleextra, he says curbside pickup could eventuallybecome an option.

In the next iteration of curbside pickup, theContainer Store hopes to improve its click-and-pickup services eventually by having a button onemail confirmations allowing consumers to let astore know when they are outside in the car, saysThrailkill.

Turning to marketing omnichannel over othermediums, retailers shouldn’t forget about TV. But they are upagainst changing viewing habits. Zito points out that compa-nies must find ways to be nimble enough to navigate con-sumers who binge-watch TV series, movies and shows onNetflix, for example, over a day or two. “That’s a new con-sumer behavior that may or may not be sustainable. Those arethe kinds of emerging opportunities that will come in and outof the marketplace. How does an omnichannel companyaddress that?” Zito asks.

Retailers may not need to find an omnichannel niche for everystrategy, but if they want to stay in favor with consumers, they willhave to develop ways to reach their customer at the right time onthe right channel. It’s either that, or risk being out.

“The philosophy I think I have toward omnichannel is thatthere is no answer. It’s not a one-size-fits-all. It depends on theproduct. It depends on the demographic that [retailers] are tar-geting. And it depends on the way consumers behave today,” con-cludes Zito.

OMNICHANNEL HAS ONLY JUST BEGUNPersonalization will grow in importance to the point where consumers willexpect marketing to accurately reflect their specific interests

IKEA PRODUCTSREQUIRE ‘PER-SONAL, TACTILEEXPERIENCES’AND IN-PERSONVISUAL CUES.RICH D’AMICO, DEPUTY MARKETING MANAGER, IKEA


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