Monday Apr 28, 2014

Personalization for Retail

Personalized service was one of the casualties when the retail industry moved from independent stores to chains.  Personalization at scale has always been difficult, but technology advances in the last ten years have helped.  One only needs to visit to see what automated personalization can accomplish.  By personalizing the customer experience, retailers like Z Gallerie and Zenni Optical are increasing customer engagement, converting more sales, and cross-selling/up-selling.  Typical approaches include:

  • Product Recommendations
  • Searchandising & Faceted Navigation
  • Personalized Emails
  • Webpage Curation
  • Targeted Alerts & Offers

All of these approaches must effectively leverage many data sources.  While these techniques are fairly mainstream in the digital world, they are only now making inroads in the physical stores.  The combination of indoor-location and mobile apps has opened new opportunities to find customers and provide relevant, personalized content while they are shopping.  Of course there has been much debate over the privacy concerns, but as long as retailers focus on being a butler rather than a stalker, those issues will work out over the long-term.

The three C's for personalization are Context, Content, and Conduits.  Understanding each is important to the overall personalization effort.

Context makes message more relevant and therefore more sticky.  Context starts with location, which includes tactics like geo-fencing and in-store location.  Messages delivered as the consumer drives near a store or as they browse a particular department within the store are relevant to the current situation and therefore more helpful.  Context also includes what might be known about the customer.  Unidentified customers might rely on what's known about local customer segments, while an identified customer might include detailed purchase history.  If the customer doesn't own a dog, don't offer them dog food.

Content includes product data, offers, and lifestyle information.  Not everything is about a coupon.  A sporting goods retailer, for example, might alert customers about local sporting events.  Alerts for new shipments or upcoming promotions are also helpful to customers.  Help customers improve their lifestyles without always overtly selling to them.

Conduits refer to the different touchpoints for contacting customers.  Obviously the web is an excellent opportunity to present offers, but email and mobile apps can be just as effective and are sometimes more appropriate.  Using a combination of conduits, possibly managed via marketing automation, can provide the most consistent messaging.  Be care to note a customer's contact preferences.

Connecting the data sources, optimization science, marketing execution, and delivery technologies will round-out the personalization solution.  Remember, customer centricity is a philosophy, not a feature.

Wednesday Apr 23, 2014

The Art and Science of Retail Planning

Long before the sales are rung-up, a retailer's success or failure is determined by the decisions made during merchandise planning.  This occurs at both the strategic level, where budget and space are considered, and at the operational level, where the exact SKUs to be carried are determined.  While its extremely difficult to predict what consumers will buy, sophisticated forecasting helps to predict the likely outcome of stocking particular products.  Buy too much product and you'll be marking it down at a loss.  Buy too little, and your customers will head for the doors empty handed.

The days of using spreadsheets to plan assortments has given way to retail-specific tools that facilitate decision making at various levels within the product hierarchy and the ability to analyze and tailor assortments using attributes reflecting consumer preferences. This ensures planners, buyers, and category managers can manage the millions of SKU/store combinations that arise for localizing assortments to fit the varying communities of shoppers.

Forrester Research, Inc. recently evaluated the 11 top retail planning solutions vendors using 80 separate criteria in its report entitled "Forrester Wave™: Retail Planning Solutions, Q2 2014.”  The entire report can be found here, but you can assume I wouldn't call it out unless Oracle did extremely well.

Oracle Retail's merchandise planning and optimization solutions are centered around a powerful multidimensional datastore, a so-called no-SQL database, that is highly configurable and able to process large volumes of data.  This platform embeds the retail science that helps retailers make the best decisions while planning their merchandise.  Additionally, release 14 marked the debut of a new dedicated science engine that offers additional algorithms like Customer Decision Tree, Demand Transference, Advanced Clustering, and Market Basket Analysis.

Whether its grocery, fashion, specialty, or department stores, the planning process is crucial to delivering on consumer expectations. Choosing the right toolset to complement the art of retail with advanced science has never been more important.

Thursday Apr 10, 2014

Stage Stores Rounds-up

Steven Hunter, SVP and CIO at Stage Stores, said something at Oracle's recent Industry Connect conference that caught my attention.  He was retelling a story about how Stage Stores customers, communicating through social media, said they wanted to make donations to charities at the point-of-sale.  So Steve implemented round-up functionality that allowed donations to several nationwide charities.  The program was good, but not great so they went back to social media to receive additional guidance.  This time they swapped the nationwide charities for local charities and donations rose by 600%!

There are a few lessons to take away from this story.  First, listening to customers is important and never easy.  Social media can be a big help, but sometimes it still takes experimentation to find the right solution.  Second, customers want to be charitable, but they want to be involved in the choice of charities and prefer local organizations that directly impact their communities.

Donating to worthy causes feels good, so why not associate that feeling with shopping?  The donation jar by the register has been around forever, but it presents issues for security, counting/reconciling, and lack of audit trail.  So retailer's have a couple requirements for taking donations at the register:

  • Must never increase checkout time.  Long lines are bad news for retailers.
  • Must be integrated into the payment process, without requiring prompts from employees that are awkward for both parties.
  • Must be electronic, so theft is minimized and there's no overhead for counting.
  • Prefer to give customers a choice of charities, so they get a say in where their money goes.
  • Prefer configurable charities, that are local and can be changed to align with events.
  • Prefer to provide receipts for donations, so customers can collect them and take deductions at tax time.

Based on these reasonable requirements, ARTS developed an integration standard that aims to reduce the cost of integrating the POS to "charity processors," the third-parties that process donations for retailers. Greg Buzek, who is very active with his own charity, quickly calculated that 1.4 million POS registers were represented by the companies involved in creating the standard,  Just imagine if each one of those collected $10 a day for a year.  That would be $5 billion, significantly more than what's collected today, for those in need.

Using the standard, Oracle Retail has integrated its POS with Mini-Donations as a proof-of-concept to show what's possible.  As more retailers follow Stage Stores' lead, vendors will incorporate the interface into their POS and e-commerce offerings, making it easier for retailers to adopt the practice.  Then retailers can strengthen the bonds with their customers and community, and reap the benefits that follow.

Monday Apr 07, 2014

Amazon Dash

Just to once again prove that Amazon is a technology company that happens to do commerce, the Seattle giant has released Amazon Dash, a new tool for shoppers.  Chances are you heard about their recent set-top box, Fire TV, but the Dash didn't get much hoopla.  That's because it complements their Fresh program, which is only available in Seattle, San Francisco, and Los Angeles.

Think of Dash as a remote control for your shopping list that you leave in the kitchen.  When you pour the last of the milk in your coffee, grab dash and scan the carton's barcode.  Or better yet, just say "milk" into Dash's microphone.  Items are added to your online shopping list, then when you're ready to order, you make a few adjustments and checkout.  Amazon Fresh delivers your items the next day.

In a similar vein, I introduced Grocery IQ, a mobile app, to my family to manage our grocery list.  Its nice because we can all add to a centralized shopping list.  When my wife does the shopping (in a physical grocery store), she checks the items off the list as she goes.  We can actually monitor the list in real-time.  (Warning: that also means the kids can add items as you're shopping so the list never shrinks -- real funny kids.)

Amazon has made this process even easier by providing a dedicated device instead of (actually, in addition to) a smartphone.  And of course its hardwired to Amazon's shopping cart.  Brilliant, as usual.


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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