Unlocking the Secrets of Web-to-Store Integration

10/7/2008
Retailers are increasingly strategizing better methods to integrate their brick-and-mortar retail stores with online channels. Although the evolution to online merchandising has not been without challenges, e-commerce has rapidly been embraced by consumers and despite choppy economic conditions online retail sales remain brisk, with optimistic forecasts.

Clearly, cross-channel integration is in the best interests of retailers who want to keep pace with demand and attract new customers, yet less than a third of multi-channel retailers have achieved some level of integration across their inventory, order management, fulfillment and customer processes. The following are key strategies retailers should consider when integrating and leveraging cross-channel demand drivers to satisfy both consumer and shareholder demand.

Align Organization Infrastructure to Support Web and Store Integration. Brick-and-mortar stores, catalogs, and multiple online retail partners undeniably add layers of complexity to the retail operation. It's not uncommon among retailers to have silo merchandising and distribution groups operating within each channel; this silo effect threatens a company's ability to compete. Additionally, retailers previously accustomed to carton and pallet shipments to retail stores may lack a reliable infrastructure for online order fulfillment, which requires individual order shipments directly to consumers.

Compounding these issues, duplicate processes and data management create inconsistencies and inaccuracies, threatening profit margins, leading to communication break downs caused by an inability to share critical business data across channels. Before they can take advantage of a cross-channel integrated business model, retailers must first align organizational processes, consolidate and restructure internal resources to support cross-channel integration. The first step is to develop an integration team to address issues with legacy systems and processes between channels.

Create One Synchronized View of Demand. Retailers are increasingly turning to advanced supply chain solutions to consolidate and leverage cross-channel data to optimize the allocation of resources between channels, with the goal of improving the consumer experience, while streamlining operations, optimizing inventory and increasing profitability. Today's retail supply chain solutions differ from traditional products as they offer a holistic view into demand across multiple channels and break down the silo effect to provide seamless communication of information and planning across all sales channels. Cross-channel supply chain integration mitigates pain points, enabling the most cost-effective selection of shippers, warehousing, fulfillment partners and other outsourced logistics providers. As they adopt these solutions, retailers will undergo a paradigm shift as traditionally splintered divisions with independent forecasting and business plans are blended into a common technology platform, enabling the capture of time-phased demand forecasts that accurately reflect all channels in a single and unified plan.

In an ideal world, retailers would be able respond to replenishment cycles and shifts in demand in real-time, enabling them to work seamlessly with manufacturing partners to ensure the right products are in the right place at the right time. The key to achieving this ideal state is integrated planning and execution (IP&E). By connecting merchandising, assortment planning, pricing, replenishment, sourcing and logistics through a unified plan of action, retailers can realize optimal inventory levels, reduced out-of-stocks and markdowns to increase their profits. By disseminating the same data at the same time across the organization, this action plan links individuals from all core business functions, creating one synchronized view of demand that allows vertically integrated retailers to operate more efficiently and enables them to be more responsive to consumer demand.

Revamp Your Merchandising Strategy To Support Consumer Purchasing Habits. Consumer shopping habits underscore the need for companies to invest in cross-channel integration. Currently, the online channel represents a projected 34 percent of overall retail revenue in 2008 - a growth rate of more than 42 percent since 2006, with cross-channel shoppers typically spending up to 30 percent more than single-channel shoppers. According to a Nielsen Online survey of consumers who recently purchased electronics, almost two thirds of those who visited local stores also used the Web for product research. Consumers who visit a retailer's Web site and shop at brick-and-mortar stores spend a good deal more than average shoppers, in some cases 50 percent more or higher.

Retailers need to take into consideration the impact of all sales channels when revamping their merchandising strategies. Retailers should move toward a cohesive, integrated merchandising strategy that aligns all channels, improving the customer cross-channel shopping experience and satisfaction. One synchronized view of demand provides retailers valuable insight to analyze customer purchasing habits for improved management of promotions and marketing activities on the Web and in-store.

Adopt Smarter Assortment Techniques. Assortment management is imperative for online and in-store channels. The benefits to retailers include optimal inventory levels and sales. From a consumer perspective, cross-channel product transparency, ease of online interactions, and purchasing and return flexibility are all important purchasing considerations. Cross-channel integration that includes accurate assortment management enables a retailer to keep pace with those demands, providing a seamless sales experience Web-to-store. As the expansion and immediacy of cross-channel Web retailing reduces time to market on products, in-store tailored assortment management becomes increasingly important. Dedicating the right visual and product assortment down to the item and location level is quite feasible and manageable, and also provides an edge over competitors as consumers can quickly locate products viewed or promoted online easily in-store, improving the overall shopping experience. Utilizing cross-channel integration strategies, retailers can better align inventory and assortment to support all channels, with the ability to incorporate assortment and shelf planning solutions.

Stay Ahead of the Curve. Many traditional promotional and advertising strategies that once drove people into stores are being phased out and replaced with methods aimed at generating traffic and demand online. Forward looking cross-channel retailers are moving to the next level - from simply selling product to effectively defining the consumer decision process and creating new consumer demand. There's been much speculation on the next retail channel on the horizon, with mobile internet showing signs of becoming a strong contender. The fact is: online and other channel retailing is here to stay. Market share will be won by those retailers who possess the right solutions and technology to make the consumer shopping experience easy, enjoyable and satisfying.

Recognizing the online channel as part of the operational structure is critical to cross-channel integration, more accurate forecasting, marketing activities, and operational and business planning. Achieving one synchronized view of demand with intelligent, synchronized integrated planning & execution capabilities is just as critical. In this sense especially, choosing the right technological solution for effective cross-channel integration serves both the consumer experience and organizational business strategies. Ultimately, retailers want to ensure the ability to address existing consumer demand, while positioning themselves as an industry leader in cross-channel integration and securing a piece of the rapidly expanding channel markets.
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