Monday Dec 28, 2015

Nordstrom Drives International and Omni-Channel Growth with Oracle Solutions

Founded in 1901, Seattle-based Nordstrom has long been known for superior service, going above and beyond to create a fantastic customer experience, and empowering employees to do whatever it takes to keep customers happy. To know Nordstrom, is to love Nordstrom. I would encourage you to explore for yourself, the Half-Yearly Sale is on until January 3rd. Below is an editorial view of the recent Oracle OpenWorld presentation. 

Today, the department store chain also leads the market in bringing customers new omni-channel conveniences. For example, Nordstrom offers not only in-store pickup of goods bought online, but also permits cross-channel returns with buy-anywhere-return-anywhere service at any of its Nordstrom, Nordstrom Rack and Haute Look outlets.

“We provide an awesome shopping experience,” David Boeschenstein, vice president of Merchandise and Supply Chain Technology for Nordstrom, said in a presentation at Oracle OpenWorld in October. “We make it convenient for the customer to shop wherever and whenever she wants to shop.”

Oracle Powers Nordstrom’s Renowned Inventory Management

Most recently, Nordstrom employed Oracle Retail Merchandising System to enable its omni-channel initiatives by giving the department store chain a full view of inventory. The company eventually extended the system to its Nordstrom Rack division and web storefronts, but it became overly customized and siloed over time—and a new push into Canada would necessitate improved integration.

“Our strategy is straightforward: to realize the strengths and advantages of One Nordstrom,” Boeschenstein said, referring to its unified omni-channel strategy. “But we were handcuffed by a system that’s overly complex [and] costly to maintain. As we entered the Canadian market, we wanted to make sure we were able to grow. We wanted to maintain the upgrade path, so we didn’t face the same situation going forward.”

Nordstrom identified several priorities to guide the Next Generation (NGEN) initiative. “We needed to make sure we weren’t just going to replace the system we have today,” Boeschenstein said. “We wanted to be able to justify any complexity. We want to stay nimble; we want to stay focused—and prioritize what’s added going forward.”

The announcement of a Fall 2014 launch date for its first Canadian store helped the team focus on those goals and go live with RMS 13.26 just nine months later in Calgary. “It helped us balance the ‘nice to haves’ versus the ‘need to haves,’” Boeschenstein said. “We learned a lot from the implementation. It was opportunity for us to evaluate what support was there, and evaluate our internal capabilities.”

Nordstrom Rack Moves to New Oracle Retail Solutions

The next phase of the upgrade—taking Nordstrom Rack stores in the U.S. to Oracle Retail Merchandising System Version 14.1—would be more complicated. The team broke the task into stages and looked to the Oracle Retail Reference Library for guidance. Rollout will ultimately require an interdepartmental approach, and has the full support of the company. “Acknowledging that this is the most important initiative in the company enabled us to get the resources we needed,” Boeschenstein said.

“The other thing we learned, and knew intuitively, is that there’s a need for early and often performance testing,” he added. “We’ve piloted a few stores, and now we’re taking a break to make sure performance is tuned correctly so we’re on track for Fall 2016.” In 2017, the company will upgrade to Oracle Retail Version 14.1 in Canada and introduce Nordstrom Rack stores there; full-price stores in the U.S. will see an upgrade starting in 2018.

“We have a great relationship with Oracle, and we really appreciate that,” Boeschenstein said. “We’re learning along the way, and applying the lessons learned. And we feel like we’re making significant strides in achieving our One Nordstrom strategy.”

For more insight to Nordstrom’s strategic use of Oracle solutions to support its expansion into Canada, see the full presentation "Nordstrom: Technology to Enable Future Growth". 

Oracle’s retail customer community is a rich resource for peer-to-peer insights to best practices and business strategies. Follow this blog in the coming weeks as we share a series of stories presented by retailers during Oracle OpenWorld 2015 in San Francisco. We invite you to learn more about the Oracle solutions used by these and other retailers worldwide, join us at the National Retail Federation “Big Show” held January 17-20 in New York City, New York, where we will demonstrate the industry’s most comprehensive suite of cloud and retail services solutions. #NRF16 

Friday Oct 23, 2015

The Magic of a Vibrant Customer Community

We are in the final days of the preparation for Oracle OpenWorld. The conference continues to grow year over year drawing about 60,000 people to the SF area to share experience across applications, technology, database and industries. The Oracle brand is impressive at #16 on the Interbrand ranking this year and we shine brightest next week.

The community is even more impressive. Oracle employs some of the brightest minds in technology to deliver innovation to the market at scale. Our ecosystem is vibrant and motivated to deliver customer results. The Oracle Retail community is comprised of 12,500 business partners. We have spent over 3,100 days in the last 12 months enabling our ecosystem on our latest releases.

