Omni-Channel Retailing—A New Paradigm of Product Marketing: Interview with Leo Suarez

 
Glenn: Hi, everyone. I’m Glenn Gow, Founder & Advisor of Crimson Marketing. Welcome to Moneyball for Marketing where we talk about the incredible changes happening in marketing organizations around big data and marketing technology. We feature marketing technology insights from the top marketers in the world. The reference to Moneyball is from the story of how the Oakland A’s baseball team were able to win and win and win because they figured out how to use data and technology to their advantage. If you’d like to learn about how to use big data and marketing technology and marketing to help you win visit us at CrimsonMarketing.com or email us at info@CrimsonMarketing.com. And now on to our podcast.
Today I am very pleased to welcome Leo Suarez, Senior Vice President of Worldwide Marketing and Strategy for Toshiba Global Commerce Solutions. Now, how does Toshiba describe itself? Toshiba Global Commerce Solutions is the leading supplier of point-of-sale systems for retailers with a worldwide installed base larger than the next three major competitors combined. So, welcome, Leo.

Leo: Thank you.

Glenn: So you and I were talking about the customer journey and where retailers fit in the customer journey as it relates to an omni-channel world. Tell us a little about your thoughts there.

Leo: Sure. I think today a lot of the retailers are struggling on how to mimic the experience that a lot of customers get when they shop online, when they go to an e-commerce site and they buy something, what they experience there is really endless aisles, endless comparison of different products, price comparisons, real time suggestions for other things that they could buy with the thing that they’re actually looking at.

Glenn: Yeah, you make it sound great to shop online.

Leo: Exactly, and so that’s the struggle that retailers have is, “How do I mimic that customer experience when the store is open and when the customer decides they want to go into my store?”

Glenn: Yeah, it’s a big challenge, right? Because retail sales are dropping relative to online.

Leo: Correct. And what a lot of retailers are missing today is that customers, in reality, if you look at all of the surveys that have been taken and you ask customers, “Where would you prefer to buy?” The overall majority of them, it’s more like 85 to 87 percent prefer to buy in the store, and why is that? Well, it’s because we’re all visual people, we like to see, touch, smell, feel what it is that we want to buy, so we would rather visually look at something, touch it, and then buy it versus looking at on a screen.

Glenn: Right.

Leo: And so, that advantage that retailers have in that customers want to buy in the store is the challenge that retailers have. “How do I mimic that e-commerce experience when the shopper decides they’re going to go into my store?”

Glenn: Right. Okay.

Leo: Go ahead.

Glenn: No, no, no, you’re good.

Leo: And so, one of the examples that I use is you’re sitting on a Sunday afternoon and you’re looking on a website, maybe you’re looking at the store’s website, and you’re looking at a red shirt. And you decide, “Geez, I like that shirt but I’m not sure about the material. I’d really like to feel the material because I just can’t do that online, and maybe it’s tapered. I want to try it on,” and so forth. And so, there’s the scenario where the retailers and their store has an advantage, and so the challenge is the then that customer is going to walk into that store, maybe the same day, maybe three or four days from the point that they looked at it, and at that point the store and the staff in that store has to know that the customer has already been looking at a red shirt.

Glenn: Right.

Leo: And ideally should be able to offer that shirt or other things that they could work on.

Glenn: So how do they do that?

Leo: And so, what they do is that they have a challenge ahead of them, what we call an omni-channel paradigm that they have to set up and that is that they have to tie all of the disparate systems that they use to run a store, pricing systems, advertising systems, loyalty systems, couponing systems, all of these systems, the website itself. All of these systems have to work together in a way that when a customer looks at the red shirt on the website and then they go into the store that the store associate can they say, “Okay, you looked at in on Friday. Let me look it up. The pricing file says that on Sunday it cost this much, that that same record can go look at their inventory and say, “Yeah, we have it here.” Or, “No, we don’t, but we have it at this other store.” And so, what they do is they present to the customer in a face-to-face fashion all the same information that they would’ve experienced had they done that through a website. And like I said, the majority of the research that we have done shows that an interactive sales experience is much preferred by most people because, like I said, we’re all human beings and we prefer to talk to each other.

Glenn: That sounds like a lot of systems to tie together to create that great customer experience.

Leo: Correct. And that’s the challenge, so what happens today in the real world is that retailers have been stitching this together. It’s the way I try to show it to date, and buy an inventory system, they buy a loyalty system, they buy a pricing system, and they buy all of these systems and then they install it into their enterprise and then when they try to connect them all together they realize that the systems are not necessarily designed to work in a seamless fashion. And that’s the problem that most retailers have today is that in this journey to omni-channel all of the big data that they have and they use is kind of in silos and it doesn’t necessarily migrate well between one silo to the other and that’s the dilemma they have. That’s where we in Toshiba come in and say, “We can help you with that and try to put together a seamless type of solution that transfer customer records between all of these different silos that the retailer has today.”

Glenn: And I would imagine, Leo, that this is even more important now because as I’m shopping in a retail store at the same time I’m enabling online buying to occur. I can look. If you don’t have the red shirt I can look who does have the red shirt and I can walk over, perhaps, to another store.

