But even the big winners will not create a sustainable retail business by cashing in on their successful trend-spotting bets. Instead, true retail success will go to those who align operational excellence with customer desires. When this happens a successful business strategy emerges that produces continuous growth and profit."
The fusing of operational excellence with business strategy, especially when it includes the deployment of cross-channel retail technology, is at the heart of the 5th Annual RIS Fusion Awards.
The retailers singled out in 2008 for outstanding achievement are Borders, Follet Higher Education Group, Virgin Entertainment Group and Zappos. Collectively, these dynamic retailers achieved industry-leading results in innovation, integration, customer satisfaction, expansion into new markets, and cross-channel integration.
Over the past few years RIS has sharply increased its focus on the importance of cross-channel retailing, which is the hallmark of the modern age and the largest growth opportunity in the retailing industry.
For this year's Fusion Award program the editors of RIS selected the initial round of candidates based on news and interviews we covered over the past 12 months. Then, along with input from the RIS Editorial Advisory Board, the editors made the final selections. The awards were presented live at the 2008 Cross-Channel Executive Summit.
The year 2008 will go down as one of the toughest business and consumer climates in living memory. With so many retailers facing difficult challenges, it is a smart thing to focus on organizations that are making inspired decisions and executing them to a high level of success.
The tides of change are sweeping retailing today, and this year's Fusion Award winners have proven extraordinarily successful at meeting new challenges and keeping ahead of dramatic changes in the market.
The winners cited here received awards in the following specific categories: Borders for Cross-Channel Innovation, Follett Higher Education Group for Cross-Channel Customer Experience, Virgin Entertainment Group for Cross-Channel Integration Mid-Market, and Zappos for Pure-Play E-Commerce.
RIS is proud to honor this group of leading cross-channel retailers, who continue to set a standard for the rest of the industry.
By the Numbers
>Revenue in 2007: $3.8 billion
>Number of Stores: 1000 +
>Number of Employees: 28,000
>Technology Partners: Allurent, BazaarVoice, ChoiceStream, Endeca, Omniture, Sterling Commerce
It's been a year of rapid transition for Borders, which launched its new Web site, www.borders.com, after seven years of outsourcing operations to Amazon. With a team of 100 employees and consultants and a time frame of 18 months, Borders established a "to-do" list for its new site which included incorporating an e-commerce platform, search, fulfillment, Web analytics, payment processing, a loyalty program, personalization, as well as in-store pickup/returns, affiliate marketing, guided navigation, merchandising, order management, search-engine marketing and complete integration with store systems.
The site officially launched in May 2008 and consumers quickly began to enjoy innovative new features including Magic Shelf, a virtual book shelf that uses Adobe Flash-based Flex technology to display books, movies and music in a way that emulates the in-store shopping experience.
In addition to the Magic Shelf tool, the site incorporates site search and guided navigation that lets shoppers browse by selecting criteria. Loyalty program members have the ability to check the status of their accounts and redeem awards online.
Other important aspects of the new Borders' site include exclusive half-hour video programs featuring best-selling authors in a Borders Media section, ability to reserve books for future in-store purchase, creation of online wish lists, customer reviews, a Marketplace section that features rare and used books, send-to-a-friend functionality, and gift-card purchasing. A new design component called the "digital center" allows customers to access computer stations to burn CDs, download to their MP3 players, upload to photo processing services, and explore the latest digital innovations.
Today, the Borders Web site allows consumers to scroll through two million books, more than 300,000 CDs and 100,000 DVDs. It also displays books by category, upcoming releases, best sellers, staff picks and a personalized shelf that changes each week based on pre-selected categories.
Pure Play E-Commerce
By the Numbers
>Revenue in 2007: $840 Million
>Online Revenue: $840 Million
>Number of Employees:1,300
>Technology Partners: Bill Me Later, IBM, Netapp Paymentech, SAP
Over that past Eight and a half years, Zappos.com has attracted a loyal customer base of 7.7 million shoppers and continues to attract new customers with unique online features. The retailer commands about one-fifth of the $3 billion online shoe business and is best known for its expansive selection of products, which include footwear, apparel, handbags, and sunglasses.
In addition to high quality products, Zappos.com is best known for providing exceptional customer service. The retailer receives approximately 5,000 calls a day so every employee, regardless of position, must spend five weeks training in the call center and distribution center. Another differentiating factor is that Zappos.com makes sure that products are in stock and available for free, next day delivery. With full inventory visibility, online customers only view merchandise that is in stock and ready for shipping.
