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Can Conversational Commerce Fulfill Its Potential In Retail?

Retail TouchPoints – The remarkable growth of voice-assisted devices over the past year has expanded what “conversational commerce” truly means for retailers. While the term had largely been used to describe chatbot activity just a few years ago, voice now gives retailers yet another shiny toy to fulfill consumer needs — and hopefully create a new shopping channel. As such, there are high expectations around the technology: voice shopping is expected to account for $40 billion in U.S. consumer spending by 2022, according to a study from OC&C Strategy Consultants. However, for such a figure to be achieved, retailers must still surmount some high barriers.

It’s true that enthusiasm for the technology itself is high— voice-activated devices are set for 50% U.S. sales growth from the 2016-2017 period to the 2018-2019 span, according to NPD Group. Yet despite this popularity, interest in — or even awareness of — their commerce functionalities remains low.

“As much as retailers have made great strides over the past couple of years in being nimbler and more agile, this is such a unique technology that they will still struggle with,” said Jeffrey Neville, Senior VP and Practice Lead at BRP Consulting in an interview with Retail TouchPoints. “The thought of doing a pilot of a customer service/voice commerce program is going to be difficult because it’s so different. There’s a tendency to overthink the impact of something like this on their customers. As far as the base technology goes, you can get partners or cloud-based third-party applications to do a lot of the groundwork, but from a data integration standpoint and from an understanding of how you build and manage these tools — that’s going to be a struggle.”

“A big discussion in this space is: ‘Do we want the customer to think they’re speaking with a real human being or do we want the customer to realize that this is convenience with Watson or some other AI technology?’” said BRP’s Neville. “That’s a decision retailers have to make right now. Any AI using voice is probably going to mess up the conversation at some point, and the customer is going to realize that they’re talking to a computer.”

“If you look at apparel or luxury, you’re seeing companies like Burberry and Tommy Hilfiger use chatbots to be able to play the role of a stylist and provide fashion advice,” said Neville. “That’s where you may start seeing that relationship building through a chatbot, versus the stylist you’re used to going to at Polo Ralph Lauren. Not to bring this back to Amazon, but the Echo Look can take a picture of you in an outfit, and the long-term theory is to be able to combine this conversational commerce and voice shopping with image recognition. As you start to mix the concepts of being able to have a conversation with a computer-based stylist, and then having that computer-based stylist also be able to recognize patterns and colors, and making recommendations out of the existing retailer’s catalog, there’s some cool opportunities that retailers can tap into.”

Read Full Article: Can Conversational Commerce Fulfill Its Potential In Retail?  

Alibaba is piloting AI-enabled shopping experiences

Luxury Daily – Chinese ecommerce giant Alibaba has opened a concept store that offers shoppers and luxury retailers a look at a new frontier for fashion retail digitization.

Dubbed “FashionAI,” the pilot boutique harnesses artificial intelligence capabilities for a stress-free shopping experience. While it is only open for a few days, the store will act as a temporary testing ground for innovative retail formats.

“AI-assisted shopping brings the compelling elements of online purchasing to the physical store, creating a truly unique, personalized customer experience,” Laura Sossong, consulting manager at Boston Retail Partners, Boston. “Consumers who desire a meaningful in-store experience but want the added benefits of styling tips, convenience and individualized customer service are sure to embrace this hybrid offering.”

Ms. Sossong is not affiliated with Alibaba but agreed to comment as an industry expert.

“Predicting fashion trends is imperative for the success of luxury retailers, and in-store AI technology will allow retailers to glean invaluable insight into marketplace preferences and trends,” Ms. Sossong said. “By gathering rich reportable data on customer shopping choices, retailers can then predict trends, demand and inventory needs and shape assortment direction and strategy based on findings.”

“The plethora of insights created by AI will enable luxury retailers to make smarter merchandise planning and assortment decisions,” BRP’s Ms. Sossong said. “We are bound to see elements of AI technology being incorporated into the luxury space, particularly in high end markets where implementing AI will bring ROI by inducing further purchases.”

Read Full Article: Alibaba is piloting AI-enabled shopping experiences

CLOUD STRATEGIES: Proving Key to Personalization, Product Content Enhancement

Retail TouchPoints – The retail cloud business segment is expected to reach more than $28 billion by 2021, growing at a compound annual growth rate (CAGR) of 20.9%, according to research from MarketsandMarkets. As many as 70% of retailers say cloud will be a major factor in their business by 2020, according to a report from The Economist Intelligence Unit. But as more retailers jump aboard the cloud bandwagon, they should strive to gain a competitive edge with the technology that goes beyond the basic benefits of a cloud implementation.

This Retail TouchPoints Special Report will spotlight innovative strategies facilitated by cloud solutions that can help retailers achieve new business goals with speed and efficiency.

