Considering that nearly three-quarters of consumers also say they’ve switched brands within the past year, stores must employ proactive strategies and technology to improve the retail customer experience to grow and retain their customer base. Companies with high digital maturity are generating the highest total returns² to shareholders – more than three times higher than companies that are lagging.

Here are five technology pillars retailers which help create a great in-store experience.

1. Data & Personalization

71% of consumers in a McKinsey study reported that they expect personalization³ and 76% are frustrated when it doesn’t happen. The retail industry has a long way to go to close the gap. However, that gap creates a significant opportunity for companies that get it right. McKinsey data also shows that stores that drive personalized shopping experiences can drive a 10% to 15% revenue lift.

At the heart of improving in-store experiences is data. Data analytics in retail can identify trends and optimize operations. The right data platform can also help optimize inventory and staffing levels, anticipate customer needs, and measure the effectiveness of various in-store strategies.

Data analysis can also measure the effectiveness of promotions and marketing campaigns to optimize performance.

Artificial intelligence (AI) and machine learning in retail can extract details from customer purchases and preferences to help you craft better experiences. AI is also being deployed for automating inventory management, supply chains, warehousing, order fulfillment, and shipping.

2. Automation

Automation has become an indispensable retail technology solution to drive personalization and just about every other backend function. Retail automation can manage inventory in real-time, bringing together offline and online sales channels to reduce stock-outs, set automated reorder points, and manage safety stock levels. Digitization of the sales process and automation can help reduce waste and dead stock by analyzing consumer buying habits.

Automation in the form of self-checkout kiosks can reduce labor costs and always improve the customer experience by letting shoppers skip the lines and complete purchases faster. It is growing quickly, already accounting for nearly 40% of checkout options⁴ in grocery.

By automating processes, retailers can also improve system performance and reliability, reduce errors from manual input, and free up associates to provide more individualized assistance to shoppers.

3. Mobile

Today’s consumers are shopping on mobile whether they are online or in the store. Providing customers with mobile apps that can offer personalized recommendations, promotions, or in-store guidance can improve the experience. Mobile technology in retail includes:

• Utilizing portable/mobile point of sale (mPOS) devices to provide speed and flexibility
• Enabling mobile payments to improve the checkout experience
• Encouraging self-service, self-checkout, and app-based checkout
• Creating a seamless shopping experience across online and in-store channels through mobile integration

Mobile technology also puts the information store associates need to check on inventory and customer queries on handheld devices wherever they are in the store.

4. Augmented Reality (AR) and Virtual Reality (VR)

Leverage AR and VR technologies to enable virtual try-ons, interactive product demonstrations, and enhanced visualization, allowing customers to make informed purchasing decisions and have immersive shopping experiences.

5. Unified Commerce

Integrating various sales channels, such as online, mobile, and physical stores, to provide a unified and consistent omnichannel experience, for customers across all touchpoints. In addition, more retailers are using stores as fulfillment centers and shipping direct to customers.

A unified platform allows greater functionality in a more streamlined manner and also has a significant upside when it comes to revenue. By creating new ways to discover and explore products and by helping to fuse physical and virtual product experiences in more meaningful ways, retailers can provide more options for customers.

Crafting a great in-store customer experience with technology

Creating great customer experiences requires prioritizing store modernization initiatives such as POS upgrades and modernization, app-based checkout, and other technology to support the five pillars. Retailers need to foster closer collaboration between business, product, and tech to create a seamless and inviting customer experience. This requires building a unified commerce experience, enhanced brand experience, data collection, and an energizing store environment. Creating the store of the future demands a holistic approach to customers that is embedded in every aspect and every interaction.

SkillNet Solutions is an industry leader in providing consulting and technology solutions for retailers who are digitally transforming their business to modern commerce and creating great customer experiences. SkillNet has experience in transforming more than 112,000 retail locations in 263 countries. Contact SkillNet today and talk to one of our retail consulting and technology experts.

References

1. https://www.salesforce.com/news/stories/customer-engagement-research/
2. https://www.mckinsey.com/industries/retail/our-insights/breaking-the-code-unlocking-digital-and-analytics-at-scale-for-consumer-goods
3. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-value-of-getting-personalization-right-or-wrong-is-multiplying
4. https://www.grocerydive.com/news/self-checkout-grocers-shoppers-catalina/636087/

60% of consumers (#1) have used Buy Online, Pick Up in Store (BOPIS). Nearly as many have used ROPIS (Reserve Online, Pick up in Store) and Buy Online, Ship to Store (BOSS) for order fulfillment. Buy Online, Return in Store (BORIS) has become a significant win for retailers. Nearly half of consumers say they are more likely to buy online (#2) if they can return items in-store. 

