Thursday Jan 30, 2014

Cookies in the Store

Online retailing has many advantages, which companies like Amazon have magnified with great success.  Since the early 1990s, technology has enabled great leaps forward for e-commerce sites while the brick-and-mortar world has remained relatively stagnant.  Yes, there are pockets of in-store innovation that have certainly  improved the customer experience inside stores, but by-and-large the Web world retains a big advantage. 

Tax legislation is finally being passed (on a state-by-state basis for now), which helps level the playing field a bit.  And by the same token, next-day delivery detracts from offline's allure of instant gratification.  Both physical and digital stores continue to up the ante, and consumers are the big beneficiaries.

One huge advantage of e-commerce sites is context awareness -- knowing who's browsing products, along what path, for how long, from what geography, etc.  The nature of the Web allows online retailers to "watch and learn" how customers shop and even to influence their behaviors along the way.  But this notion of context isn't strictly limited to the Web, at least not anymore.  Mobile phones are acting like Web cookies in the physical world, opening up possibilities that retailers only imagined were possible online.

The table below shows some online capabilities alongside some similar offline capabilities.

 Online  Offline
 Cookies  Mobile Phones
 Login  Geo-fence / Check-in
 Visitors Metric
 People counters
 Pageviews Metric
 Product info
 QR Codes
 Recommendations  Assisted Selling
 Opt-in + Beacons
 Promo Codes
 Digital Coupons

Assuming the right hardware is installed in the store and the customer has opted-into being tracked via the retailer's mobile app, a world of opportunities are suddenly accessible. We can follow customers on their journey through the store, noting where they dwell and which items they touch.  These data points yield improved store layouts, better assortments, and more localization.  Furthermore, we can make intelligent recommendations, offer personalized offers, and award/redeem digital coupons as they shop, enhancing the overall customer experience.

So much of the same context the online retailers take for granted is now available to brick-and-mortar stores for both analytics as well as real-time engagement.  None of these in-store capabilities are really that new, but the idea of combining them to provide a holistic view is where we're going.  And when you track events across both stores and e-commerce, you have contextual shopping at its best.

Wednesday Jan 22, 2014

Will EMV Protect Retailers?

Will EMV protect retailers?  About as well as PCI certification does today.  I used to work with the Europay/Mastercard/Visa standard when I developed software for smartcards, and the technology is certainly better than the ancient magstripe cards we use today.  But it was created before e-commerce really took off, and the US implementation of EMV isn't very secure.  Let's imagine for a moment that Target was ahead of the 2015 deadline and already had smartcard readers in its stores (like they did back in 2001).  Would they have been protected?

Since the smartcard has a tiny microprocessor embedded, it can do calculations like encryption.  When the card is inserted, it authenticates the POS, and the POS authenticates the card using a shared secret (typically an encryption key).  But in the case of Target, the POS was legit so they would have trusted each other anyway.

The typical Chip & PIN implementation in Europe requires the cardholder to enter a PIN to unlock the card, but in the US the PIN is optional and usually not required.  Do you know the PIN number for your credit card?  No one does because the banks think it would be inconvenient.

Since trust has been established, the smartcard sends over the account number and other associated data.  Its in the clear for a brief moment before its encrypted and sent to the bank.  This is the same situation as with the magstripe.  Until the banks establish the ability to support end-to-end encryption and/or tokenization, we've still got the same issue.

There is one area where EMV helps a little.  The thieves still get the creditcard data but they won't be able to create fake smartcards.  Those chips need to be programmed with the right data and keys, which are only available at the issuing bank.  So even though they managed to get the data, they can't create forged cards. Except for one little issue -- they can just use the card data online.  No need to create cards at all.

Just as PCI didn't really make retailers safe from fraud, neither will EMV.  Its a step in the right direction, but far from perfect.

Thursday Jan 09, 2014

NRF 2014

This year we're kicking off NRF with our new Release 14 which you can hear more about in the Oracle Retail booth.  I'll be spending my time there as well as walking the floor looking for trends and saying "hi" to friends.  Although I've always been a big supporter of RetailROI, this is my first year attending SuperSaturday and I'm really looking forward to it.  In additional to consuming all the great content, I'll also be leading a lunchtime discussion on innovation processes.

Here's a photo from last year's RIS/IHL/ARTS panel (courtesy of my buddy Darrell Sandefur):

On Sunday, I'll be delivering a part of the "ARTS and the Seamless Data Experience" presentation in which I'll focus on the value of standards for innovating.  I'd encourage NRF attendees to stop by and learn what ARTS has been doing this past year and what we're planing for 2014.  You can also stop by the ARTS booth and hear about our latest standard called Change4Charity.  Its an XML integration standard that simplifies taking charitable donations at the point-of-sale (which also includes Web stores).  Digital Donations, Donate Wise Now, and MiniDonations were all key contributors to this effort.

