A modern Point-of-Sale (POS) solution is critical to deliver the enhanced digital experience customers expect in stores. Given the current expectations from customers, many retailers face the challenge of determining if, when and how they may want to upgrade their current POS system. Not only do Point-of-Sale upgrades require money, time and resources, but other factors have to be considered – from additional functionality to the potential disruption to current operations.
How to decide whether to upgrade to Xstore POS
In a typical engagement we are often asked the question “Do I upgrade or not”? So, we run through the following structured assessment methodology to help clients:
The important steps taken during the process include:
- Functional Design documentation review
- Technical Design documentation review
- Product code (if available) review
- Validating how many past customizations are now supported by base Xstore POS capabilities
- Facilitate several work sessions with business and IT teams to understand current and future requirements. These include:
- In-store demos of current functionality
- Pain points review
- High-level architecture documentation review
- Review alternative cloud options
- Q & A sessions as needed
- Demonstration of new functionality
Once these activities are completed, we provide a report which includes the pros, cons, and costs (typically driven by the number of resources and timeline) of upgrading. This methodology works across POS solutions, but this article focuses on the benefits of Oracle Xstore POS upgrades.
Do you need help with your Oracle Retail Xstore POS Upgrade?
Oracle Retail Xstore POS Upgrade
Recently SkillNet, which is #1 in Oracle Xstore POS implementation & upgrade was engaged by a Tier 1 global retailer to assess whether they needed to upgrade from the previous version of Xstore to the latest available version. Based on the hundreds of implementations and upgrades we have done over the past years, we put together a list of factors for the client to consider when determining an upgrade strategy.
While the Oracle retail POS software team has made several improvements to Xstore POS over various versions, here is the list of 7 features which we consider are the most important:
Feature 1: Self-Checkout and Kiosk
In most recent versions Oracle Retail has added an alternate user experience (same application, same business logic) that will allow customers to scan their own items and pay with different non-cash tender types. In addition, functionality exists which allows for retailer intervention when required (i.e. authorization for age-restricted items). This new functionality can be used with existing register hardware or with a kiosk. In light of the labor shortages across the globe, this will continue to be a popular feature with additional enhancements to come in the future.
Feature 2: Tax-Free Shopping Experience
For Global retailers, Xstore can now provide tax-free invoices that make it easier for customers to claim a tax or VAT refund. It integrates with leading tax-free solution providers such as Fintrax (a.k.a Premier Tax Free), Global Blue and Planet Payment.
Feature 3: Configuration Accelerators
One of the larger efforts when implementing Xstore POS is setting configurations to align with evolving fiscal requirements. To help accelerate this process, Oracle has created bundles of pre-set country configurations related to formats (date, time, address, phone, etc), legal limits, tender types, and invoicing. These bundles already existed for certain countries such as France, Germany, and Brazil, but with new releases retailers will see additional countries such as India, Singapore, and Chile.
Feature 4: Enhancements to mobile stores
New features now allow a retailer to operate Xstore without a fixed register and supports multiple mobile servers. When necessary, new features also allow for shared peripherals such as printers, tender drawers, and payment devices.
Feature 5: Temporary Stores
Retailers seem to be quite excited about supporting temporary stores for events. Strategically, this allows stores to bring the shopping experience to the customer. As shopping center traffic continues to recover, retailers can use this functionality to offer products and services in not only temporary spaces in traditional shopping areas (think of a mass erchant opening a special Halloween shop in dead space at a mall from August through October) but at music festivals and other outdoor venues. Inventory can either be unique for a one-time pop-up store, or shared with a physical location for an event. Oracle has also developed remote servers that can support transacting via wireless communications. Obviously, ecommerce and curb side pick-up features helped many clients survive last year, but customers now expect a wider variety of ways for brands to build relationship with them. Temporary store functionality in the POS solutions helps Retailers meet these new expectations.
Feature 6: Customer Not Present Payments
With evolution of various digital payment methods and trends, Xstore POS now supports various customer/ card not present methods allowing customers to make payments over the phone or by their preferred method as supported by payment service provider. This could be useful while accepting payment for telephone orders.
Feature 7: Oracle Retail Applications Cloud Services
- Cloud service offerings from Oracle takes care of all infrastructure related tasks.
- All future upgrade and hot fixes are applied by Oracle and backward compatibility is also maintained.
- Better security (including OAuth), faster actions on restorations, backups, and maintenance, etc.