On Sunday October 25th will welcome nearly 900 retailers to San Francisco for three consecutive days of insightful conversations, best practice sharing and presentations from our customers. For our retail community, it’s always about creating an experience. My job is to create the forum to foster these relationships and sharing. My proudest moments are seeing brands working together to figure out solutions to the latest challenges in the retail industry. We have a vibrant community of customers and partners that I am privileged to participate in. When you do the right thing for your customer community, magic can happen. At the Oracle OpenWorld 2008, my late friend and former CIO of SUPERVALU Paul Singer gave an inspiring keynote that led to the creation of the RetailROI community.

This year Oracle will be featuring stories from Nordstrom, Guitar Center, Gap Inc, TOMS shoes, Vitamix, Vodafone, Verizon, Furniture Row, and Ascena in the retail track at the Marriott Marquis. Click on the Focus on Retail document to see the details. We will have @OracleCommerce customers like Elaine Turner, Hollander, Rock Creek and Vitamix offering demonstrations in the Exposition Hall.

We will compliment the customer stories with a great line up of solution experts to talk about the latest developments in our footprint as we move toward the unveiling of Oracle Retail Version 15.

We have multiple partners who have contributed to the OpenWorld 2015 program with customer stories including Sparkred, Cirrus10, SapientNitro, Infosys, and Deloitte. Infosys is the retail track sponsor. Deloitte is sponsoring our Retail Executive Summit. IBM, Logic, Rackspace and OLR are sponsoring the networking activities. 

If you will be in San Francisco connect with us on Twitter for live updates on sessions, available demonstrations or if you just have a question and we will make sure your experience is outstanding. As a sign of appreciation, Oracle is throwing a concert on Wednesday night for the community at Treasure Island featuring Elton John and Beck. 

Monday Apr 27, 2015

Insights from OIC: Nordstrom’s New Canada Stores Become Testing Grounds for Enterprise IT Initiative

Last month our customer shared some fantastic experiences at Oracle Industry Connect 2015. Here is a glimpse of what you missed from the sessions....

Among its other accomplishments, Nordstrom has been a retailing technology pioneer, beating its competitors to market with customer-focused offerings including save-the-sale and endless aisle capabilities, buy online/pick up in-store, and coordinating returns between multiple stores and channels.

From 2001 until 2013, the Oracle Retail Merchandising System (RMS) served as a technology backbone for Nordstrom’s increasingly complex operations, but this required more and more customization as time progressed. When the retailer realized it was reaching the limits of customization, it initiated the Nordstrom Next Generation (NGEN) initiative, a six-plus-year program to support the company’s growth by replacing its current enterprise foundation solutions with new Oracle Retail systems offering advanced capabilities and scalability.

Nordstrom’s recent expansion into Canada is doubling as the first phase/pilot for NGEN, according to Nordstrom Director of Supply Chain and Fulfillment Brenda Glasgow, who spoke in late March at Oracle Industry Connect in Washington DC. The retailer has already opened two of a planned 10 full-line stores in Canada, with the next opening planned for fall 2015, and also plans to open its off-price Nordstrom Rack stores beginning in 2017.

The Canada expansion “gives us a chance to test, learn, and adjust with our business partners and technologists,” said Glasgow. “It’s allowing us to socialize the ‘vanilla’ implementations of Oracle solutions, and giving us practice managing the scope of these implementations.”

Nordstrom is still relying heavily on Oracle solutions, particularly in merchandising with Oracle Retail Merchandise Operations Management (MOM). This system is supporting international requirements around currencies and import/export issues, and Nordstrom is also taking advantage of new trade management and invoice matching modules that supplant older legacy applications for these functions.

Glasgow and Deby Hansen, Director of Program Management and Architecture for Nordstrom, identified key learnings from the Canada opportunity that include leveraging best practices identified in the Oracle Retail Reference Library, and using a process-led design approach that makes extensive use of personas and job roles. “By painting a full picture of a job’s process flow, it’s been easier to work through what’s been different from one system to the next,” said Glasgow. “We need to balance respecting our people’s business requirements with our motivation to stay ‘vanilla’ with these implementations.”

Nordstrom will apply these learnings as NGEN progresses, supporting long-term corporate goals that include sustaining the company’s growth, supporting its Nordstrom Rack stores becoming more of a separate entity, and “keeping us on an upgrade path that leverages our research and development investments,” said Hansen.

Congratulations to Nordstrom for their hard work and success. Nordstrom continues to impress the industry with their approach to the enterprise transformation. Read the press release or check out the presentation in the RACK to dive a little deeper. 