Many retailers already are leveraging cloud servers for business basics like POS processes, order management and fulfillment and communications across the enterprise. More advanced cloud offerings can help them:

  • Personalize offers even before the purchase journey begins;
  • Improve delivery and quality of product content offerings, especially as the number of SKUs they carry increases;
  • Unlock and unify customer data from disparate sources; and
  • Assist with in-store, mobile-powered guided selling.

ELIMINATING THE ‘SAFETY STOCK’ PROBLEM

Despite the introduction of cloud services, many merchants still haven’t taken the proper steps to give shoppers true “real-time” access to their inventory across channels. Many retailers still struggle with “safety stock” — additional quantities of an item held in inventory to reduce the risk that the item will be out of stock, according to Ken Morris, Principal of BRP.

“Let’s say I’m selling Tag Heuer watches — I must have a safety stock of two to account for this lag,”
said Morris. “If I have two or less items in a store, I have to tell corporate I have no items, because I have to account for the lag in updates to inventories between all the distribution centers and all of the stores. Although I may have two each in every store of 1,000 stores, it’s going to read as zero to someone trying to buy online and pick up in store.”

With a cloud service that incorporates data from all stores and distribution centers, retailers would be able to generate more accurate real-time stock numbers throughout the enterprise, without worrying about products going out-of-stock. Additionally, associates would be able to access this information quicker within the store, so they could assist consumers with real-time inventory data.

MOBILE APPS GUIDE IN-STORE SALES VIA SHOPPER DATA

Cloud platforms also can help retailers match products within the store to shoppers via guided selling. Morris described how an app recently designed for a BRP retail client offers guided selling in-store based on prior shopper behavior.

“Whatever they visited or put on their wish list or basket as they walked into the store, the app would guide them around to look at what they saw online and direct them with a Google map around the store,” Morris said. “This makes retail experiences way more relevant than most are today, especially because stores are changing. Having that data while the customer is in the store is key. To be able to affect the sale before checkout is what Amazon does every day online. They know who I am, they know what I buy, they know what I’m likely to buy and they help me through that sale.”

Read Full Article: CLOUD STRATEGIES: Proving Key to Personalization, Product Content Enhancement

Amazon’s “style assistant” offers guidance, product suggestions

Luxury Daily – Online retail giant Amazon is looking to become a key source of fashion inspiration and advice through the nationwide roll out of its style-centric Echo Look device.

Originally launched last year on an invite-only basis, the Echo Look uses machine learning and artificial intelligence to help consumers pick between outfits or add to their closets. The Echo Look has the potential to change the way consumers shop for fashion and interact with their wardrobes, opening doors for Amazon and its brand partners.

“Echo Look is a logical extension to integrate with Amazon’s commerce platform,” said Laura Sossong, consulting manager at Boston Retail Partners. “It’s the perfect complementary offering to stimulate incremental sales and create cross-selling opportunities for Amazon’s existing fashion pieces and Alexa technology.”

“Fashion marketers will absolutely look to leverage Echo Look’s Style Check function to boost sales and increase exposure to their brand offerings,” Ms. Sossong said. “The social component of the device will allow sharing of look books, raising awareness and demand for labels and trending merchandise across social communities.”

“Playing upon successful components of social media, Echo will bring outside influence and inspiration to a consumer’s closet,” Boston Retail Partners’ Ms. Sossong said. “It will promote social shopping by introducing shoppers to new style ideas and brands that inspire purchases.”

Read Full Article: Amazon’s “style assistant” offers guidance, product suggestions

RETAILER OF THE YEAR: Albertsons

Frozen and Refrigerated Buyer – Will an upcoming merger with Rite Aid be enough to turn things around at the nation’s second-largest supermarket chain? Industry observers aren’t so sure.

Plain vanilla,” “mediocre at best,” “generic,” “tired,” “middle of the road,” and “meh.” Those are some of the ways a panel of industry observers described Boise, Idaho-based Albertsons. So why the heck did we name it our 2018 Retailer of the Year?! Well, keep in mind that the title doesn’t necessarily go to the best operator. For better or worse, we’re looking for a chain whose actions over the past year have influenced the industry in a significant way, and Albertsons clearly fits the bill.

While Amazon-Whole Foods may have been the obvious choice for Retailer of the Year, the truth is we’ve done that story to death. Yes, e-commerce is the wave of the future, but “traditional” brick-and-mortar isn’t going any- where anytime soon, and after its mega-merger with Rite Aid is completed later this year (more on that coming up), Albertsons will have a whopping 4,900-plus locations nationwide, serving more than 40 million customers per week. It also announced several unique initiatives in the past few months and recently welcomed a new president and COO with a history of transforming under- performing companies, so there’s reason for optimism.