Besides the features outlined, there are several additional benefits from a POS system upgrade:
- New updated features to meet country specific regulations, by using country accelerators
- Reduction in maintenance for customizations that may be redundant with new functionality
- Improved security and updated 3rd party solutions (i.e. more recent version of Java)
- Adoption of new best practices that come with new features
The cost for upgrading is heavily dependent on how much you customized your solution. Oracle Retail does have a streamlined upgrade process available if you have implemented Xstore POS just out of the box functionality. The reality is that most clients have some sort of customization which will require testing before deploying a POS solution.
Risks in not upgrading
Every retailer needs to weigh increased functionality against the risk of losing Premier Oracle support and the costs of upgrading and not upgrading. Many of our clients have procurement departments that develop this Cost-Benefit Analysis, but for those that do not, SkillNet is able to provide these additional financial analysis services.
Below is the current Oracle Xstore support sunsetting schedule [source Oracle retail documentation]. Some clients believe this may not be a critical issue, especially if they use SkillNet Support services. However, there is an inherent danger in losing Oracle’s premier support in case of a catastrophic event that most Retailers do not want to risk.
|Version||GA Date||Premier Support Ending|
|Xstore Office and Point of Service 16.0||December 2016||December 2021|
|Xstore Office and Point of Service 17.0||January 2018||January 2023|
|Xstore Office and Point of Service 18.0||December 2018||December 2023|
|Xstore Office and Point of Service 19.0||December 2019||December 2024|
We have been able to upgrade Xstore in as quickly as 4 months, but for some retailers with heavily customized systems, the timeline will probably be longer. One of the major activities that may drive the timeline for a heavily modified system would be system integration testing and user acceptance testing. Both of these activities will require participation from your organization, so it may not be the case that you can throw extra bodies (from a third party) to accelerate these timelines.
Do you need help with your Oracle Retail Xstore POS Upgrade?
SkillNet is an Oracle Retail Solutions and integration partner. We have also supported clients in their on-prem to cloud journeys. Apart from Xstore expertise, Skillnet also supports other Oracle Retail Products such as Omnichannel, Merchandising, Planning & Optimization, Supply Chain, Brand Compliance, Insights & Science.
The IT landscape of retail enterprises is made up of a network of interdependent systems – internal legacy applications, modern COTS implementations and interfaces to external applications like payment gateways, merchandizing, and supply chain systems. Various infrastructure elements that are essential to the retail industry – POS devices, Bar Code Scanners, Card Readers – to name just three, add to the complexity. The CIO is responsible for ensuring that these diverse systems perfectly work in-synch with each other. With ever increasing requirements to provide customers with better experience, real time store monitoring becomes a critical necessity. Orchestration of these systems to provide consolidated retail monitoring solutions, becomes extremely challenging.
Orchestration begins with monitoring. With so many disparate systems, retail enterprises have had no option but to use multiple monitoring systems, each necessitated by the choice made at the time of acquiring or upgrading these systems. These diverse monitoring for retail systems provide information that gets isolated into islands. Worse, different monitoring systems give rise to different versions of the truth and provide conflicting data that could lead to poor operational decisions.
In such situations, the need for a monitoring solution that can consolidate all these islands of information onto a single dashboard becomes critical. The solution will help present information that reflects operational status in an accurate manner. Further, such a solution can also forecast peak load periods, based on seasonality, time of day, and day of week or month.
Traditional monitoring solutions lack features which are essential for the retail enterprise. Some of these are critical for ensuring consistent customer experience, such as:
- Retail Applications Connectivity Monitoring
- Retail Devices Monitoring
- Retail POS Monitoring
Other features, lacking in many of the traditional solutions, are needed to ensure better orchestration across the IT Landscape:
- Views customized to Retail Operations Monitoring Needs
- Consolidated notifications
- Multi-Site Scalability
Additionally, in the absence of a consolidated monitoring solution to implement Business level SLA’s, traditional monitoring solutions will need significant re-configuration.
A case in point is a retailer, who had over 90% of their tickets in the overdue state, which obviously meant they were unable to meet SLAs. Only 15% of the tickets were resolved in under a day, while nearly 20% took up to a whopping 10 days! A consolidated monitoring solution helped this retailer to zero in on issues impacting these SLA’s as well as understand the impact these issues were having on the business. Having helped similar retail enterprises in over 53 countries increase their margins by $10 Billon, consultants at SkillNet Solutions created RetMon, a consolidated monitoring solution. Unlike expensive proprietary solutions involving heavy license fees, RetMon monitoring solution is based on Open-Source Monitoring applications. An active community helps keep these applications up to date, avoiding technical debt.