Leo: Right, right, and that’s the other problem that a lot of retailers have today and that is that the customer that’s walking into their store sometimes is infinitely more knowledgeable about the item that they want to buy than the staff in the store because before they get there they’ve already researched it, they’ve already looked at it. They’ve compared the red shirt from different brand makers, they’ve compared prices, and so when they walk in there all they want to do is essentially execute. They want to buy what they’ve already decided on. And so, if for some reason that retailer doesn’t have that particular shirt that buying is lost if they can’t actually then mimic that online experience which is the ability to say, “Look, let me find another store.” Maybe that’s within walking distance of the store or, “Let me go look at some other alternative for you,” that allows me to execute that sale. Maybe I can buy it for you from another store and ship it directly to your house, but they need to do is to be able to supplant the experience that that customer would’ve been shown had they done everything online.

Glenn: Right. We also talked about another issue that online stores have as an advantage, what you call the “endless aisle” story. Tell us about that.

Leo: Right. So, “endless aisle” means that the advantage that e-commerce has is you can sift in your comfortable chair at home and just shop to your heart’s content on a particular item and really never run out of options. It’s just you can go from website to website checking for, let’s say, you wanted to buy a headboard for your bed and you wanted a white headboard and the headboard had to have specific characteristics. You can shop endless amounts of vendors that offer headboards, and so this “endless aisle” phenomena is one of the reasons that a lot of people like to shop online because they say, “When I go into the store they have a fixed amount of inventory in there,” and it’s not endless.

And so, what a lot of retailers do then, they say, “No, that’s not really true because, one, I can provide a kiosk there that allows you to shop endlessly through all of the inventory that I have throughout my enterprise. I can enable my staff associate with a mobile device that can sit there with you and look for stuff endlessly.” And so, again, as long as there’s an option to mimic that “endless aisle” in the store, typically, you can save that particular sale. I’ll give you an example, my wife went into a store this Sunday and she wanted to buy these glass beads that she wanted to put in a vase and they had to be aqua blue and they had to have this special shape.
She went into a store because she had actually seen that in the website of the particular store. She went into the store and those glass beads were not there and she was very frustrated. She said, “Well, geez, I saw it there and now I want to buy it.” And the associate, very adept, pulled a mobile device and said, “Well, let’s go look at the store, the online inventory that we have.” She found exactly what my wife was looking at and executed the sale there. She said, “Look, don’t worry about it, we’ll ship it right to the house, and since we didn’t have it here we’re not going to charge you any shipping.” And she was perfectly satisfied, so there’s an instance where something that could’ve been a bad shopping experience turned into a very pleasant experience.

Glenn: And that’s interesting because that’s where the retail store now becomes a warehouse, right? If I’m in one store, whether I’m shopping online or I’m in a brick and mortar location, if there’s another store within a reasonable distance away we can ship it to you just like if you were shopping online.

Leo: Yeah, that’s really the other advantage that a lot of larger retailers have and they haven’t looked at their stores all around town as not just a store but a warehouse, and it’s because all of these stores have goods, all of these stores have inventory, and so if you are able to connect real time the inventory status of all of these stores then a customer that goes to one particular store doesn’t find what they want can be easily either directed to another store that has the item or just simply have that other store ship it directly to their house. And the advantage that the retailers have with that is over the online is because particularly over the online if you buy something the best of cases you’ll get it overnight. You’ll get it the next day and typically you have to pay a premium for that.

Glenn: Right.

Leo: And what most people do is they say, “Yup, I’ll get it within two or three days.” But if you have what I call a “distributed warehousing system” which is nothing more than all the stores in a given geographic area, what you can now offer the customer is, “Look, not only can I find it for you but I’ll ship it to today because it’s in the same geographic area.” And so, the customer can literally go home and within a couple of hours have the item show up at their house. And to that customer it was exactly the same experience had they bought it in the store and brought it back to the house. In fact, if anything, it might be easier because it was something big that they didn’t have to carry it through the house.

Glenn: Right, right. So they could actually be at an advantage in that. So let’s talk about mobile. So as we all know mobile is completely transforming the buying scenario and let’s talk about how stores work with mobile and are either concerned about it or are taking advantage of it. You gave one example already, but I’d like to hear more about that.

Leo: Well, mobility today is an interesting challenge for customers and stores. As we talked before there’s been several studies here in the U.S.A. that shows that for most Americans on a 24 hour day never have their mobile phone more than three feet away from their body 24 hours a day, so think about that. And then what that means is these devices have now become an extension of us and we all know it. We continuously are checking emails or checking stuff. I mean, we’re always with this device in our hands. And so, that device, because it has become an integral part of ourselves, we expect that when we go into the store that that device somehow will have some function in the purchasing experience in the store. I mean, that’s exactly what they would want and a lot of retailers haven’t really figured that out yet. And so, a lot of retailers, when you talk to them, they look at mobility from two points-of-view. One is, “Do I need to go mobile myself?” In other words, do I need to have a mobile part. So think of an Apple store where you don’t see a cash register anywhere and everybody’s got a handheld device that executes the thing, very good for stores that have very little SKUs, but they don’t think of that in an environment in a grocery store where you have 35,000 SKUs, that scenario is not necessarily usable. So, the retailers are looking at, “What can I do to arm my staff with mobile devices to help in that?”