See you there!

Wednesday Jan 08, 2014

Release 14

On January 6th, Oracle Retail announced Release 14 of its enterprise suite of software.  This release represents our largest R&D investment to date, and it addresses the major goal of most retailers: Commerce Anywhere.  While there has been much said about the front-end experience for customers, that's just the tip of the iceberg.  As all retailers know, there are many systems behind the scenes that make delivering the Commerce Anywhere experience possible.  It might be really valuable to deploy iPads for store employees, and provide cool consumer-facing mobile apps, but none of that flash works without the back-office systems that gauge demand, plan the buys, source the products, distribute the inventory, and record the sales.

The market long ago identified the need for cross-channel, omni-channel, or whatever you want to call it.  But its such a difficult problem that many retailers have struggled to provide the supporting systems.  I don't think there's another vendor that offers the breadth of retail products that Oracle Retail owns, so the spotlight has really been on us to deliver.  This release provides the opportunity to transform a retailer's business to truly deliver Commerce Anywhere.

In a recent article, Mike Webster describes the release in terms of providing consumer journeys, targeted assortment offerings, inventory alignment & transparency, and integrations.  These are the principle components of the Commerce Anywhere recipe for retailers.  Additionally, we provide detailed business process flows and architecture diagrams that prescribe a Commerce Anywhere implementation.  Retailers can pick and chose the processes they need for their business and can mix the Oracle assets with existing ones as necessary because the answer can't be "replace everything and start over."

Additionally, there's new science, revamped user interfaces, deeper analytics, performance improvements, and lots of new features that help retailers plan and execute better.  One of my favorite things is our new Retail Integration Console -- a dashboard that not only monitors the performance of integrations, but allows drill-down for research and immediate corrections.  This supports both proactive and reactive troubleshooting that should help IT perform better.

So don't let the Amazon Octocopter distract you.  The retailers that execute on Commerce Anywhere will grow their business, regardless of what's happening in Seattle.

Thursday Jan 02, 2014

Commerce Anywhere

As we welcome the new year, I usually post my predictions for the future of the retail industry.  But given my dismal track record, I thought it might be better to look back at all the things that have shaped retail since this blog began in 2008.  Technology has become a huge driver in defining the new customer experience, so its more important than ever to monitor the landscape.  Below are a sampling of postings that introduced new concepts or trends.  Pick a few and think about how far we've come in this short time.

Retail Feels the Pain (2008)

Does Mobile Commerce Really Work (2008)

Social Side of Retail (2008)

Amazon's Competitive Edge (2009)

Speedy and Scalable Analytics (2009)

Retail in the Clouds (2009)

Shopping on my Phone? (2009)

Mobile Coupons (2009)

Augmented Reality (2009)

Crowdsourcing in Fashion (2009)

Get Your Group On (2009)

iPhone Redlaser (2009)

Apple Stores, Touch2Systems, and the iPad (2010)

The North Face Erects Geo-Fences (2010)

Google Rules for Retail (2010)

The Semantic Web and Retail (2010)

Bridging the Physical and Digital Worlds (2010)

Counting Eye-Clicks in the Store (2010)

Stop Saying "Multi-channel!" (2011)

Can You Trust Search? (2011)

Moneyball for Retail (2011)

Four Emerging Payment Stories (2011)

F-Commerce Gets an 'F' (2012)

Comparing ISIS, Google, and Paypal (2012)

EMV on its way to the US (2012)

Facial Recognition for Retail (2012)

Shipping Wars (2013)

3D Printing (2013)

The Cookie in my Mobile Phone (2013)

Crowdsourced Grocery Shopping (2013)

Apple iBeacons in the Store (2013)

The thread that ties all these themes together is Commerce Anywhere.  Whereas retailers often controlled the agenda in the past, consumers are now firmly in control, defining the ways in which they wish to shop.  And of course they want it all: anytime, anywhere, anyplace.  So its only fitting that I rename this blog the Commerce Anywhere Blog.  The focus remains on stories about delivering the best customer experience with special focus on applying emerging technologies.

Commerce Anywhere isn't just about bring the physical and digital stores together.  Its impacts are wide and deep, affecting every business process in the enterprise.  At Oracle Retail, we continue to provide solutions that enable Commerce Anywhere for the world's best retailers.

Welcome to 2014.

Thursday Nov 07, 2013

Blockbuster Time Machine

In another example of clinging to the core business much too long, DISH announced its closing the remaining 300 Blockbuster stores.  This reminds us that we must always be looking over our shoulders for the next big thing.  Blockbuster had the opportunity to buy Netflix, but it passed just as Barnes & Noble decided it didn't need to partner with Amazon.  Its so tempting to stick with a profitable business instead of taking a risk on a new idea.  Nevertheless, Blockbuster is history -- and this video from The Onion seals it.