RetMon solution for monitoring retail enterprises help them understand, plan and mitigate issues relating to capacity and growth requirements. It also helps identify inventory, sales, operational and business needs.
With RetMon, you can anticipate the following benefits over traditional monitoring solutions:
- Digital Transformation – RetMon adoption can help Retail Enterprises gain end-to-end visibility into infrastructure and applications.
- Faster Detection of Issues – Active monitoring detects issues in real-time and significantly reduces manual intervention needed to connect the issue with the business process.
- Faster Resolution – Real time issue detection reduces any guess work in triaging issues, and effectively reduces Mean Time to Resolution.
- Reduced Call Volume – Issues are automatically reported, and this enables proactive closure. It reduces the need for store staff calling the Help desk.
In the retail enterprise, consolidated monitoring needs are best met by adopting an integrated monitoring solution capable of scaling to meet increasing transaction volumes and custom requirements.
RetMon has far more to offer than what has been discussed so far. But that is another blog! Contact us today, if you are looking for a monitoring solution that can consolidate islands of information onto a single dashboard.
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A voice interface in customer journeys can bring new insights and a better customer experience. Bots are now very easy to integrate to applications and the support for voice and text recognition inputs backed by machine learning continues to improve exponentially in capability, supporting more general use cases. As a consequence, the transition from bot interaction to speaking with a service representative can be made more seamlessly with better contextual data available from the start.
Another driver for further integration and digital transformation in the call center has been the COVID pandemic, which forced many call center representatives to work from home away from their existing call center infrastructure. The solutions for them are also the basis for further cloud-based integration.
Due to these, as is the case for other traditional sales channels, the call center is much further integrated into the operations and metrics of execution of customer journeys, which are by definition channel-agnostic.
In response, the market for call center as a service(CCaaS) solutions is rapidly evolving. The latest Gartner Magic Quadrant 2021 shows that there are still many relative niche players providing specialized solutions with the notable exception of the behemoth cloud provider AWS.
A combination of AWS tools, including Alexa and AWS Connect can provide a complete cloud-based end-to-end solution for seamless integration of voice into existing customer journeys.
As well as channel-agnostic and self-service customer interactions, solutions in the CCaaS space include process orchestration, resource management, employee engagement and reporting metrics for operations and customer insights.
As enablers of Modern Commerce, in SkillNet we have found that the opportunities for integration with established eCommerce and mobile channels can bring immediate value, both to adding capabilities to the execution of core customer journeys and to the insights on conversion and real-time sentiment analysis.
The progress of these solutions has made setting up integrated demos and proofs of concept a straightforward activity, allowing for experimentation and incremental iterations in short timeframes.
This is the preferred approach to ensure that customer journeys evolve based on the data from the interactions with the consumers.
Today, however, many customer journeys still end with the promise of a call from a call center agent, that might or might not happen and which the customer might or might not pick up. Or with an attempt from the customer to call a number that takes them out of the application context in which they are in, so they can join a dreaded queue on the phone, for the privilege of repeating all of the information they already provided after a few minutes.
Over the next few years, voice integration will become a mandatory feature of modern commerce. At SkillNet we can help with that integration today.
This Blog first appeared on Medium.
2020 will go down in the history of eCommerce as groundbreaking. Both, B2B and B2C eCommerce received a major shot in the arm as businesses went into digital overdrive. A United Nations Conference on Trade and Development (UNCTAD) study released earlier this year noted that the share of global retail eCommerce alone went up from 14% in 2019 to about 17% in 2020. The report says that the growth in eCommerce seen in 2020 is likely to be sustained during recovery. Independent forecasts for global retail eCommerce show that sales will increase from US$4,891 billion in 2021 to US$6,388 billion in 2024. A flush of funding for eCommerce is on the way, making choosing the right eCommerce platform more important than ever before.
Fortunately, the eCommerce industry has matured over the last decade, giving way to an explosion in solutions. While actual estimates vary, there are over 240 eCommerce platforms to pick from. Having a plethora of choices is good. They provide feature sets and price-point flexibility that businesses need. However, as even the most experienced CTOs know, the options can quickly become overwhelming. How does a retailer make the right choice?