Offering consumers multiple ways to buy and pick up purchases is essential to compete in today’s omnichannel environment. 

Benefits of Omnichannel Fulfillment

Research shows that omnichannel strategies produce an 80% increase in incremental store visits (#3). However, the benefits go well beyond that, including: 

• Improved customer experience, allowing customers to shop how they want and use the most convenient methods for receiving products. 
• Reducing fulfillment costs, leveraging multiple channels to optimize supply chains, and reducing costs from shipping and handling. 
• Enhanced inventory management to reduce the likelihood of overstocking or understocking items

Major retailers such as Target, Best Buy, and Walmart are using excess store space or space within underperforming units to fulfill eCommerce orders, reducing the need for warehouse space. 

Nearly 95% of Target’s digital orders are now fulfilled (#4) at the store level. Macy’s move to transforming stores into mini-distribution centers (DCs) is adding about a million square feet (#5) of the supply chain that the company didn’t have previously — without having to lease or build new DCs or staff warehouses.

Challenges of Omnichannel Fulfillment

Retailers moving to an omnichannel fulfillment strategy will need to work with an order management system (OMS) built for omnichannel fulfillment. The right OMS can evolve your systems and process by providing a seamless experience to overcome these five challenges: 

1. Inventory Management

Retailers need comprehensive inventory visibility across every sales channel, tying in-store and online resources together into a single solution. Many retailers have struggled to maintain accurate inventory across multiple channels. When you are also expanding your fulfillment footprint, accurate inventory is essential.

2. Packages Per Order

One of the big advantages of omnichannel fulfillment is leveraging inventory that is closest to the customer, whether it’s in-store pickup or shipping from stores. Since inventory may be in different locations, it can create multiple shipments to fulfill the same order, driving up shipping and packaging costs. 

3. Ensuring customers have the same experience across channels

Customers expect to have seamless experience across digital and brick and mortar experiences. Typically, one thinks of this seamless experience in terms of fulfillment, but what is often overlooked are pricing and promotions. When pricing and customized promotions are not in synch, customers can become confused and, potentially, disappointed. There is nothing more frustrating for a customer then the realization they could have saved money and time if they had placed their order online, rather than going to a store.

Other components of seamless customer experiences include loyalty programs, smart phone apps, customized product bundles, personalized shopping events (i.e. in store VIP events for top ecommerce customers), and returns/exchanges which are covered below.

4. Minimizing Impact on Employees

Shifting work from distribution centers to store fulfillment creates an additional workload for store employees. This requires a change in the business process and providing employees with the tech tools they need to make the process easier.

5. Managing Returns

One of the biggest challenges for eCommerce sellers is managing returns. It’s expensive and labor-intensive. Providing in-store return options for customers can not only attract customers, but turn returns into profits. 80% of consumers who return products in-store spend their refund on the same visit. 

However, it takes a robust and reliable OMS to manage returns and reverse logistics efficiently. 

Are You Ready for Omnichannel Fulfillment?

Optimizing omnichannel fulfillment requires a rethinking of the retail tech stack to create a seamless experience for shoppers without overburdening sales associates. Given that most enterprises already have some elements of omnichannel enablement in place, the obvious step is to assess and evaluate the current technology and see if it is better to replace or modernize existing systems. While this can be done inhouse, an external partner who has worked across technologies and platforms can provide valuable insights.

Today retailers moving to omnichannel fulfillment are leveraging the power of MACH architecture to create modern commerce solutions to do so. 

Why MACH Architecture?

MACH stands for micro-services based, API-first, cloud-native, and headless, allowing retailers to respond to change more quickly. Solutions based on MACH architecture allows enterprises to respond quickly to changes in shopping behavior.

Microservices

Microservices provide flexibility and scalability by using small, modular services that can be developed and deployed separately. This allows retailers to update portions of the software or add additional modules without having to redesign the entire underlying software. 

Adopting microservices can significantly increase speed and service. For example, when SkillNet used microservices architecture during modernization of legacy point of sales (POS) systems for a retail chain across 1,400 stores and eCommerce sites, it resulted in 5.5X growth in transactions in three years. 

API-first

Adopting an Application Programming Interface (API) mindset, retailers use APIs as the primary interface for integrating systems and services. This allows for greater integration, making it easier to use best-in-class solutions along with different programs or applications.

Cloud-native

Using a cloud-native infrastructure to build and deploy applications provides high availability and reliability, allowing access from any authorized user regardless of where they are working. Cloud resources let retailers deploy seamless communication across physical locations. 