Tuesday Mar 31, 2015

The Next Steps for Subscription Commerce

I recall a few years back when flash sales were all the rage, probably peaking when Nordstrom acquired HauteLook. The model readily captures the excitement of discovery, and draws on the competitive nature of deal-hunters.  This cue-routine-reward formula has only one flaw -- as competition enters the market, differentiation dwindles.  Obviously flash sales are very different from traditional online retailing, but there isn't much difference between flash sale sites.  A typical customer is a member of several sites without much loyalty to any particular one.  Then the pressure to watch several sites and pounce on deals becomes exhausting.

Subscription commerce, from sites like Birchbox and Stitch Fix, maintain the excitement of discovery plus add the regularity of a subscription with a rewards program that garners loyalty.  You get a box of curated stuff every month and points awarded for purchases.  Over time the company develops a profile of you so that the box can be better curated for your tastes and style.  The model seems to be working well enough for Nordstrom to buy Trunk Club.

Now here are three next steps that retailers should consider:

1. Smarter Subscriptions

Just as the basics are replenished in a store, the same needs to happen in homes. This starts with the dry basics like toilet paper, cereal, and makeup.  Retailers should know a customer's preferences and consumption level, and help replenish products just-in-time. This takes historical data and forecasting, or possibly the use of in-home sensors (i.e. Internet of Things).  Nobody enjoys shopping for toothpaste, so just figure out when I need more and have it delivered before I run out.

2. Better Personalization

Customers are members of many segments, and its the intersection of those segments that makes them unique.  To cull out segment membership requires a mix of soliciting preferences (e.g. what heel height do you prefer?), collecting available psychographic data (what heel heights did you like on Facebook or pin on Pinterest?), and analyzing historical sales (what heel heights have you purchased?).  Even so, a healthy amount of A/B testing is required to stay on top of emerging trends as tastes tend to be dynamic.  Use the data to make the product selections more tailored and relevant.

3. Inclusive Store Experience

To date, subscription commerce has been a solely digital activity, but many customers still require more physical interaction.  For style-sensitive products like fashion, why not provide monthly, personalized suggestions with an opportunity to schedule a try-on appointment in the store?  Or perhaps an in-store tasting for the jelly-of-the-month club?  Driving customers to the store should increase basket size, and also provide customers with the flexibility to tweak their personalized product recommendation.

I'm watching the market to see if these ideas gain traction.  Use the comments to express your own opinions as well.

Thursday Jan 10, 2013

Innovation Labs

Once of the trends I noticed in 2012 was retailers creating standalone innovation labs.  The ones that seem to get the most notice are Walmart Lab and Nordstrom Lab, most likely because they have great marketing to compliment their inventions.  Two new labs that just started are the Staples Velocity Lab and the Home Depot Lab.  In most cases these labs stem from acquiring a start-up, and not wanting to crush the start-up spirit, the retailer keeps the company separate.

Having a separate lab has a few important advantages.  First, since its not part of the larger IT organization it doesn't get sucked into fire fighting, which can be a huge distraction.  Also, its not bogged down by enterprise-class software development processes that tend to slow things down.  An important part of innovation is constant tweaking that can't be documented up-front.  Having labs focused on retail-specific solutions keeps a retailer's edge.

At Oracle Retail we established the Retail Applied Research (RAR) team a couple years ago under the leadership of John Yopp.  They research emerging technology, collaborate with other labs, and convert ideas into prototypes in a nimble fashion.  Their efforts help us better assess the value of ideas and de-risk some of the technology.  This year we'll be demonstrating two of their projects in our booth at NRF.  We'll be demonstrating an Isis payment using NFC with our Mobile POS running on a Verifone sled. Additionally, we'll be showing how voice-response can speed transactions on our Mobile POS.

To foster the innovative spirit, we also have an annual Science Fair in our R&D organization.  Small teams with innovative ideas are given the week of NRF to build prototypes which are then judged based on originality, execution, and presentation.  Last year we had some pretty cool ideas using iPhones and Twitter that led to patent applications.

Technology doesn't stand still, so I'm hoping that more retailers create separate labs to incubate ideas in 2013.  Nobody can afford to stand still.

Tuesday Oct 02, 2012

Innovation for Retailers

One of my main objectives for this blog is to point out emerging technologies and how they might apply to the retail industry.  But ideas are just the beginning; retailers either have to rely on vendors or have their own lab to explore these ideas and see which ones work.  (A healthy dose of both is probably the best solution.)  The Nordstrom Innovation Lab is a fine example of dedicating resources to cultivate ideas and test prototypes.

The video below, from 2011, is a case study in which the team builds an iPad app that helps customers purchase sunglasses in the store.  Customers take pictures of themselves wearing different sunglasses, then can do side-by-side comparisons.