Omnichannel customer experiences and Master data management software solutions
The perfect choice of a platform will depend on the needs of a business and the path of evolution it chooses. However, the B2B eCommerce solution platform must make it possible to customize even the most basic features, such as customer account management, product catalogs, shopping cart, pricing, quote management and order replenishment (for B2B), offers to specific customer groups, check out, payments and returns/ logistics and inventory management. These systems should be integrated with suppliers and partners, procurement and inventory management, approval workflows, social media and CRM, etc.
Our experience as a maker of modern commerce for retailers shows that today’s solutions must go beyond the basic platform features. To have truly powerful eCommerce capabilities it is necessary to remember the key features that go into a flexible and extensible B2B and B2C solution. Your long-term strategy must address:
- Support for an omnichannel strategy and
- Backing provided by an easy-to-use master data management (MDM) system
These provide the retailers the means to anticipate and respond to changing customer behavior across channels, without losing focus of customer convenience.
The convenience offered by a retailer plays a dominant role in determining customer loyalty. And convenience has become largely dependent on an omnichannel approach. Shopping today is no longer limited to a single desktop website. Technology adoption by end-users has brought a variety of devices, networks and platforms into play, making omnichannel retail a reality. In the emerging environment, delivering an omnichannel shopping experience (desktop, mobile, POS — see Figure 1) and personalized retailing will dictate the selection of an omnichannel retail solution.
Figure 1: Omnichannel Retail Shopping Experience
Master Data Management – MDM plays an important part in the success of an omnichannel retail solutions eCommerce strategy. Retailers must bring unrelenting attention to MDM. With the right MDM, retailers can seamlessly service customers across channels, while creating offers and promotions specific to a channel. For example, a customer who orders a shirt using a mobile app can easily return it, if required, by visiting the nearest store without being told that “Online purchases can only be returned using the app.” Or a customer trying to buy a smartphone at a store will not see a lower promotional price for the same model at the store’s eCommerce website.
Poor data management leads to confusion between channels and affects the retailer’s reputation. Often, inconsistent data and conflicting content across channels can make customers resentful. They may even suspect they are being cheated. On the business side, poor data management can result in low ROI on marketing investments. It can affect the ability to cross-sell and up-sell; lead to customer churn; and result in regulatory penalties. These risks can be circumvented by putting appropriate MDM in place.
When all business functions and channels refer to the same source of truth—the master data—customers are assured of a seamless, highly personalized and trustworthy experience.
Impact of successful omnichannel retail solutions
Creating the right omnichannel strategy can have dramatic results. In one instance, an auto parts retailer in the US with 45 large format stores could not provide a consistent online experience to customers for the availability of auto parts and tires when scheduling servicing. Besides, the retailer’s site could not combine the process of tire purchase and other item purchases.
The solution implemented by SkillNet included a robust enterprise-level MDM strategy, which included merging Data and Processes across all three channels, viz. Mobile App, POS app and web application. This strategy for omnichannel sales enabled a 2X growth in online sales.
A strategy that pays off when designing eCommerce solutions is using a headless eCommerce design pattern. The headless pattern, in sharp contrast to the monolithic approach, decouples the front and back ends of the eCommerce application. This allows retailers the agility to quickly and easily roll out new functionalities to address changing customer needs across touchpoints (channels). SAP Commerce Cloud, as an example, allows retailers to leverage headless eCommerce (see Figure 1 & 2 for details).
Figure 2: SAP Commerce Cloud | Strategic direction
The impact of a headless design pattern on customer experience across the growing number of channels can be significant. It is one of the leading technologies driving retail innovation.
The upside of omnichannel retail has been known for almost half a decade. A study published in 2017 found that an omnichannel approach ensures that customers spend 4% more on every store visit and 10% more online than single-channel customers. The study found that with every additional channel used, there was a parallel increase in spend. For example, customers who used 4+ channels, on average, spent 9% more in-store than users of a single channel. This trend will be amplified as Zoomers (Gen Z consumers), who value brands for the seamless experience they provide, become the single-largest customer segment. The key to staying ahead of this trend is, without doubt, looking beyond feature sets and addressing MDM across channels in the enterprise.
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In their book The Sentient Enterprise: The Evolution of Business Decision Making, Mohan Sawhney and Oliver Ratzesberger argue that agility doesn’t like scale and scale doesn’t like agility. But modern commerce leaders are quickly adopting agile at scale. This is necessary in today’s business environment. It has become critical for retailers to increase their speed of execution, pivot using early customer signals, sharpen productivity, reduce cost without sacrificing innovation while engaging employees and staying ahead of competition.