Headless

A headless approach separates the front end from the back end for greater design flexibility. By keeping the presentation layer separate from the backend functionality, it is easier for retailers to manage multiple sales channels and multiple fulfillment channels using a consolidated database for more robust inventory control and tracking.

Omnichannel Enablement – A SkillNet BOPIS Case Study

Shifting to a modern commerce solution that connects all aspects of your customer service and removes friction points can generate big results. One example is a SkillNet client that optimized operations by shifting order fulfilment from warehouses to 50 stores across the country. By creating a customized order adaptor on the eCommerce site, adding new services to route delivery orders to designated stores, enhancing the POS system to integrate with new order processes and establishing a process to pick, pack, and fulfill from stores, they were able to make significant gains in productivity and cost reductions. 

Today, 44% of orders are fulfilled from stores on average. In the first week of implementation, more than 20,000 orders were filled. By the second week, 49,0000 orders were fulfilled for an average of 7,000 a day. That adds up to some 900,000 orders being fulfilled from stores rather than warehouses.

SkillNet helps clients leverage existing and new technology to accelerate commerce, enabling digital transformation to improve customer experience. Contact SkillNet today to learn more about Store & eCommerce Platform modernization solutions that we have designed and implemented. Reach out for an assessment of your technology stack!

References

1. 1. Shopper story 2022 Consumer trends and the future of commerce – https://www2.criteo.com/Shopper-Story-2022
2. 2. Shopify Retail trends 2023 – https://www.shopify.com/plus/commerce-trends/retail
3. 3. Think with Google consumer insights – https://www.thinkwithgoogle.com/consumer-insights/consumer-trends/meeting-shoppers-needs-omnichannel-drives-instore/
4. 4. Beyond the distribution center – https://www.mckinsey.com/industries/retail/our-insights/beyond-the-distribution-center
5. 5. More Stores Do Double Duty as Distribution Centers for Online Orders – https://www.wsj.com/articles/more-stores-do-double-duty-as-distribution-centers-for-online-orders-11670519596

“Customers want their interactions handled effectively, regardless of the channel they choose,” according to Gartner. If you don’t prioritize your omnichannel enablement, you risk alienating your customer base.

One way that retailers can provide an omnichannel customer experience is by using a consolidated, next-generation Order Management System (OMS). An OMS helps retailers manage orders from all channels in a single system. Regardless of whether a customer places an order online, in-store, or over the phone, the retailer can view and manage all orders from one central solution.

Order Management System

What is order management? An OMS provides retailers with the ability to offer customers more convenient and consistent shopping experiences. If a customer begins shopping online but decides to finish their purchase in-store, the retailer can easily retrieve the customer’s order from the OMS and complete the sale. Similarly, if a customer starts shopping in-store but wants to have their purchase delivered to their home, the retailer can easily route the order to the fulfillment center through the OMS.

In addition to providing a more seamless customer experience and order management process, an OMS can also help retailers improve operational efficiencies and reduce costs. By consolidating orders from all channels into one system, retailers can eliminate the need for multiple order management systems and the associated costs. Even better, an OMS will help retailers optimize inventory levels and improve fulfillment processes, while also providing complete, cross-channel data for analysis.

Why is OMS used?

An Order Management System is used to manage orders from all channels in a single system. In other words, it enables omnichannel order management and omnichannel order fulfillment. By consolidating orders from all channels into one system, retailers can eliminate the need for multiple order management systems and the associated costs. Today’s world is integrated and cross-channel. We cannot assume that a customer will continuously engage with a single channel… and most retailers don’t want to spend time managing each channel discretely.

What are the basic features of an OMS?

An Order Management System must be able to manage inventory from all locations, route orders to the appropriate fulfillment center, and provide data for analysis. It should also be noted that an OMS is not necessarily a complete eCommerce solution, although it can be. An eCommerce solution will likely include an OMS, but will also include a shopping cart, product catalog, customer management, and other features. Ideally, an OMS should provide complete end to end order management, from the moment that a customer shows interest in a product to identifying and retaining relationships with previous customers.

How does an OMS work?

Order management is an end-to-end process of receiving a customer order to delivering the merchandise to the customer. The overall process is extremely complex. Retailers need to manage the entire fulfillment process around the order. The fulfillment process includes but is not limited to, receiving the order, finding the best and most profitable location to deliver the order to the customer, inventory visibility to fulfill the order, and actual delivery of the goods. Inventory visibility itself is a complex process, which includes vendor-managed inventory to backorder in case of stockout.

