Monday Oct 28, 2013

Right-Time Retail Part 3

This is part three of the three-part series.  Read Part 1 and Part 2 first.

Right-Time Marketing

Real-time isn’t just about executing faster; it extends to interactions with customers as well. As an industry, we’ve spent many years analyzing all the data that’s been collected. Yes, that data has been invaluable in helping us make better decisions like where to open new stores, how to assort those stores, and how to price our products. But the recent advances in technology are now making it possible to analyze and deliver that data very quickly… fast enough to impact a potential sale in near real-time. Let me give you two examples.

Salesmen in car dealerships get pretty good at sizing people up. When a potential customer walks in the door, it doesn’t take long for the salesman to figure out the revenue at stake. Is this person a real buyer, or just looking for a fun test drive? Will this person buy today or three months from now? Will this person opt for the expensive packages, or go bare bones? While the salesman certainly asks some leading questions, much of information is discerned through body language. But body language doesn’t translate very well over the web.

Eloqua, which was acquired by Oracle earlier this year, reads internet body language. By tracking the behavior of the people visiting your web site, Eloqua categorizes visitors based on their propensity to buy. While Eloqua’s roots have been in B2B, we’ve been looking at leveraging the technology with ATG to target B2C. Knowing what sites were previously visited, how often the customer has been to your site recently, and how long they’ve spent searching can help understand where the customer is in their purchase journey. And knowing that bit of information may be enough to help close the deal with a real-time offer, follow-up email, or online customer service pop-up.

This isn’t so different from the days gone by when the clerk behind the counter of the corner store noticed you were lingering in a particular aisle, so he walked over to help you compare two products and close the sale. You appreciated the personalized service, and he knew the value of the long-term relationship.

Move that same concept into the digital world and you have Oracle’s CX Suite, a cloud-based offering of end-to-end customer experience tools, assembled primarily from acquisitions. Those tools are Oracle Marketing (Eloqua), Oracle Commerce (ATG, Endeca), Oracle Sales (Oracle CRM On Demand), Oracle Service (RightNow), Oracle Social (a social monitoring company from Boulder, Vitrue, Involver), and Oracle Content (Fatwire). We are providing the glue that binds the CIO and CMO together to unleash synergies that drive the top-line higher, and by virtue of the cloud-approach, keep costs at bay.

My second example of real-time marketing takes place in the store but leverages the concepts of Web marketing. In 1962 the decline of personalized service in retail began. Anyone know the significance of that year? That’s when Target, K-Mart, and Walmart each opened their first stores, and over the succeeding years the industry chose scale over personal service. No longer were you known as “Jane with the snotty kid so make sure we check her out fast,” but you suddenly became “time-starved female age 20-30 with kids.” I’m not saying that was a bad thing – it was the right thing for our industry at the time, and it enabled a huge amount of growth, cheaper prices, and more variety of products. But scale alone is no longer good enough. Today’s sophisticated consumer demands scale, experience, and personal attention.

To some extent we’ve delivered that on websites via the magic of cookies, your willingness to log in, and sophisticated data analytics. What store manager wouldn’t love a report detailing all the visitors to his store, where they came from, and which products that examined? People trackers are getting more sophisticated, incorporating infrared, video analytics, and even face recognition. (Next time you walk in front on a mannequin, don’t be surprised if it’s looking back.) But the ultimate marketing conduit is the mobile phone. Since each mobile phone emits a unique number on WiFi networks, it becomes the cookie of the physical world. Assuming congress keeps privacy safeguards reasonable, we’ll have a win-win situation for both retailers and consumers. Retailers get to know more about the consumer’s purchase journey, and consumers get higher levels of service with the retailer.

When I call my bank, a couple things happen before the call is connected. A reverse look-up on my phone number identifies me so my accounts can be retrieved from Siebel CRM. Then the system anticipates why I’m calling based on recent transactions. In this example, it sees that I was just charged a foreign currency fee, so it assumes that’s the reason I’m calling. It puts all the relevant information on the customer service rep’s screen as it connects the call. When I complain about the fee, the rep immediately sees I’m a great customer and I travel lots, so she suggests switching me to their traveler’s card that doesn’t have foreign transaction fees.

That technology is powered by a product called Oracle Real-Time Decisions, a rules engine built to execute very quickly, basically in the time it takes the phone to ring once. So let’s combine the power of that product with our new-found mobile cookie and provide contextual customer interactions in real-time.

Our first opportunity comes when a customer crosses a pre-defined geo-fence, typically a boundary around the store. Context is the key to our interaction: that’s the customer (known or anonymous), the time of day and day of week, and location. Thomas near the downtown store on a Wednesday at noon means he’s heading to lunch. If he were near the mall location on a Saturday morning, that’s a completely different context. But on his way to lunch, we’ll let Thomas know that we’ve got a new shipment of ASICS running shoes on display with a simple text message.