Comments from Perry Kramer – Page 24:

On the flip side, the merger will also allow Rite Aid to increase its presence in the grocery business, says Perry Kramer, senior vp and practice lead at Boston Retail Partners, Boston. “Rite Aid has a very significant urban foot- print, and many of their stores have recently been refreshed or remodeled,” he reports. “Those locations provide a great opportunity to expand frozen and refrigerated offerings, including Albertsons private label brands, which will help extend brand recognition and improve margins in those stores.” Another benefit of the merger with Rite Aid is the addition of a large amount of consumer data to enhance Albertsons’ customer data analytics, says Kramer. “Analyzing the data will enable the company to build a much more extensive view of its customers,” which will help it improve the customer experience both online and in stores.

Comments from Perry Kramer – Page 26:

In addition to using POS and loyalty data to improve customer analytics, Albertsons is likely to utilize real-time transactional data to improve its in-stock positions, which will become even more important as the company grows its digital presence, including online ordering and home delivery, adds Kramer.

One area that could truly become a competitive advantage for Albertsons is its own brands, most of which originated with Safeway, which many pundits list as one of the chain’s greatest assets. “The company has done a good job with its private labels in individual stores,” says Kramer, citing sales of more than $11 billion in fiscal 2017. However, “There’s a significant opportunity to continue to expand store brands across Albertsons’ many banners. When consumers see the same brands in different stores and when they shop and browse online they will become household names.”

Comments from Perry Kramer – Page 28:

But Kramer likes the idea of partnering with an established player in the meal kit space. “It allows Albertsons to rapidly roll out this new capability while learning the meal kit delivery business without a major investment of capital or time. Once it has an understanding of this rapidly changing market, the retailer will have the ability to bring the operation in-house if it makes sense.” He adds, “I think the move demonstrates Albertsons’ recognition that it needs to be ahead of trends if it’s going to continue to grow.”

Read Full Article: RETAILER OF THE YEAR: Albertsons (pages 22-28)

Fashion aggregators duke it out in a crowded market

Glossy – Google “Balenciaga sock boots,” and a line up of different retailers arrange themselves on the results page, all offering the same item for the same price. If you have the $995 needed to actually make the purchase, you’d be faced with options to buy from Nordstrom, Net-a-Porter, Farfetch, Ssense, Bergdorf Goodman, Matches Fashion, or Balenciaga’s own e-commerce site, in that order. Tweak the search — remove “sock,” for instance — and the same retailers show up again, this time in a new order.

Who ends up making that sale, and why, is a question marketers at emerging luxury marketplaces like Farfetch, Net-a-Porter and LVMH’s 24 Sèvres are fighting to solve. It’s crucial, since they’re largely competing on the same inventory, save a few brand or collection exclusives here and there.

Paid search drives business, but for these companies to move away from the expensive acquisition strategy, there’s more at work in the path to purchase than who appears first in a Google search.

“For this industry, it’s more nuanced than who can buy up the most SEO,” said Ken Morris, principal at Boston Retail Partners. “Luxury customers need to be taken care of and catered to, and there’s an different playbook to follow when it comes to both getting them in the door and keeping them there.”

“The luxury customer is not the average customer thanks to exclusivity,” said Morris. “There are savvy digital strategies behind sourcing potential customers by linking together lifestyles — people in certain clubs, yacht owners, travelers. You can sift through purchase histories across other industries and zero in, if you know how to use that data properly. It’s a matter of keeping track of these people, and then making sure the value of acquiring them is greater than the cost of doing so.”

“Taking care of the luxury customers you have isn’t a simple business. They need concierge, white-glove treatment and the people who provide it are the people who win,” said Morris. “This is incredibly important when you’re in a field where 20 percent of your customers drive 80 percent of your business.”

Read Full Article: Fashion aggregators duke it out in a crowded market

Retail and Consumer Goods Analytics Study 2018: May the Best Insights Win

RIS News – Challenged at one end by digital behemoths and at the other by nimble, born-in-the-cloud startups, retailers and consumer goods companies are under tremendous pressure to deliver exceptional, personalized customer experiences that drive revenue and repeat business. The emergence of an analytics arms race has forced companies to find ways to expend their limited resources on technologies and applications they believe will deliver the most bang for the buck.

As retail and CG executives seek to build their analytics infrastructure, governance and talent pools, they must also rethink internal processes and shift their cultures toward an analytics mindset. And even as they gain capabilities, new market demands emerge that continually raise the bar ever higher.

But the analytics marketplace is also evolving rapidly, offering new capabilities such as artificial intelligence and machine learning, supported by cloud architecture, that carry the potential to turbocharge analytics programs. These not only discern data patterns more quickly, but sometimes even generate their own algorithms to further fine-tune output.