Glenn: Right.

Leo: And then on the other flip side is, “How do I enable the customer’s mobile device to do something in that purchasing power?” And that’s what most people would want with their mobile devices is to, the most obvious is, to pay. They pay with their mobile device for things like Apple Pay and Google Wallet and things like that are things that are coming into the fray now, but they also want to use their devices to do and list aisle shopping. They want to go in there and continue their shopping research while they’re in the store.
It would be great if they could get real time alerts that say, “Hey, I know you’re in the store. Thanks a lot, here’s a special price for you since I know you were on the web three days ago and you were looking at this particular shirt I can give you a special on that red shirt today.” And so, the idea of the mobile device from the consumer is what I call an opportunity for the retailer to drive intimacy. Intimacy in a sense of special pricing, special selection, some special things based on their shopping habits. And from the retailer side it’s to drive more competence into the staff such that they’re ready to ask the questions and ready to execute on whatever it is that the customer asks of them.

Glenn: So, Leo, talk to us about how does a retailer know that I’ve been to their website? How do they know what to offer me? So you talked about that example of I come into the store and maybe the store says, “Hey, welcome and here’s a digital coupon for that red shirt.” How do they tie that together?

Leo: Well, two things. One is, first of all, you have to give them permission to know that you’re shopping on their website. So, typically you do that through some sort of loyalty program or some other program where you register your name and your email on their website.

Glenn: Right.

Leo: And then the harder part, that’s the easy part, the hard part is then an analytical engine that keeps tabs on what it is that you’re doing on that website, what are you looking at, what are you clicking at, where are you spending your click time at because you can actually measure how much time somebody is on a particular URL, and then through that analytics come up with suggestions of what potentially could be of interest to that customer. And those are very sophisticated algorithms that some retailers are implementing, but the majority of retailers there’s still a long way to go.

Glenn: Well, I think it’s fascinating because mobile is either a threat or it’s an advantage, right? Because many retailers, I’m sure, look at people walking around with mobile devices who are scanning devices–sorry, are scanning their inventory saying, “Oh my gosh, they’re looking for a lower price somewhere else, they’re not going to buy from me.” Whereas, if I can create that experience that you describe with the red shirt I actually took advantage of them using a mobile device and I’m making their life easier.

Leo: Yeah, honestly though the price item is a misnomer in most cases because I think that can be very easily addressed and you can’t have competitive pricing, in fact, a lot of people won’t mind paying a little bit more if they can get it, whatever it is that they want to buy right now, so instantaneously, so there is a premium to be paid for instantaneous delivery.

Glenn: Right.

Leo: But many of the more saavy retailers now are being very proactive. I was looking at, without naming names, I was looking at a television at a large electronic store and I had my phone out. I was looking at it and the sales person saw me wanding the barcode of the TV and he said, “Whatever price you find online I’ll match it.” Right?

Glenn: Oh, nice.

Leo: And that basically–I ended up buying the TV there because what he essentially did was to take away that price problem and allowed me to actual experience the television, measure it because I was worried that it wasn’t going to fit, and actually take it home the same day.

Glenn: That’s pretty smart, they took advantage of the very concern they had about you buying it somewhere else and made your life easier.

Leo: Right. So I think retailers need to embrace mobility, it’s an advantage to them actually because if you enable customers to involve their phone or their smart devices in that shopping experience they’re going to be happier and, in fact, the younger they are the happier they’re going to be because that is the way that they’ve grown up.

Glenn: Right. Well, we’re out of time and I just noticed though what’s really nice about this whole story is that not only is life better for me as the consumer when all these systems come together, but certainly it’s better for the retailer as well, so it’s a real win-win if we can figure out how to integrate all these systems and provide the information that’s needed at the point-of-sale.

Leo: Absolutely. I mean, as long as retailers realize that human beings are visual sensory people, or things, they have an advantage because they have the advantage of actually allowing them to touch, feel, smell whatever, whatever it is that they’re interested in, and that’s something that an e-commerce site could never do, and that’s a major advantage when it comes to global sales.

Glenn: Very, very interesting. Well, Leo, thank you so much for your time. It’s been a pleasure.

Leo: All right, thank you.

Glenn: Talk to you soon.

Leo: Bye.

Glenn: If you like this podcast please subscribe and rate us on iTunes and tell your friends about us. You can also go to our website, CrimsonMarketing.com, and sign up for our free monthly newsletter featuring the very best of our marketing insights, featured Moneyball for Marketing podcasts, and one of our favorite features called, “Bad Marketing,” or email me at info@CrimsonMarketing.com. Thanks for listening to Moneyball for Marketing from Crimson Marketing. Have a great week and let us know if we can help you in any way.