Some of the most recent projects the retailer has completed include the launch of a new clothing line and expansion into Canada in March of last year. In June 2008, Zappos installed a mobile fulfillment system and deployed a fleet of mobile robotic drive units and inventory storage pods at its Shepherdsville, Kentucky facility. Mobile robots, which are linked to a wireless network, help expedite order processing by working with Zappos' racking and carousel units. When an order comes in, information is transmitted to the robot. The mobile drive units bring the required shelf to a packing station and then a worker picks the item from the shelf.
Future plans for Zappos revolve around social networking. Zappos recently launched a Facebook application and blogs that allow employees and customers to communicate and send product recommendations to friends. The retailer plans to add a wardrobe building feature that lets consumers match apparel, shoes, and accessories via a virtual model. On the product side, luggage will soon join offerings.
Cross-Channel Integration Mid-Market
By the Numbers
>Revenue in 2007: sales growth of 11.5%
>Number of Stores: 10
>Technology Partners: Baker & Taylor, Epson, IBM, Inetco, Microsoft, SAP
Less than a year ago, Virgin Megastore unveiled it would operate an independent e-commerce shopping site free of Amazon, which had powered the retailer's site for six years. The retailer was compelled to have a site that truly met the personality of the store brand.
Virgin Megastore now controls and customizes its site, www.virginmega.com, which offers a deep catalog of products and services to compliment its in-store offerings. Launch took place just in time for last year's holiday season and targeted online shoppers that opted to avoid crowded malls as well as those who prefer shopping from home.
Before the site went live, Virgin promoted the re-launch with e-mail marketing to more than 150,000 members of its loyalty program, customers who shopped on the old site and in-store signage.
"We have worked hard on rebranding Virgin Megastore as a lifestyle destination filled with great and unexpected products, says Dee Mc Laughlin, vice president of marketing, Virgin Entertainment Group, North America. "Now we will be able to showcase these products online so that the brand offline and online will be consistent."
The online version of Virgin Megastore facilitates shopping for fashion, electronics, DVDs, video games, books and music. One new feature of the site is the MegaBoutiques page, where products are grouped by theme: "Guys Rock," "Girls Rock," "Games," and "Punk" boutiques. Each boutique offers a selection of fashion, movies, music, books and electronics. The site also includes blogs, streaming video, news feeds and event calendars, as well as a listing of upcoming in-store artist performances.
The site is linked to Virgin's new Social Media Mashup site, www.virginmegamashup.com. This second site is a place where consumers can log on to see photos of in-store celebrity events, company information, vote for their favorite artists and even post comments on artist's personal blogs.
"It's about communicating to the public at large that we've changed who we are from a music destination to more of an entertainment and lifestyle retailer," says Kevin Milligan, vice president of product and merchandising, Virgin Entertainment Group North America. "We feel the new site will allow us to communicate that we are more than a me-too site on Amazon."
Cross-Channel Customer Experience
By the Numbers
>Revenue in 2007: $2.4 Billion
>Online Revenue: $205 Million
>Number of Stores: 760
>Number of Employees: 10,000
>Technology Partners: JDA
Follett Corporation provides more than 800 college and university bookstores and libraries with a variety of educational tools and services. With a unique cross-channel business model, the retailer requires that Web orders be picked from the store with the help of store associates.
"We've experienced a constant, rapid increase in the ratio of online sales to in-store sales, causing an increase in store labor costs as more personnel are needed to pull inventory for online orders," says Tom Dillon, vice president merchandising systems, Follett Higher Education Group.
In an effort to gain more efficient operations, Follett added merchandise management from JDA. Follett's new software establishes inventory control capable of gathering, integrating and distributing data throughout Follett's organization. Follett's point-of-sale, Win/DSS from JDA, is integrated with its merchandise management software to process Web order returns. This helps improve the customer experience compared to being routed to a service desk.
"Our order fulfillment time on over 1.2 million annual orders has decreased by 30 percent, resulting in both labor cost savings and improved customer service as Follett associates are able to be redirected to the sales floor," says Dillon.
Follett also leverages JDA's Performance Analysis application to optimize merchandising decisions. Follett utilizes Performance Analysis to spend less time digging for data and more time analyzing the numbers for fast and slow movers, sell through and inventory levels (in weeks of sales) to achieve merchandise availability. This ensures that the shelves are stocked with the right amount of merchandise.
"JDA gives us a competitive advantage, because we are demonstrating how it helps to create unique bookstores that meet each of our partners' academic profiles." says Dillon. "The cross-channel order processing functions for the bookstore catalogs integrated with efollett.com, along with data warehouse intelligence, have aided in enhancing the service provided to our customers