On the Omnichannel Journey, Just as Many Questions as Answers

As the industry migrates slowly but surely toward omnichannel operations, apparel and footwear brands must shift away from simply hawking their wares to "enabling outcomes," PwC director of U.S. retail and consumer Ron Klein shared at the AAFA's recent omnichannel conference in New York City.

Although just 4 percent of retailers have established fully mature omnichannel enterprises, according to supply chain and logistics vendor OHL, work is underway at apparel companies across the board with the goal of keeping up with where the empowered consumer is heading next. Shoppers have leveraged the power of social media to their advantage — and also for the good of their fellow consumers. PwC's research revealed that 58 percent of surveyed shoppers publish their brand experiences online specifically to protect others from similar pitfalls. Gone are the days of keeping less-than-savory shopping trips hush-hush.

Today's consumer has more information at her fingertips than ever before. Some 88 percent of shoppers look to social channels to influence their purchase decision-making process. "It's too easy to have different brand experiences in different channels," Klein noted.

Even if they couldn't define "omnichannel," consumers want seamless experiences regardless of where or how they choose to shop. The lightning-fast gratification of mobile technology is driving consumers' lofty expectations; 21 percent would prefer to pay for their goods without having to queue up at a register, and another 45 percent want to be able to browse brick-and-mortar inventory before visiting a store, according to PwC.

Advancements such as mobile POS are becoming a common sight in leading retail stores but next-gen technology is hovering on the horizon that could deliver truly unique and useful benefits to consumers. Bob Moncrieff, principal of U.S. retail and consumer advisory leader for PwC, noted that after he ran the New York Marathon, complete strangers sent him their congratulations online — because embedded wireless technology immediately broadcast his finishing time for all the world to see.

Similarly, in the near future clothing could be designed with built-in RFID or other tags readable by smartphone so that the wearer's device could push out an alert if the shirt and pants don't match, for example. If and when that happens, the "I got dressed in the dark" excuse suddenly could become a thing of the past.

AEO brings IT up to omnichannel snuff

When American Eagle Outfitters senior vice president and general manager of omnichannel e-commerce Joe Megibow was hired by the popular teen brand in November 2012, the company was surviving on "maintenance levels of technology," he admitted. Every aspect of the company's systems and technology, including analytics, was outsourced.

"It didn't dovetail with the overall tightly controlled brand experience," Megibow explained. For example, although 80 percent of AEO's business came from loyalty members and branded credit card holders, the company didn't even have email addresses for 15 percent of these customers.
Megibow and his team set about the challenging task of creating a solid IT platform. "When you build a foundation and harvest the results, then you earn the right to innovate," he said.

Curiously, prior to Megibow's arrival and despite the lure of the customary employee discount, AEO staffers weren't really shopping much through the e-commerce site, largely because they were responsible for paying for shipping and could only send purchases to corporate headquarters. The company decided to remove those barriers, as long as employees provided valuable feedback about their e-commerce experiences.

Given AEO's young demographic, mobile is a significant factor in the company's operations. More than 30 percent of AEO's web traffic comes through a mobile device and 62 percent of its email promotions are opened and read on a smartphone or tablet. When the brand ran a promotion offering a 25 percent discount to shoppers who showed the brand app in store, downloads skyrocketed tenfold to grab the No. 2 spot in lifestyle apps, Megibow revealed.

AEO has taken giant steps forward in revamping its infrastructure and processes but the journey is far from over. "Omnichannel means eliminating channel conflict to become customer-centric," Megibow said. It's a corporate initiative that demands that retailers dismantle their current corporate structure in order to keep the focus on the needs of the shopper, he added.

But the proliferation and convergence of channels often results in the occasional hiccup, circumstances that are difficult or impossible to anticipate and accommodate. What happens when the "most pinned" Pinterest product — say, a sweater — is posted to Facebook for AEO's 9 million fans to ogle, and shoppers decide they want not only that item but also the camisole that the model is wearing beneath it? There's no easy, direct link for customers to click on to find the camisole, explained Megibow. "Products aren't bundled that way," he added. "Merchants didn't plan for this."