We used the context to look-up Thomas’ past purchases and understood he was an avid runner. We used the fact that this was lunchtime to select the type of message, in this case an informational message instead of an offer. Thomas enters the store, phone in hand, and walks to the shoe department. He scans one of the new ASICS shoes using the convenient QR Codes we provided on the shelf-tags, but then he starts scanning low-end Nikes. Each scan is another opportunity to both learn from Thomas and potentially interact via another message. Since he historically buys low-end Nikes and keeps scanning them, he’s likely falling back into his old ways. Our marketing rules are currently set to move loyal customer to higher margin products. We could have set the dials to increase visit frequency, move overstocked items, increase basket size, or many other settings, but today we are trying to move Thomas to higher-margin products.

We send Thomas another text message, this time it’s a personalized offer for 10% off ASICS good for 24 hours. Offering him a discount on Nikes would be throwing margin away since he buys those anyway. We are using our marketing dollars to change behavior that increases the long-term value of Thomas. He decides to buy the ASICS and scans the discount code on his phone at checkout.

Checkout is yet another opportunity to interact with Thomas, so the transaction is sent back to Oracle RTD for evaluation. Since Thomas didn’t buy anything with the shoes, we’ll print a bounce-back coupon on the receipt offering 30% off ASICS socks if he returns within seven days. We have successfully started moving Thomas from low-margin to high-margin products.

In both of these marketing scenarios, we are able to leverage data in near real-time to decide how best to interact with the customer and lead to an increase in the lifetime value of the customer. The key here is acting at the moment the customer shows interest using the context of the situation. We aren’t pushing random products at haphazard times. We are tailoring the marketing to be very specific to this customer, and it’s the technology that allows this to happen in near real-time.

Conclusion

As we enable more right-time integrations and interactions, retailers will begin to offer increased service to their customers. Localized and personalized service at scale will drive loyalty and lead to meaningful revenue growth for the retailers that execute well. Our industry needs to support Commerce Anywhere…and commerce anytime as well.

Friday Oct 25, 2013

Right-Time Retail Part 2

This is part two of the three-part series.  If you missed part 1, you can find it here.

Right-Time Integration

Of course these real-time enabling technologies are only as good as the systems that utilize them, and it only takes one bottleneck to slow everyone else down. What good is an immediate stock-out notification if the supply chain can’t react until tomorrow? Since being formed in 2006, Oracle Retail has been not only adding more integrations between systems, but also modernizing integrations for appropriate speed.

Notice I tossed in the word “appropriate.” Not everything needs to be real-time – again, we’re talking about Right-Time Retail. The speed of data capture, analysis, and execution must be synchronized or you’re wasting effort. Unfortunately, there isn’t an enterprise-wide dial that you can crank-up for your estate. You’ll need to improve things piecemeal, with people and processes as limiting factors while choosing the appropriate types of integrations.

There are three integration styles we see in the retail industry. First is batch. I know, the word “batch” just sounds slow, but this pattern is less about velocity and more about volume. When there are large amounts of data to be moved, you’ll want to use batch processes. Our technology of choice here is Oracle Data Integrator (ODI), which provides a fast version of Extract-Transform-Load (ETL). Instead of the three-step process, the load and transform steps are combined to save time. ODI is a key technology for moving data into Retail Analytics where we can apply science. Performing analytics on each sale as it occurs doesn’t make any sense, so we batch up a statistically significant amount and submit all at once.

The second style is fire-and-forget. For some types of data, we want the data to arrive ASAP but immediacy is not necessary. Speed is less important than guaranteed delivery, so we use message-oriented middleware available in both Weblogic and the Oracle database. For example, Point-of-Service transactions are queued for delivery to Central Office at corporate. If the network is offline, those transactions remain in the queue and will be delivered when the network returns. Transactions cannot be lost and they must be delivered in order. (Ever tried processing a return before the sale?) To enhance the standard queues, we offer the Retail Integration Bus (RIB) to help the management and monitoring of fire-and-forget messaging in the enterprise.

The third style is request-response and is most commonly implemented as Web services. This is a synchronous message where the sender waits for a response. In this situation, the volume of data is small, guaranteed delivery is not necessary, but speed is very important. Examples include the website checking inventory, a price lookup, or processing a credit card authorization. The Oracle Service Bus (OSB) typically handles the routing of such messages, and we’ve enhanced its abilities with the Retail Service Backbone (RSB).

To better understand these integration patterns and where they apply within the retail enterprise, we’re providing the Retail Reference Library (RRL) at no charge to Oracle Retail customers. The library is composed of a large number of industry business processes, including those necessary to support Commerce Anywhere, as well as detailed architectural diagrams. These diagrams allow implementers to understand the systems involved in integrations and the specific data payloads.