All Order Management System have few key features – order entry, order broking and inventory management. Generally, Order Management System are cloud-based solutions. Order entry is the channel from where a customer can place an order. Order broking includes finding nearest and most profitable source to fulfil order, assigning the order to the location and pick, pack and ship of the order. Lastly and importantly inventory management and control feature help keep the information up-to-date for backorder, stock-level at each location and monitoring the overall demand.

Today’s OMS is almost always cloud-based. Cloud-based systems can be accessed from anywhere. Your point-of-sale system in your brick-and-mortar shop ties directly to your point-and-sale system on your website. Because they are software-as-a-service solutions, they are easily managed; most of them have troubleshooting and help desk ticketing baked in. But that’s not how an OMS system has to work. There are platforms that are purely on-location as well; these desktop applications sync through the internet and are often used for heavy transactional output, such as the point-of-sale systems for large theme parks. These platforms may manage thousands upon thousands of transactions each day.

OMS for omnichannel retail

As we’ve already discussed, one of the main benefits of an OMS is that it enables retailers to provide their customers with a consistent, convenient, and cohesive shopping experience regardless of how or where they choose to shop. An OMS helps retailers manage orders from all channels in a single system. Regardless of whether a customer places an order online, in-store, or over the phone, the retailer can view and manage all orders from one central solution.

From a retail inventory perspective, OMS systems are able to move inventory that may be ”dead” (for example, a winter parka jacket that is sitting in a store Scottsdale, Arizona in March) to either a customer who needs it or a store (i.e., Park City, Utah) that may sell it.

Essentially, an OMS is what makes an omnichannel experience truly omnichannel.

How can OMS help improve your in-store customer experience?

In-store customer experience can be improved in several ways. One way is by optimizing stock levels. An OMS gives retailers the ability to see inventory levels in real-time across all locations. This information can be used to ensure that products are always available when and where customers want them.

Another way an OMS can improve customer experience is by providing employees with the tools they need to quickly and efficiently resolve customer issues. If a customer is looking for a product that is out of stock in-store, an employee can easily check inventory levels at other locations and have the product shipped to the store for pickup. In fact, the OMS can help empower cashier to help customer shop from the store (order in this case) and get the order delivered to shopper’s home.

Long-term, an OMS provides an in-depth analysis across all channels that the company can use to improve its experiences across all channels.

BOPIS and BORIS with the OMS

Apart from all of the above, an Order Management System is the key to a successful Buy Online Pickup In-Store (BOPIS) or Buy Online Return in Store (BORIS) program. A BOPIS program allows customers to purchase items online and pick them up in-store, while a BORIS program allows customers to purchase items online and return them in-store.

For either of these programs to be successful, retailers must have a way to track and manage online orders and in-store inventory levels. An OMS provides this capability by integrating with a retailer’s eCommerce platform and POS system. This integration allows retailers to see all orders in one central place and route them to the appropriate fulfillment center.

It is worth noting that a BOPIS or BORIS program can be implemented without an OMS. However, doing so would likely result in a less efficient and less cohesive customer experience. It would be more difficult to track orders and inventory levels and provide data for analysis… and it would require a lot of paperwork.

eCommerce order management

As we’ve discussed, an OMS is a cloud-based system that enables retailers to manage orders from all channels in a single system. This includes orders placed on a retailer’s eCommerce website.

An eCommerce order management system (OMS) gives retailers the ability to track and manage online orders in one central place. This information can be used to ensure that orders are fulfilled correctly and in a timely manner. Additionally, an eCommerce OMS can provide retailers with valuable data about customer behavior and preferences.

While an eCommerce OMS is not required for a successful online store, it can certainly help. A well-designed eCommerce OMS can save time and money by streamlining order fulfillment and providing valuable insights into customer behavior.

What should you consider before selecting an OMS for your retail systems?

There are a few things to consider before selecting an OMS for your retail business.

1. Features required by your business. First, you’ll want to consider the specific features required by your business. For example, if you have a multichannel retail business, you’ll need an OMS that can seamlessly integrate with your POS, catalog, and eCommerce systems. Alternatively, if you have multiple brick-and-mortar stores but not a strong eCommerce stores, you may not need all the bells and whistles.
2. Integrations with existing systems. An OMS must be able to integrate with your POS and eCommerce systems and other channels such as phone orders (if you have them). But it’s also important to consider other systems that you may use, such as accounting or CRM software. Your order management microservices and order management system microservices architecture will need to be robust, complete, and built-in.
3. Reporting and analytics. A good OMS will provide you with valuable insights into your business, such as which products are selling well and which channels are generating the most sales.
4. Customer experience. What experience does the OMS provide to your customers? Do your customers leave happy and feeling as though they were heard and seen? Or are they frustrated by the user interface and left unhappy?
5. Scalability of the solution for your growing business. How easily can the OMS scale accommodate your growing business? Is it a SaaS solution that can scale infinitely? Or does it require new licensing for each location and channel?
6. Service, support, and product lifecycle. How well does the vendor support their product? Do they have robust customer service and support infrastructure? What is the product’s roadmap look like?
7. Pricing. Is the OMS affordable for your business? Does it provide a good value for the price? These are just a few of the things to consider when selecting an order management system.