Historic ‘Blockbuster’ Store Offers Glimpse Of How Movies Were Rented In The Past

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.

Monday Sep 30, 2013

Standards Accelerate Innovation

At the beginning of the US Civil War there were over 20 different railroad gauges in use across America. That meant railroad cars could only travel on the track with a matching width thus limiting how far cars could travel.  For example, in 1853 there were three different gauge tracks leading into and out of Erie, Pennsylvania where a booming business grew for workers to unload cars on one track and transfer cargo to cars on a different track.  It was clear this approach wouldn't scale in our westward expansion so in 1862 Congress specified a standard gauge for railroad tracks.  During the spring of 1886 the standard was adopted across the US thus freeing minds to solve more important problems.  Instead of researching ways for cars to adjust their wheels to fit different gauge tracks, the industry focused on other aspects of improved transportation. Standardization frees capital for additional innovation.

The Association of Retail Technology Standards (ARTS), takes a similar approach.  One of its goals is to standardize the way in which we handle data so retailers can focus their limited resources on innovations that more directly impact consumers. Retailers spend far too much time integrating systems instead of adding features.  (Sometimes integration can be the innovation, but often times its just the cost of doing business.)

There's a three-stage cycle I've observed.  Typically an idea emerges, adoption begins, its standardized, then we move on to the next idea.  Its a cycle where the idea gets optimized and standardized for mass consumption.  Standardization reduces costs thus freeing resources to work on the next great idea.  In the case of the railroad, we don't really care if the gauge is 3 feet or 6 feet.  The important thing is that we all agree on a standard (by the way, the standard is 4ft 8.5in or 1435mm) and move on.  The earlier we agree on a standard, the less rework that must be done down the line (11,000 miles of track had to be fixed in the South to match the standard).

The Technology Adoption Lifecycle depicts how new ideas are adopted by the masses. (This was extended by the book Crossing the Chasm by adding a gap between the Early Adopters and Early Majority.)  The graph is depicted below along with ARTS inputs.

ARTS provides whitepapers, blueprints, and webinars that inform retailers and help the industry cross the chasm.  When its clear the industry is interested in adopting an idea, ARTS creates database and XML standards that lower the cost of adoption thus making the idea more affordable for smaller retailers.  To help the late majority, ARTS creates Request for Proposal (RFP) templates, training, and appears at conferences to tout the idea and best-practices for its use.

As you can see, ARTS helps retailers take advantage of emerging technologies at various stages of adoption.  Membership and participation in ARTS is open to both retailers and vendors that want to be on the forefront on innovation.  I've certainly found it a valuable resource over the years.

Thursday Sep 19, 2013

Aligning Strategy to the Future

People like to ask me what retail will look like in five or ten years.  I can paint a futuristic picture involving lots of tech toys, but the reality is that I, like most people, am horrible at making accurate predictions that far into the future.  There are just too many variables, and the biggest one is the consumer.  Its really hard to predict the success of an idea AND get the timing right.  I recall testing tablets at a retailer ten years ago, but they've only recently taken off.  People are saying tablets will replace registers, and maybe they will, but I never could have predicted that ten years ago.

So perhaps instead of asking what will be different ten years from now, maybe we should ask what won't change?  That's one approach Jeff Bezos takes when deciding where to focus energies.  You can bet consumers will still want low prices, vast assortments, and fast delivery so those are constants in the Amazon strategy.  So what are some other things that won't change?

The internet isn't going away, that's for sure.  If anything, bandwidth will increase and open up even more features.  How can your business benefit from a 10x improvement in bandwidth?  Would all the products on your website be animated, perhaps with 3-D perspective?  Would you offer live video help online and from store kiosks?

Mobile will still be important as well, but it might take some additional new forms like wearable devices.  Its always going to be important to serve customers wherever and whenever they want to shop.  We need to stay flexible and support various form-factors for communicating with consumers on the move.  That might include watches, holograms, and displays projected on the nearest piece of glass (Total Recall 2012).

You can bet the marketing department will still be around, and they might just wield even more power. Assuming we're able to increase the amount of data we collect about our customers, how will we use that data to improve the shopping experience?  Can we provide real-time, personalized pricing?  What new types of security can we employ to protect that data?  How do we better include the customer's voice in our business processes?

My best advice for retailers: First and foremost focus on how technology can improve the things that aren't going to change.  Adopt technologies that help keep prices low, improve the customer experience, and make better merchandising decisions, for example.  These will vary depending on your business model, but the point is to not waste energy aiming for something that may never take hold.  Even the best ideas have fits and starts, so don't even try to align your strategy to predictions of the future.  But always track innovation and be ready to adopt when the timing is right.  Awareness and agility are key.