Furthermore, with our upcoming release we’ll be providing a new tool called the Retail Integration Console (RIC) that allows IT to monitor and manage integrations from a single point. Using RIC, retailers can quickly discern where integration activity is occurring, volume statistics, average response times, and errors. The dashboards provide the ability to dive down into the architecture documentation to gather information all the way down to the specific payload. Retailers that want real-time integrations will also need real-time monitoring of those integrations to ensure service-level agreements are maintained.

Part 3 looks at marketing.

Thursday Oct 24, 2013

Right-Time Retail Part 1

This is the first in a three-part series.

Right-Time Revolution

Technology enables some amazing feats in retail. I can order flowers for my wife while flying 30,000 feet in the air. I can order my groceries in the subway and have them delivered later that day. I can even see how clothes look on me without setting foot in a store. Who knew that a TV, diamond necklace, or even a car would someday be as easy to purchase as a candy bar? Can technology make a mattress an impulse item? Wake-up and your back is hurting, so you rollover and grab your iPad, then a new mattress is delivered the next day.

Behind the scenes the many processes are being choreographed to make the sale happen. This includes moving data between systems with the least amount for friction, which in some cases is near real-time. But real-time isn’t appropriate for all the integrations. Think about what a completely real-time retailer would look like. A consumer grabs toothpaste off the shelf, and all systems are immediately notified so that the backroom clerk comes running out and pushes the consumer aside so he can replace the toothpaste on the shelf. Such a system is not only cost prohibitive, but it’s also very inefficient and ineffectual. Retailers must balance the realities of people, processes, and systems to find the right speed of execution. That’ what “right-time retail” means.

Retailers used to sell during the day and count the money and restock at night, but global expansion and the Web have complicated that simplistic viewpoint. Our 24hr society demands not only access but also speed, which constantly pushes the boundaries of our IT systems. In the last twenty years, there have been three major technology advancements that have moved us closer to real-time systems.

Networking is the first technology that drove the real-time trend. As systems became connected, it became easier to move data between them. In retail we no longer had to mail the daily business report back to corporate each day as the dial-up modem could transfer the data. That was soon replaced with trickle-polling, when sale transactions were occasionally sent from stores to corporate throughout the day, often through VSAT. Then we got terrestrial networks like DSL and Ethernet that allowed the constant stream of data between stores and corporate.

When corporate could see the sales transactions coming from stores, it could better plan for replenishment and promotions. That drove the need for speed into the supply chain and merchandising, but for many years those systems were stymied by the huge volumes of data. Nordstrom has 150 million SKU/Store combinations when planning (RPAS); The Gap generates 110 million price changes during end-of-season (RPM); Argos does 1.78 billion calculations executed each day for replenishment planning (AIP).

These areas are now being alleviated by the second technology, storage. The typical laptop disk drive runs at 5,400rpm with PCs stepping up to 7,200rpm and servers hitting 15,000rpm. But the platters can only spin so fast, so to squeeze more performance we’ve had to rely on things like disk striping. Then solid state drives (SSDs) were introduced and prices continue to drop. (Augmenting your harddrive with a SSD is the single best PC upgrade these days.) RAM continues to be expensive, but compressing data in memory has allowed more efficient use.

So a few years back, Oracle decided to build a box that incorporated all these advancements to move us closer to real-time. This family of products, often categorized as engineered systems, combines the hardware and software so that they work together to provide better performance. How much better? If Exadata powered a 747, you’d go from New York to Paris in 42 minutes, and it would carry 5,000 passengers. If Exadata powered baseball, games would last only 18 minutes and Boston’s Fenway would hold 370,000 fans. The Exa-family enables processing more data in less time.

So with faster networks and storage, that brings us to the third and final ingredient. If we continue to process data in traditional ways, we won’t be able to take advantage of the faster networks and storage. Enter what Harvard calls “The Sexiest Job of the 21st Century” – the data scientist. New technologies like the Hadoop-powered Oracle Big Data Appliance, Oracle Advanced Analytics, and Oracle Endeca Information Discovery change the way in which we organize data. These technologies allow us to extract actionable information from raw data at incredible speeds, often ad-hoc.

So the foundation to support the real-time enterprise exists, but how does a retailer begin to take advantage? The most visible way is through real-time marketing, but I’ll save that for part 3 and instead begin with improved integrations for the assets you already have in part 2.


Monday Oct 21, 2013

A Comparison of Store Layouts

Belus Capital Advisors is an independent stock market research firm that sometimes rolls up its sleeves and walks retail stores.  This month Brian Sozzi walked both Macy's and Sears and snapped pictures along the way.  The results are a good lesson in what to do and what not to do in retail.  The dichotomy between the two brands is stark, and Brian's pictures tell the stories of artistry and neglect.  For example, look at these two pictures:

Where do you want to shop for sneakers?  The left picture shows the Finish Line store within Macy's and the right shows empty shelves at Sears.  The pictures really show the importance of assortments, in-stock inventory, and presentation.  Take a look at the two stories, and pay particular attention to the pictures of Sears.