Combining stability and dynamism, two seemingly conflicting goals, has become central to retail agility. Fortunately, technology is making the task of becoming – and staying – agile easier. Agile 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 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 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?
Agile in 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.
Retail was one of the first and most disrupted industries by the emergence of the internet. What years later would be referred to as Web 1.0 drove exponential growth in remote selling with the eCommerce revolution. The arrival of Web 2.0 with social, mobile and SaaS was also very impactful, so much so that all of these innovations are now taken for granted and mainstream in the retail industry.
Some technologist now believe that Web 3.0 is the adoption of crypto for delivery of existing and new services. However this is not yet widely accepted as the next step for the Internet. The wild swings on the prices of coins largely impact the discussion on the potential utility of the technology. There are plenty passionate proponents and detractors. Add to that the leading industry in application is not retail but finance and the picture specific for retail is even less clear.
When most people think of crypto in retail, they think of the ability to accept Bitcoin as a tender. News of Tesla accepting Bitcoin for then stopping the acceptance of Bitcoin made headlines recently. With the price of Bitcoin moving up and down and being considered by many as an investment hedge against USD inflation it is unclear why would anyone use it to buy a car.
There are other use cases in retail which are more interesting. Arguably with far more potential to disrupt the retail industry:
- Payments: this is indeed a wide potential area for disruption. Crypto should be able to provide anonymity and decentralization at scale for payments. Some services from DeFi (decentralised finance) will be made available to retail. While there are multiple approaches for feasibility, solutions around stablecoins are the most common. As of this writing there are already hundreds of different stablecoins in the market. Big retailers like Wallmart or El Corte Ingles might seek to create their own stablecoins while there are platforms available in which to develop solutions like Celo. Another utility is for consumers in developing countries. SkillNet worked in the last decade with retailers in Africa to introduce M-Pesa, which allowed for digital payments for people without access to a debit card. This new generation of solutions, over the next decade, will be able to extend the portfolio of financial services for those without or with limited access to traditional banking to include things like credit and insurance.
- Personal identifiable information and loyalty systems: out of the Dapps (decentralised applications) being built at the moment, those that deal with customer information might prove most disruptive for retail. A key driver for retailers to unlock value is to provide a personalised experience. The main barrier of adoption, other than technology, is the initial disclosure and subsequent management of personal information with relation to privacy and security. Crypto can potentially provide the intermediate tier which enables personalization features without customer disclosing personal information or retailers storing such information. Combined with systems of reward which can also be blind to PII , this is an area for potential large changes. The business model for these applications in which selling customer data is not an option, remains to be seen. Loyalty systems based on blockchain are starting to emerge for other industries but are much less ambitious in leveraging a decentralised model.
- Trusted supply chains: traceability in the supply chain through blockchain was perhaps the first enterprise use case widely in pursuit for Crypto. There have also been barriers to these solutions over the last five years. Schemes not being truly decentralised and open but being managed by large tech companies has been one. Another issue has been the link between proofs in the physical world and on chain proofs given the limitations of storage and the security considerations of the blockchain. Innovation to overcome these barriers is ongoing. The prevalent approach for implementation is to introduce smart contracts which have access to physical proofs through APIs that trigger on chain events. One example of these is Chainlink, which allows smart contracts on Ethereum to securely connect to external data sources, APIs, and payment systems .The scale of investment in these initiatives is already in the billions of dollars.
- Receipts and return management: one way to easily classify blockchain initiatives in retail is to think of them as before or after customer purchase. For the latter, the creation of receipts and management of transactions is another potential area of disruption in retail. In a crypto solution, a receipt can be a token and a return policy a smart contract. Another potential approach is use of NFTs. Non-fungible tokens have raised in popularity due to outlandish purchases recently. These unique tokens can map to what today are serialised items in retail. In hospitality they could map to event tickets
- Marketplaces: currently for a marketplace the authenticity and reputation of buyer and seller are critical for a particular transaction to take place. These are mainly driven by the previous activities of both users on the marketplace and the amount of data they are willing to share between them. Crypto can anonymise their identity and yet increase the security. It can also through smart contracts place proofs on the goods sold and hence change completely the technology and process that underpins these digital exchanges.
There are still technical barriers for the wide adoption of crypto but the investment in the sector and the amount of continuous innovation is impressive. The current performance limitations, high energy consumption and high transaction fees are barriers for this type of solutions but the use cases in which crypto has value could drive the innovation required to overcome them.
Some of the current limitations in crypto might need to be resolved before really going mainstream or the utility for some use cases just might win regardless at the end.