Wednesday Aug 28, 2013

A Digital - Analog Merge

I recently downloaded an iPhone app called Pounce that furthers the concept of Commerce Anywhere.  Since weekly circulars are still an important part of reaching consumers, they continue to be a cornerstone in many retailers' marketing plans.  So Pounce augments the newspaper experience by allow users to point their mobile phone's camera at an item in the circular and have it added to a basket.  The basket can then be passed to the retailer's e-commerce site for normal checkout.  If you've per-registered your payment information with Pounce, you can checkout immediately on the mobile phone.

According to Business Insider, only Staples, Ace Hardware, Toys "R" Us, Babies "R" Us and Target are currently supported.  After downloading the app, I went to the Staples site and tried scanning a random item.  The app didn't recognize any items I selected from the website, but that's not what its suppose to do (I was trying to cheat).  So I clicked over to the print ads where my local newspaper inserts are available online.  The app was great at quickly recognizing those items, taking just a second or two.  In fact, as I moved my phone across the page it was grabbing multiple items and putting them all in my cart.  Obviously the app is "trained" to recognize only the items in the circular, which makes perfect sense.

This is another great example of merging the analog and digital worlds, letting each do what it does best.

Monday Jun 24, 2013

Maximizing the Value of Software

A few years ago we decided to increase our investments in documenting retail processes and architectures.  There were several goals but the main two were to help retailers maximize the value they derive from our software and help system integrators implement our software faster.  The sale is only part of our success metric -- its actually more important that the customer realize the benefits of the software.  That's when we actually celebrate.

This week many of our customers are gathered in Chicago to discuss their successes during our annual Crosstalk conference.  That provides the perfect forum to announce the release of the Oracle Retail Reference Library.  The RRL is available for free to Oracle Retail customers and partners.  It contains 1000s of hours of work and represents years of experience in the retail industry.  The Retail Reference Library is composed of three offerings:

Retail Reference Model

We've been sharing the RRM for several years now, with lots of accolades.  The RRM is a set of business process diagrams at varying levels of granularity. This release marks the debut of Visio documents, which should make it easier for retailers to adopt and edit the diagrams.  The processes represent an approximation of the Oracle Retail software, but at higher levels they are pretty generic and therefore usable with other software as well.  Using these processes, the business and IT are better able to communicate the expectations of the software.  They can be used to guide customization when necessary, and help identify areas for optimization in the organization.

Retail Reference Architecture

When embarking on a software implementation project, it can be daunting to start from a blank sheet of paper.  So we offer the RRA, a comprehensive set of documents that describe the retail enterprise in terms of logical architecture, physical deployments, and systems integration.  These documents and diagrams describe how all the systems typically found in a retailer enterprise work together.  They serve as a way to jump-start implementations using best practices we've captured over the years.

Retail Semantic Glossary

Have you ever seen two people argue over something because they're using misaligned terminology?  Its a huge waste and happens all the time.  The Retail Semantic Glossary is a simple application that allows retailers to define terms and metrics in a centralized database.  This initial version comes with limited content with the goal of adding more over subsequent releases.  This is the single source for defining key performance indicators, metrics, algorithms, and terms so that the retail organization speaks in a consistent language.

These three offerings are downloaded from MyOracleSupport (article 1564821.1) separately and linked together using the start page above.  Everything is navigated using a Web browser.  See the Oracle Retail Documentation blog for more details.

Friday Jun 21, 2013

Oracle is a Leader again in Gartner’s Magic Quadrant for E-commerce

Although e-commerce represents only 10% of the typical brick-and-mortar retailer’s sales, that percentage continues to climb.  So it’s no wonder that many retailers are considering the purchase of new e-commerce platforms to provide a commerce experience that keeps customers coming back.  And once again, Oracle and IBM lead the pack, identified as leaders in Gartner’s 2013 Magic Quadrant for E-Commerce along with hybris. 

Many retailers are realizing the need to support Commerce Anywhere, allowing customers to interact with brands on their own terms.  Gartner reinforces this trend saying, “E-commerce is moving beyond just an online selling channel to integrated platforms delivering a unified customer experience. Traditionally, most organizations have been investing in the online channels with the objective of driving additional sales. However, customers increasingly are expecting a seamless buying experience across all channels, and e-commerce is a critical part of this evolution since it is a point where other channels are integrating to synchronize the customer experience across channels."

Oracle saw this trend coming and acquired ATG, FatWire, and Endeca, all leaders in their respective markets, starting back in 2010.  The assets have been combined as Oracle Commerce and represent a comprehensive solution for retailers to sell via the Web while offering the best customer experience possible.  Retailers like JCPenney, American Apparel, and Kohl’s have recently licensed Oracle Commerce as part of their transformations.

In the next two years we’ll begin to see more separation between the retailers that have a Commerce Anywhere strategy, and those that continue to flail with separate channels.  Integrating online and offline commerce, along with mobile and social aspects are becoming crucial to success in the industry.


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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