19 Photos that Show the New Magic of Macy’s

Sears is Vanishing from our Minds, the Shocking 18 Photos That Show Why

Thursday Oct 17, 2013

Crosstalk Retail Panel

Susan Reda from Stores magazine hosted a panel at Crosstalk earlier this year.  I found the discussions on mobile and Commerce Anywhere very interesting, especially from the perspective of retailers not based in the US.  On the panel were:

  • Michel Joncas, CIO at Groupe Dynamite (Canada)
  • David Hunn, Head of IT Delivery at John Lewis (UK)
  • Dan West, CIO at New Look (UK)
  • Tom Madigan, VP at Oracle Retail

Take a look:

Tuesday Oct 08, 2013

Wearing My Sunglasses Indoors

If you're like me, you've heard of TOMS shoes but you may not know the back-story.  And since they're an Oracle Retail customer (and recently spoke at Oracle OpenWorld), I decided I should learn little more.  TOMS is famous for giving away a pair of shoes in developing countries for each pair they sell.  It all start when Blake Mycoskie, an Amazing Race contestant, visited Argentina and noticed two things. Farmers were wearing a unique canvas shoe that looked comfortable, and lots of kids couldn't afford to wear shoes at all.  Thus the "one for one" business model was born.

I got to see the benefits of this program on my recent visit to Honduras.  While handing out clothes, books, and stickers in small villages, I saw many kids without shoes.  And I also saw TOMS shoes being handed out to those same kids, making them very happy.  (Photo by Jeff Roster who was also on the trip.)

If shoes work, then why not sunglasses?  For each pair of sunglasses sold, TOMS will provide eye care for someone in need. I was stunned to learn there are 285 million visually impaired people worldwide of which 80% can be corrected or prevented with available eye care.  I just can't imagine being blind while knowing a cure is available but out of reach.

To call attention to this issue, TOMS is asking that we wear our shades indoors on October 10th.  Watch the @oracleretail twitter feed and see if you recognize any Oracle Retail employees.

It's okay to be shady.


Tuesday Oct 01, 2013

Five Ways to Seed Innovation

So you're a retailer and you want to plant the seeds of innovation at your company.  Where do you get started?  Here are 5 suggestions:

1. Find sources of inspiration

You and your team need to be exposed to many ideas from lots of different industries. Its unlikely a perfect solution to a problem will drop in your lap -- more likely you'll see how someone in a similar industry solved a similar problem, and you'll be inspired to do the rest.  I follow general technology sites like Mashable, TechCrunch, Ars Technica, The Verge, ReadWrite, and MIT Tech Review and look for applicability to retail.

You can also get a good understanding where technology is going by reviewing ARTS blueprints, analyst briefings, and industry publications like Retail TouchPoints, RIS News, Chainstore Age, Retail Wire, and Internet Retailer to name a few.  These organizations do a good job of staying current with the happenings of both retailers and vendors in the industry.

Its also important to cultivate ideas within your own organization.  At Oracle Retail, we have a yearly science fair in which employees form teams and are given time to build out ideas and experiment.  I've also been invited to retailers' "vendor innovation weeks" where various vendors are invited to pitch ideas.

2. Set aside resources to experiment

Many retailers have decided to acquire a start-up to form an internal lab where engineers are free to experiment with new ideas.  Others create a rotation of engineers through lab assignments to spread wealth.  Whether there are dedicated or ad-hoc resources, the important thing is always be testing new ideas.

3. Establish partnerships

Vendors, especially start-ups, want to partner with retailers to test ideas.  Its important to cultivate partnerships with regular meetings and occasional proof-of-concepts. You can get access to multiple start-ups by staying in touch with venture companies, or attending conferences.

4. Streamline processes

Its easy enough to plant the seed, but existing processes are sure to strangle any seedling.  Some amount of capacity needs to be set aside to cultivate ideas when they spring up.  Forcing someone to create a huge marketing pitch and wait six months for hardware will not advance the cause.  Make it easy to start, pivot, and if necessary, fail fast.

5. "Non-stupid vs. brilliant"

I was once discussing innovation with Jerry Rightmer in a bar in San Francisco when he said something that has stuck with me.  Paraphrasing, he said it wasn't necessary to have a brilliant idea, only a non-stupid one.  If the idea has any merit, then follow the thread and see where it leads.  From one idea, many others may sprout with a little investment.  Failed projects are full of valuable learnings and will likely lead to better ideas in the future.

About


David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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