Optimizing Omnichannel for Increased Apparel Appeal

12/3/2014
The key to increasing apparel sales is to increase apparel appeal. That means making it easy for customers to get what they want, when they want it. But what happens when what they want changes?

Apparel retailers and manufacturers are used to fashions changing at the speed of light. They're also used to seasonal buying and ever-shifting consumer preferences. That's why the industry's leaders excel at getting products from designer sketches to store shelves and e-commerce sites. But while that may have been enough in the past, it no longer is.

Today's consumers expect more. Being "spot on" with this season's trends just isn't enough. Instead, consumers expect you to anticipate their needs based on what's happening right now, whether that's a snowstorm, a hot new movie or trending item on Pinterest. They also expect you to make product offers based on these and other real-time events.

Retailers and manufacturers that become adept at identifying and acting on these opportunities will have a distinct competitive advantage.

The consumer is king — now more than ever   
Only a few years ago, the concept of the perfect order was defined as a set of criteria retailers gave to their suppliers that largely focused on those suppliers making on-time, complete and damage-free deliveries to the retailers' distribution centers, where retailers would then take control.

In today's world the concept of the perfect order still exists, but now the consumer is defining the criteria and dictating it to retailers, suppliers and the logistics firms that enable and support them. The criteria now include:
  • Social validation
  • Robust and accurate product information
  • Real-time accurate inventory information
  • Competitive pricing
  • Convenient fulfillment
  • Convenient returns
Meeting these criteria requires an enormous amount of complexity, both from a technical perspective and a business process perspective. To retailers, suppliers and logistics partners must work together. They must also think and act differently from their competitors.

Omnichannel fulfillment: The key to exceeding consumer expectations
For the past two years, omnichannel pressures were felt on the selling side of the business-to-consumer industry: the challenge of creating a consistent customer experience and providing a single view of products and services, regardless of the medium (stores, online, mobile, etc.).

But now, that emphasis has shifted to the supply chain side of the business, what some call the "Amazon effect." In the simplest terms, it's the presumption that retailers will always have in stock the items consumers want to buy and be able to deliver those items quickly to wherever consumers want them.

That may sound easy, but the reality is that all players in the omnichannel ecosystem are finding execution tougher than they expected. In fact, according to the third annual Retail Insight industry benchmark report, 94 percent of retailers, suppliers and logistics firms surveyed haven't executed a long-term omnichannel strategy, and 37 percent haven't even developed an omnichannel plan.

The report, commissioned by SPS Commerce and conducted by Retail Systems Research (RSR), highlights the cross-functional challenges retailers and others face as they build omnichannel capabilities into their operations. The report also underscores the critical role fulfillment excellence plays in meeting consumer expectations for rapid fulfillment and flexible returns. But most importantly the report affirms that omnichannel integration truly is the future of retail — and that the future is now.

Here are some of the report's findings:
  • Few companies believe they are "advanced" when it comes to omnichannel capabilities, and between 35 percent and 40 percent believe they're lagging.
  • Only 11 percent of companies are ready for cross-channel fulfillment, but retailers are more likely (18 percent) to report mobile commerce readiness.
  • Both retailers and suppliers feel significant pressure from rising consumer expectations, with 75 percent of retailers experiencing increased demand for more rapid fulfillment and 44 percent of suppliers reporting greater demand for more robust item information.
  • More than half (52 percent) of retailers and suppliers are too distracted to prioritize and focus on their omnichannel strategies.
  • Forty-three percent of retailers report that their legacy systems hold them back from omnichannel progress.
  • Fully a quarter of retailers have made the transition to store-based fulfillment of online orders but expect this to decline over the next three years to balance shipping costs.

Getting on board with omnichannel
While embracing omnichannel retail may be tougher than most apparel retailers and manufacturers expect, here are five recommendations that can help:

No. 1: Focus on foundational capabilities.
As a whole, the apparel industry needs greater clarity on supply chain visibility and collaboration before retailers and manufacturers can do omnichannel well. While projects such as drop shipment, expanded assortment and other more sophisticated capabilities may one day drag foundational elements along by default, that's not the case today. Instead, focus efforts on developing a single view of customers, orders, products, inventory, price, promotions and service. Only then will you be able to deliver the superior experience today's apparel customers expect.

No. 2: Share product information.
Spreadsheets, catalogs and emails are the least efficient ways to share product information, yet they're the predominant tools of most apparel retailers and manufacturers. But just because they're being used, doesn't mean they should be. Better tools are available. Invest in these tools now to stay ahead of the curve. By streamlining data exchange and allowing for additional attributes, including sourcing information and customer reviews, you will become a stronger competitor.

No. 3: Put legacy systems to rest.
In almost every study RSR conducts, one finding stands out: Legacy systems — and the siloed organizations they support — hinder progress. You must invest in new technology in order to get ahead. While replacement systems may seem appropriate, such systems require an enormous amount of time and energy, which is why some apparel retailers and manufacturers are instead integrating new applications with their legacy systems.

No. 4: Less is more.
No one company can be all things to all people and still be profitable, which is why even apparel retailers are beginning to rethink assortments. Here's why: Many studies indicate that customers prefer a more curated approach, especially when shopping in stores. And while adding more products can be tempting, it may not result in any discernable improvements to profitability.

No. 5: Lead with logistics.
Many logistics firms have been stepping up their role in enabling omnichannel. Rather than continuing to view themselves as truckers with warehouses, these firms are focusing on the services omnichannel requires and the technologies that enable those services. By doing so, they are gaining competitive advantage, for themselves and the companies they support. As a result, they make excellent partners for the long term.

To receive your complimentary Retail Insight: Fulfilling Consumer Demand report, visit http://go.spscommerce.com/apparel-mag.


Peter Zaballos is vice president of marketing and product at SPS Commerce, which provides an etail cloud services platform. .
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