Like other leading retailers, AEO has begun fulfilling e-commerce orders from its stores, crediting brick-and-mortar for the sales but creating a larger P&L problem, noted Megibow. "In theory, we could have orders coming into stores for product that hasn't hit the floor yet," he said.

AEO runs the No. 1 denim shop in the United States but for a while its SEO results were showing anything but. After Megibow's team implemented SEO tweaks and website enhancements, AEO jeans jumped from the third page of search results to top five — and is now holding steady around No. 1. A new gender-neutral denim landing page quickly steers shoppers to the right products. "No one thinks of the category page as the front door of your brand experience," Megibow explained. If it's the first thing people see on your site, you'd better make sure it's good and useful.
"Digital no longer becomes a complement to traditional retail — it's the primary way we market ourselves," he added.

Lilly Pulitzer, VF, Carter's on omni-challenges
Prior to 2012, 60 percent of business at preppy brand Lilly Pulitzer was through its wholesale channels. That figure has shifted considerably and will continue to as the company rolls out in stores in 2014 a new tablet-based mobile POS with rich e-clienteling features such as transactional history lookup.

Lilly Pulitzer, known for its bright, eye-catching designs, has more than 1 million social fans across platforms including Twitter, Pinterest and Facebook — where shoppers can buy the brand's colorful dresses and more directly through the world's largest social site, according to CIO/CTO Keary McNew.

The brand also joined the ranks of retailers shipping from store — but unlike others, it credits e-commerce for the sale. "We had to create a Team Player Report to motivate brick-and-mortar staff," McNew added. "We're still working on that end."

What's more, Lilly Pulitzer banished the time-consuming pick-from-store process, rolling out Manhattan Associates' Distributed Order Management software and reducing the in-store fulfillment process from 25 minutes to just 2.5 minutes.

McNew credits SOA for bringing all of the company's myriad interdependent systems together. "Otherwise, we're be mired in change management," he said.

On the other hand, children's wear giant Carter's is taking a cautious look at the business case for store fulfillment. "Our average product price is around eight dollars so does it makes sense to fulfill from store?" mused Erik LaValle, senior director, global supply chain systems for Carter's/OshKosh.

For now the company's priority is laying the foundation to enable omnichannel experiences, with a recent rollout of Sterling IBM for order management bringing that goal closer to fruition. "Like a Ferrari, it's sexy when it works, but when even one small piece breaks it's very obvious," LaValle said of the platform.

And while Carter's is holding off on in-store fulfillment for the time being, the next step probably will be in-store pickup for e-commerce, added LaValle. Despite many retailers offering free shipping either to home or to store, many shoppers still ship to store because they need a secure location to receive their purchases — especially for high-value merchandise. In fact in Europe, tech startup Cardrops launched last year an innovative service that delivers packages to the trunk of consumers' vehicles.

Apparel powerhouse VF Corp. empowered its store staff at The North Face with access to e-commerce inventory via Global Bay mobile POS, a move that turned out to be a "runaway success," according to vice president of VF digital development Greg Pulsifer. The bigger challenge, he noted, was getting sufficiently robust Wi-Fi coverage via provider AT&T to enable full mobility.

"The amount of business done by associates with iPads is the equivalent to adding a significant number of stores to our fleet," Pulsifer noted.

Devices such as the iPad are helping to fuel the explosion of data. Amazon Webstore's Len Eschweiler, head of North American sales, noted that 80 percent of the world's data has been created in just the past 12 months, but the challenge remains in converting that data into insights, and turning insights into action.

Part of the problem is unwieldy teams cobbled together to manage and mine data to drive business decisions. "If your team takes more than two pizzas to feed," Eschweiler added, "the team is too big."


Jessica Binns is an Apparel contributing writer based in Washington, D.C.