There are a few interesting take-aways from their process.  First, they are working in the store alongside employees and customers.  There's no concept of documenting all the requirements then building the product.  Instead, they work closely with those that will be using the app in order to fully understand what's needed.  When they find an issue, they change the software onsite and try again.  This iterative prototyping ensures their product hits the mark.  Feels like Extreme Programming if you recall that movement.

Second, they have time-boxed the project to one week.  Either it works or it doesn't, and either way they've only expended a week's worth of resources.  Innovation always entails failure, and those that succeed are often good at detecting failure quickly then adjusting.  Fail fast and fail often.

Third, its not always about technology.  I was impressed they used paper designs to walk through user stories and help understand the needs of the customer.  Pen and paper is the innovator's most powerful tool.

Our Retail Applied Research (RAR) team uses some of these concepts in our development process.  (Calling it a process is probably overkill.)  We try to give life to concepts quickly so the rest of organization can help us decide if we're heading the right direction.  It takes many failures before finding a successful product.

Monday Feb 20, 2012

F-Commerce gets an 'F'

Bloomberg is reporting that Gamestop, JCPenney, and Nordstrom have all closed their Facebook stores.  That's not the best timing with Facebook's IPO just over the horizon, but I don't think this should really be news to astute retailers.  Duplicating an e-commerce store within Facebook doesn't really offer a different experience, and Facebook users are used to punching out to the Web for all sorts of things.  By simply putting a store on Facebook, retailers have missed the point of F-commerce.

In my mind at least, F-commerce should be more about the social aspects of shopping leading up to a purchase, not the actual purchase itself.  You're not going to get much more convenient than today's Web stores, so efforts should not be focused there.  Instead, focus on ways to move the water-cooler conversations about products to Facebook where its easier to influence people into acting on those conversations.

If you've ever seen me talk about the topic, I usually show a slide depicting three approaches to F-commerce.  There's the "tab store", which is how 1-800-Flowers first approached Facebook.  Then there's the "wall store," which is best represented by JCPenney and ASOS in the UK.  And finally there's the "newsfeed store," which has been successful for stores like The Limited.  The newsfeed store highlights a couple products or promotions within the newsfeed, alongside the conversations with all your friends.  It capitalizes on the social aspects of Facebook, and doesn't try to duplicate an entire Web store.

My friend Wade Gerten, CEO of 8th Bridge, said of stores within Facebook, “it was basically just another place to shop for all the stuff already available on the retailer websites.  I give so-called F-commerce an ‘F.’”

I want to be clear that I'm not criticizing these retailers for their efforts.  They did exactly what innovative leaders should be doing: experiment, and if it doesn't work then cut the cord quickly.  Now that lessons have been learned, its time to move on and capitalize on the knowledge gained.

Retailers should continue to use Facebook to communicate with consumers and drive them to stores and e-commerce.  As always, the best results come from managing all the channels together in a unified way, leveraging the best aspects of each without needless duplication.

Thursday May 12, 2011

Gamification of E-Commerce?

Zynga makes money hand-over-fist producing simple games that are easy to learn and highly addictive (at least for some).  Other companies, like Foursquare, challenge people to earn badges and status.  Even the Amazon Gold Box appeals to a certain type of user.  Flash Sale sites like Gilt, Hautelook (now owned by Nordstrom), and MyHabit (recently launched by Amazon) attempt to add excitement and fun to shopping in their own ways.  Games, and more specifically friendly competition, can be used to inject fun while influencing behavior.

And what could be more fun than an auction?  There's competition with other bidders, the need for strategy, and a nice payoff if you win the bid at a discount.  An entire industry has grown up around eBay to support this type of retail business.  In both the eBay and Flash Sale models, the retailer brings buyers and sellers together for a transaction that benefits all three parties.

But there's a new group of retailers that have combined auctions and gaming (some might even say gambling) into a fun way to shop and possibly go broke.  I recently saw a TV commercial for Quibids where they claimed someone got an iPad for $24.74.  Yeah, right.  But after investigating, I believe it could have happened.  And while one lucky person got a great deal, many others wasted a lot of money.

The way these penny auction sites work is that you must pay for each bid you make, typically 60 cents.  Items start at one cent and each bid increments by a penny within a preset time limit. Each bid can potentially extend the time limit as well. So using the iPad example, 2474 people submitted bids netting Quibids $1484.60, which is well over 100% markup.  The last guy got an iPad for $24.74 and everyone else wasted their money.

To their credit Quibids now offers "Buy It Now" so that the money you spend on bids can be put toward the same item at list price.  So if you made 25 bids on the iPad, they credit your account $15 toward the purchase of an iPad at the list price.  Its that very feature that makes Quibids look like an e-commerce site with a gaming front end.

Their homepage reminds me of all the slot machines in casino.  Its very enticing...and profitable.

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