It is an exciting time to find out.
This Blog first appeared on Medium.
COVID-19 is reshaping modern retail. While sales are recovering – retail sales in the US increased 9.4 percent last March over the previous month and were up 26.9 percent over last year – the change in consumer buying behavior, channel preferences and loyalty will outlive the pandemic. Optimism that comes with the vaccine will fuel a spurt in discretionary spends even as additional government stimulus will bring back demand. Naturally, the consumer suffering pandemic fatigue, will go back to some old-fashioned retail therapy and we can expect to see it play out most prominently in beauty, apparel, travel, hobby, sporting goods, and dining out.
We could debate the fact this “recovery” in store visits will be short lived, the reasoning being that consumers have begun to favor online channels. But let’s admit it: consumers value the touch, feel and smell of the things they buy. Think clothes, jewelry, perfumes, a coffee mug, an avocado or even a purse or a wallet. The immersive product experience creates a pull into the stores.
Admittedly, e-commerce sales are growing fast. From being 5.1 percent of total retail sales in the US a decade ago they accounted for 21 percent of sales in 2020. But a whopping 79 percent of sales are still from brick-and-mortar stores. Stores will continue to be around, and will need to transform to offering great experience, or great convenience or both. Increasingly, smart retailers do not see the two channels as being competitive, but rather supplementing each other in the myriad paths consumers take from intent to purchase.
The tilt in favor of stores of every proclivity – from big box to pop-up, and from specialty to discount – will continue for several decades into the foreseeable future. Stores that adjust their role and purpose and remain meaningful to the consumer will win. Those that don’t will perish.
Many interesting changes in retail are already underway, even as the pandemic rages across the world. Dark stores offering curbside pickups are on the rise along with a `buy on line, pick up in store’ (BOPIS) trend. These models point to the convergence of channels. With the use of analytics for consumer insight and automation for fulfilment, these models will improve and bring down costs. In hindsight, they will look like obvious evolutionary steps.
However, smart retailers are working harder. They are focused on super charging the in-store experience and the convenience they bring to consumers. These modern trends will prove revolutionary to retail as we head into the next normal.
It is natural for retailers to do everything they can to protect the investments made in their stores. There is no reason stores should be left to underperform. This is where four deep-impact measures of retail store management come into play, placing stores in a position to have healthy bottom lines:
- Integrate physical and digital assets, making for the best experience. Provide a content-rich, intuitive and immersive experience for all online and in-app interactions. Does your consumer want to chat with a store executive or a product expert before visiting the store? Does your consumer need an online demo for a product before checking the product in the store? Provide this using live text and video interactions. Use automated bots where possible, handing over the interaction to live service executives where necessary.
- Create fresh in-store experiences that provide customers a reason to visit, make it personal. For example, make the store a place of discovery using store-only or in-stores-first product launches that draw consumers into returning. Use consumer data captured from every touch point – store visits, card and loyalty data, social media, website footprint, surveys, CRM and partner data – to shape in-store consumer interactions. Most important, help consumers seamlessly continue their online journey when they visit the store.
- Make it convenient, make it interesting, make it rewarding. Do your consumers want to try your products before they buy? The cosmetic industry turned this approach into a fine art, allowing consumers to try various styles in the presence of an expert. Can your grocery store have a master chef to adroitly guide consumers, answer questions and put their apprehensions to rest? Can your white goods store have a well-informed engineer available – perhaps online – to gently turn consumers into confident power buyers by decoding and simplifying technical details using AR and VR? Will you provide day care to turn shopping into a pleasure for the harried mother?
- Go contactless, make it safe. Provide self-service options ranging from the ability to check product details using a QR code, easily look up alternatives and options for products, order and return products, make payments and track refunds. The goal should be to make the experience comfortable, non-intrusive, dependable, simple and safe.
A variety of industries have evolved with the business landscape and with changing consumer demands. One example is of the adjacent entertainment industry. Movie theatres went from being massive 600-seaters showing a single movie into becoming clusters of small and classy 100-seater multiplexes offering online movie trailers, the ability to book tickets online, enjoy a variety of movies in the same multiplex, soak in the Dolby surround sound, get joyfully overwhelmed by 3D, gawk at the digital sharpness on the big screen, and sink into luxurious beds with freshly laundered blankets. Some multiplexes went as far as to combine movies with a fine dining experience with menus created by celebrity chefs. The industry changed itself by bringing an unrelenting focus to experience and convenience to stay in step with changing times.