Ultimately, a retail order management system is a platform that helps retailers manage their inventory and orders across multiple channels. The underlying benefit of Order Management System is increasing profitability and fast movement of inventory. It gives retailers the ability to track inventory levels, process and fulfill orders, and provide customers with up-to-date information on their order status – all in one place. Without an OMS, companies cannot create a true omnichannel experience, because they cannot manage their customers, orders and products across all channels to provide a seamless experience.

Combining stability and dynamism, two seemingly conflicting goals, has become central to agility in retail. Fortunately, technology is making the task of becoming – and staying – agile easier. Agile retail industry software (applications) is coming to the rescue of today’s modern retail businesses. However, a majority of retailers, continue with their existing applications. These are proving to be barriers in responding to evolving customer needs. The question that retailers will ask soon is: How can we change that?

A couple of years ago, Gartner examined what businesses did to become agile. The answer should surprise no one:  Most of them had considered over 8,000 significant software purchases in the previous two years. 43% were ad hoc buying efforts—efforts not tied to strategic plans or existing budget commitments. Gartner then asked the most obvious question: Is that agility or is that a sign of problems?  Acquiring new capabilities using technology, as and when the market demands, is commendable. It is an indicator of a retailer’s hunger to be agile. But if the software has to be retired with the next wave of change, it means trouble. Today, junking applications every two to three years does not signal the thinking of an astute retailer. Acquiring agile software is the way forward.

What is agile methodology in retail industry software?

Let’s quickly examine the factors that determine a typical purchase decision for retail software. First, the application must meet the complete laundry list of features to drive business (functional and technical fit) and it must provide the user experience that employees demand (performance fit). Then, it must be stable, secure and backed by reliable support. Finally, the price tag should fit an organization’s budget and value expectations. This used to be the simple and sensible way to look at software purchase decisions when long-term stability was the desired goal. Now the world has changed.

Today, the retail business environment is fluid. Nothing that is certain today is guaranteed to remain certain tomorrow. This has brought about a dramatic change in the way retail software must be evaluated. The most important criteria for a software purchase decision must now be the inherent agility of the application itself. That may be overstating it but you get the point: Agile methodology in retail software is as important as features, usability, stability, security and support.

Is your retail application easy to integrate? Is it modular and containerized so it can be run on any infrastructure—bare metal, VMs, cloud—without having to refactor it? Can be developed, delivered, deployed and even rolled back with ease? Can it be experimented upon and allow businesses to fail fast and recover faster? Is it fault tolerant so that it allows its components to fail without bringing down the entire process? In other words, there must be an agile transformation in retail application and allow for all this and more, as and when required in the future.

Software agility has become a tremendously important criteria for retailers. It should now be the logical deciding factor between a “Buy” or a “Don’t buy” decision.

The importance of agile in retail industry cannot be emphasized enough. Amazon, for example, deploys new code every 11.7 seconds for its app. This is done to achieve a variety of outcomes, from reducing the frequency and duration of outages to helping add new capabilities and fulfillment channels; from adjusting for regional needs to reducing compute requirements.

A good place to start with agile retail applications is to examine how quickly they can be re-engineered. Can they extend functionality required by differing markets and regulatory regimes? Can they manage unstable workloads, adapt to new networks, integrate with and leverage varied data sources? Can they continue to deliver a constantly improving user experience and bring agile transformation in retail?

Agile in the retail industry is new. It can be difficult to adopt. There are organizational barriers and traditional processes to overcome. But retailers who take the leap into the test-and-learn world of agile will not be disappointed. They will build deeper customer engagement and discover a new way to remain competitive.

There are some outstanding examples of agile applications in our midst. Among them we cannot afford to miss the agile nature of web browsers. Hats off to the developers of Chrome, Safari, Edge, Firefox and Samsung Internet. These continue to add new functionality, adapt to new plug ins, adjust for changing user behavior and diverse display devices. All of us appreciate the agility of web browsers. Think of them as the role model for agile retail applications.

In summary, applications you invest in must have a quality that is central to a modern enterprise—they must be agile. Agile applications refuse to die. They allow themselves to be constantly re-formed. They are built to evolve.