Comments from Ken Morris, Principal, BRP:

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“While advanced analytics are valuable for almost all areas of retail, they are most critical for replenishment and customer personalization,” says Ken Morris, principal at BRP Consulting. “Advanced analytics are necessary to predict inventory levels across channels that are complicated by omnichannel fulfillment.”

Although analytics is important to every aspect of retailing, “You can’t over-emphasize the customer aspect of analytics, as it is imperative,” says Morris. “Understanding what loyal customers like and what makes former loyal customers leave will tell you where you need to focus.”

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“Retailers are recognizing the value of centralizing applications in the cloud: speed of deployment, faster software updates, lower software, hardware and maintenance costs, and a realtime, single version of the truth,” says Morris. “Real-time visibility and access to product and customer information is critical to effectively executing cross-channel fulfillment services. Without real-time data, information provided internally and externally is out-of-date and, therefore, risks being inaccurate and out of context.”

Read Full Article: Retail and Consumer Goods Analytics Study 2018: May the Best Insights Win

Same-Day Delivery Drives Brand Loyalty and Purchase Intent

TotalRetail – While the holidays come just once a year, a brand’s reputation can easily be damaged and customers quickly lost when expectations aren’t met during the pivotal shopping season. This past holiday season, we saw retailers make changes to their delivery options to provide shoppers with conveniences they increasingly see as essential, like same-day delivery. At the same time, in what’s become an annual ritual, the major shipping providers announced an array of rate increases and late holiday deliveries.

Managing shipping costs is a challenge for retailers, which are already facing tight margins and immense competition. While last-mile delivery, or the final transit of a product to its destination, can be the most expensive and poses numerous challenges for retailers, it’s nonetheless a key differentiator and an offering retailers can no longer ignore.

According to Dropoff’s 2nd Annual Holiday Survey, 60 percent of U.S. holiday shoppers indicated they were more likely to purchase holiday gifts from retailers that offered same-day delivery. It also showed a significant number of consumers — 67 percent — planned to do last-minute shopping, and expected retailers to accommodate their needs. Ninety percent of last-minute shoppers said they were more likely to purchase from retailers offering same-day delivery.

Interestingly enough, Boston Retail Partners’ 2017 Digital Commerce Survey showed that same-day delivery was offered by 51 percent of retailers in 2017. While that number seems significant, more than half of those described their service as “implemented and needs improvement.” It’s clear retailers are headed in the right direction, but there are a few areas to focus on to ensure you’re on the right path to delivering the most cost-effective, efficient and reliable same-day delivery for your customers.

Read Full Article: Same-Day Delivery Drives Brand Loyalty and Purchase Intent

Four reasons why artificial intelligence belongs in your customer service strategy

Outsourcing-Today – At its core, artificial intelligence (AI) is about simplifying, streamlining and organizing information. Machines take on duties that have traditionally fallen to humans, freeing them up for more important and nuanced tasks.

When you break it down like this, it’s no wonder AI is becoming such a big part of customer service. With tools like chatbots and intelligent analytics platforms applied to the customer experience, contact center agents now have more time to deliver the personalized attention customers crave.

But that’s only one of the benefits of integrating AI into your customer service strategy. Leveraging this evolving technology can also have a positive effect on your business operations, brand and bottom line.

According to a recent study conducted by retail management consulting firm Boston Retail Partners, 45 percent of retailers intend to use artificial intelligence to enhance their customer experience within the next three years. In the travel and hospitality industry, 58 percent of businesses are already automating areas that include customer service and AI is becoming increasingly prevalent among financial services companies.

Read Full Article: Four reasons why artificial intelligence belongs in your customer service strategy

Study: Outdated Planning Solutions Hamper Customer-Centricity

Retail TouchPoints – Retailers know that success in today’s environment requires them to align their systems and organizations around fulfilling customer-led demand. But outdated planning systems and the legacy of channel-specific inventories still present major stumbling blocks many retailers. Still, brands including Uniqlo, Zara andBonobos have solved some of these challenges, in part by more closely aligning customer data with planning systems.

In its 2017 Merchandise Planning Benchmark Survey, Boston Retail Partners (BRP) set out to gauge the current state of retail planning processes and systems, including merchandise planning, assortment planning and localization, store planning, allocation, omnichannel demand planning and space planning. “To innovate the customer experience, [retailers] must transform their disparate systems, processes and organization into one cohesive environment with the ability to offer customers a seamless shopping environment across any channel and the capability to deliver merchandise immediately — wherever it is needed,” according to the report.

The survey underscores the fact that there are still opportunities for better integration across channels — and the people, processes and technology to support them. “Customers use technology daily to enable and control their shopping journey,” said Gene Bornac, Senior Vice President of BRP in a statement. “Now it is up to retailers to play catch up with their organization, processes and technology to deliver the right products for the right price in the right place.”

Read Full Article: Study: Outdated Planning Solutions Hamper Customer-Centricity