The pandemic has made it abundantly clear that retail cannot keep going down the traditional path. Expectations and needs have changed. It is time to re-imagine the retail store through the lens of modern marketing and commerce, upping the differentiation by improving experience and convenience.
This post was first published on Medium.com
In his yearly letter to shareholders published 15th of April 2021, Jeff Bezos shared some fascinating back of the envelope calculations on the value that Amazon creates to its customers.
28% of purchases at Amazon are completed in three minutes or less and 50% in less than 15 minutes. He concludes than on average a shop in Amazon takes 15 minutes. In contrast, he mentions that a visit to a store would take on average an hour and each customer would save two visits to the store per week (this latter part lacks mention of how that data was arrived to) If a time saving is value as 10$ per hour and multiplied by the 200 million of Amazon Prime members, the value creation in 2020 alone is $126 billion (after discounting the cost of Prime member fees)
As Amazon prime member myself, I have completed many of these quick purchases and find the value proposition compelling. However comparing time of purchase in store, which includes time to travel, with time for a digital sale is not a fair comparison. The lockdowns and pandemic have accelerated the transition to digital sales but should have also reminded us of the importance of the in store sales experience.
The challenge to compete with Amazon for retailers is huge. The logistics and commercial advantage that Amazon has through its scale are unparalleled. However if the main value to customers as stated by Jeff Bezos in this letter, is a frictionless digital sale, this is something that retailers can improve on today, on their own digital experiences.
A frictionless digital experience is only part of the value proposition for a store sale. If it is a convenience shop in a store, customer is not travelling to the store, the location is nearby and needs to have the ability to be in and out quickly, it is indeed the main value. Solutions around scan and go should be available so there is no need to interact with staff, if the customer doesn’t want to. This is not a sale that takes an hour. However if customer is travelling to a shop, in order to be motivated to do so, having a different rich experience is what would differentiate from buying online.
Metrics to differentiate between time spent in friction in the sales process and the value add provided by an in person experience are useful to explain why people still go to shops. Investing in both frictionless digital experiences and rich interactions delivers on critical metrics to generate value and compete against Amazon. The value add can translate into entertainment, education, loyalty rewards, gamification, social interaction, or others based on the specific retail brand. This value add is part of the digital solution.
At SkillNet a lot of our focus over the last 12 months has been to help retailers to design and implement the right digital customer journeys with the metrics built-in to track and reduce friction and enrich customer experience. Starting with the customer journey allows to ask the right questions about how to best use technology to serve customers and better measure the real value creation. Knowing the technology and the retail domain operation is still critically important but not sufficient.
As Jeff Bezos reminds us in most of its public communications, Amazon’s vision for being Earth’s most customer-centric company has paid off well.
Being a maker of modern commerce isn’t just about building cool looking applications and utilizing the latest and greatest architectural patterns. It’s about a complete and holistic approach to delivering a superior customer experience. Right now, as we enter the New Normal, everyone seems to be talking “customer experience” and that’s certainly a step in the right direction. But what are the mechanisms required to deliver a successful customer experience that will differentiate and separate your retail business from the competition?
Focus on the Customer
While it’s important to have a strong and stable back-end supporting your applications and systems, without a focus on the front-end experience all those great integrations and data sharing won’t matter once the application is deployed in stores. If the experience isn’t usable and fails to meet the customer’s needs, whether the customer is the consumer or employee, the application will collect dust on a shelf and not be used. This will result in an application which will be a complete waste of money.
Focusing on the front-end means talking to your customers and finding out what they want and need. What’s also important to remember is that many customers may not know what they want and need. Or, worse, be wrong about what they think they want or need. If you get this wrong then you’re back to “App on a Shelf”. So how do you get this right?
Modern Methods for Modern Commerce
- Design Thinking
Usually, the first modern development methodology that comes to mind is Agile. While certainly not without its problems, Agile is a far cry and way above the traditional waterfall approach. It also has many different incarnations such as Kanban and Scrum that allow teams to find out what works for them. But what’s most important is keeping Agile as a philosophy and remembering the key values of Agile and not let yourself get caught up in the processes and “rules” of Agile. Trust your teams to build working software through constant collaboration with customers and never be afraid to respond to change.
As you work in an Agile environment, Design Thinking becomes a critical piece of the development puzzle. By working interactively with the Design Thinking steps, and not being afraid to work the steps out of order, you can build better applications, prototypes, and a customer experience that will better serve your business. Design Thinking is about making sure you hit all the important concepts. You have to start with talking to your customers and determine what they want and need. Then you need to define these wants and needs as requirements. Next, have brainstorming sessions with your team to develop new and innovative ideas. Building a prototype based on these ideas will allow you to do some testing and get some valuable feedback. This feedback will tell you what you need to do next. Maybe you need to go back and talk to your customers again. Maybe your requirements were off. Maybe your idea needs a few tweaks.
With both Agile and Design Thinking it’s time to get technical. This is where DevOps comes in. Like both Agile and Design Thinking, DevOps is an iterative approach that constantly loops back on itself to improve and proactively produce working software that is usable, desirable, and feasible. The cycle of DevOps allows for working releasable software to be in constant production. By always building releasable software on a consistent basis, you can easily react to new customer requirements instead of having to wait for a yearly scheduled release.
The only way to improve is to collect and analyze quality feedback from your customers. There are multiple ways to generate this feedback. On one end of the spectrum are surveys. These can be sent out to customers as an email where, hopefully, enough customers will participate to create adequate actionable feedback. On the other end of the feedback generation spectrum is direct one-on-one interviews with customers. This may be more difficult with consumers than employees but it is extremely worth the effort. This is how you find out whether or not you truly understood what your customers desired and whether or not you delivered. The key here is that negative feedback is good. Negative feedback is actionable. Positive feedback feels good but doesn’t really give a viable means to improve. And if you’re not improving then you’re stagnating and if you’re stagnating then your competition is about to pass you by. In between surveys and interviews are focus groups where the opinions of groups of customers are solicited. This is another great way to gather large amounts of feedback quickly and in an inexpensive manner.
In summary, using modern methodologies, focusing on end customer experience, and gathering continuous feedback will allow retailers to deliver a successful customer experience to consumers and employees. It will also keep you to ahead of the competition by differentiating your businesses.
This is the fourth blog in a series of four blogs( Read Blog 1, Blog 2 and Blog 3) from SkillNet on how Modern Commerce Leaders have used technology to digitally transform their retail businesses to adapt to the New Normal. This ability to adapt, gives these brands a competitive advantage. While the blogs are connected each of them can be read independently.
The last year has been challenging for almost every company’s bottom line. Even essential businesses like Grocery stores that saw a revenue lift, have also seen tight margins as labor and product costs rose. In this time of uncertainty, it may be hard to convince internal decision makers to make investments which will provide long term benefits.
On a recent call, a client mentioned that they convinced a skeptical Chief Financial Officer (CFO) to invest in a new multi-million dollar app enhancement by simply demonstrating how easy it was to complete a purchase on a competitor’s mobile app, “within 5 minutes, because I was able to show how easily I could purchase a $30 Mr. Coffee Maker on my competitor’s app, I got the funding I had been asking all year”.
Change is often initiated as a reaction to market or competitive forces. However, a true Modern Commerce Leader is often trying to be an innovator, before these forces become apparent, and may not have the easy argument “our competitors are doing it”. In those cases, a more strategic approach may need to be taken to get stakeholders to agree to not only a major financial investment, but a commitment that their organization will adopt new operational process changes.
At SkillNet, we look at developing a Return on Investment (ROI) model as a 5-step strategic effort:
- Step 1: Define Business Needs
- Step 2: Identify Costs
- Step 3: Identify Benefits
- Step 4: Gather KPIs and Baseline Data
- Step 5: Make a Decision
In our experience, getting a customer journey defined in step 1 is critical and its effort is often underestimated. The journey could be a new or enhanced process, but a trend we have seen accelerate over the last year is the re-platforming of existing journeys to new platforms. An example of this re-platforming is the replication of the in-store shopping experience through mobile applications. Retailers, across both softlines and hardlines, are offering virtual chats with in-store sales associates. Others are creating a curbside pick-up process that allows for complimentary sales to make up for the loss of impulse purchases that would normally happen in stores. Once these customer journeys are identified and mapped, potential solutions can be identified.
We also see many Retailers stumble when trying to see if their initiatives actually paid off. Hence we make sure to include a Step 4, where Key Performance Indicators are identified prior to making a decision. Below is a model for a recent ROI exercise just completed for another client which highlights the potential solutions based on the journeys and some key performance indicators we considered.
The major benefit of taking a more strategic view when justifying a project is the alignment you will gain from stakeholders. The benefits of this alignment include a common stakeholder understanding on how your customer’s experience will improve, the costs to get there, and what subjective and objective metrics will prove you made your innovation goals.
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