Debunking Myths: Data, Omnichannel And The Future of Retail

Julia Dietmar

Hello and welcome to the new episode of The Retail Podcast by Vue.ai, our podcast series about leaders in retail. I'm Julia Dietmar, the Chief Product Officer at Vue.ai and your host for today. The focus of today's episode is omnichannel. Omnichannel has been the industry's favourite buzzword for many years. But what is the definition of omnichannel commerce? Since 73% of consumers shop on more than one channel and 45% of total retail sales, both online and offline is influenced by activities that customers perform on the web and mobile. It is important to understand that omnichannel commerce is the coordination of traditional channels such as marketing, selling and fulfilment and supporting systems to create a seamless and consistent customer experience across the whole enterprise. To help us understand the complexities of well-executed omnichannel strategies, I'm very excited to welcome our today's guest Eileen Rizzo, the Senior Vice President of IT at Ashley Stewart. With 20+ years of experience in retail business processes and systems development, Eileen has directed strategic initiatives for omnichannel merchandising and marketing processes including loyalty programs, assortment planning, pricing optimization and analytics. She's played prominent leadership roles at JCPenney, Accenture and more recently at Macy's where she led the development implementation and support of omnichannel processes and systems in both merchandising and marketing.

Julia Dietmar

Hello Eileen, Welcome! We're very thrilled to have you on The Vue Podcast. Since today's podcast is focused on omnichannel retail, it would be interesting to talk about how brands are approaching omnichannel to improve customer experience. But first, let's talk a little bit about your background. Can you tell us a little bit about your experience and how long have you been in retail?

Eileen Rizzo

Sure Julia! I have been in retail for 20+ years. I started out after I received my MBA, from Babson College in Retail Consulting. I spent several years there, went to work for a retailer John and David and then went back into retail consulting with Accenture for a few years, where I was then recruited by my clients at J.C. Penney and spent four years with J.C. Penney, 12 years with Macy's and I am now the Senior Vice President of Information Technology for Ashley Stewart.

Julia Dietmar

That's awesome! Can you tell us a little bit about your definition of a successful omnichannel retail strategy?

Eileen Rizzo

I believe that to be a successful omnichannel retailer, you have to be able to provide the customer what she wants, when and where she wants it. So as a retailer that means allowing her to order online and pick up in-store or order online and deliver to the store and pick up at a later time. To be able to be in the store and see sizes and colours or products that aren't necessarily physically in the store but that meet the customer's needs and be able to get it to her when she wants it.

Julia Dietmar

So there has been a lot of talk about omnichannel in the last year; it's been a buzzword in the industry for pretty much as long as Internet has been around. What is your opinion are the processes that are involved in building a robust omnichannel system?

Eileen Rizzo

Well, obviously it starts with the customer strategy and the capabilities that you're going to provide and enable with any robust solution means ensuring that you really have accurate and real-time inventory availability, that you know what product you have and where you have it in the pipeline. So all channels need to access that customer-facing product information, the content, the images, have to understand what your stock status is; whether it's on a desktop device, a mobile device at your point of sale or mobile selling tools for your associates. And finally, I think you need to have visibility to where that product is, whether it's on its way to a store or on its way to a distribution centre or on its way to a customer and while systems integration and communication are critical to delivering an experience. I think the experience can really fall short if you don't have clean and accurate data and understanding a single source of data. Think where I've seen omnichannel strategies fail and where customers can have really core experiences is when you have online data that's different from the data that's being presented in the store whether it be to the customer or to the sales associate who's trying to assist the customer in finding a product. So there's a lot that goes into the overall process from understanding item and order creation, allocation, the financials have a big component an impact on an omnichannel strategy and system, impact staffing at the right time and in the right place, logistics, I could go on, but it's truly omni impacting on all systems.

Julia Dietmar

So, sounds like data can be the biggest challenge or the biggest roadblock while building these types of complex systems. Have you seen successes with any of your previous clients or in your previous experiences where a retailer was able to solve the data problems and what were the tactics that they have employed in doing so?

Eileen Rizzo

Well, I don't know that I can say that anybody has done it completely. I think everybody is still trying to do it. A lot comes from retail businesses, brick and mortar being developed in different systems and times from the e-commerce strategies and typically when retailers went into both brick and mortar and e-commerce, they built from an e-commerce perspective. And then it's about how you're selling that information together. Obviously, the pure-play online retailers that are venturing into brick and mortar may have an advantage if we're leveraging the same systems and the same source of data. So the reverse side probably has a better approach, a store or concept like one of those.

Julia Dietmar

Yeah. That makes total sense because thinking about how traditionally brick and mortars went online and what type of data they had available, it makes complete sense that suppliers supplying for brick and mortar stores are not required to provide imagery and rich product metadata whether it is for online and absolutely a requirement and that's why those pure online players have an advantage. Have you seen successful use cases of omnichannel retail and do you think that specifically stood out in your opinion and in the last couple of years?

Eileen Rizzo

Yeah. I mean for me, the Amazon acquisition of Whole Foods and what it's doing now in creating brick and mortar presence is pretty big. So there were those that said, 'Well, Amazon's a marketplace, that we're not going to be a marketplace retailer' and obviously there is the Amazon effect which is them getting into brick and mortar and we're integrating into the Amazon experience for customers and the whole foods market, some developing more storefronts. I think it's going to really provide increasing pressure for existing retail formats to ensure that they are omnichannel, have the right strategy and value propositions for the customers.

Julia Dietmar

Yeah. Yesterday I experienced Amazon go for the first time. They just opened a store in San Francisco, I went to check it out and the experience was very frictionless. It was, as long as you install the app, it just works. You walk in, you get what you need, walk out and about two or three hours later I got the receipt that I was charged and it was pretty easy from the customer convenience point of view. So yeah absolutely something we all can learn from Amazon. The next question I have is about business decisions and how omnichannel systems have helped shape future business decisions to help alter retail strategists. Can you think of any specific ways of doing so and then what have you seen in Macy's or JCP or in your current position?

Eileen Rizzo

For me the biggest way systems can help or alter strategies is really through that data. Having a data strategy, machine learning and AI capability with that data. So really understanding the customer's behaviour; what they're looking for or whether they're lingering or whether it's in the store or online, what they're purchasing not just colours and sizes and styles but the combination of products of the purchasing and then what they're not purchasing, what are they abandoning in their cart, what are they searching for, browsing and spending time looking at and not completing the sale and analyzing that information can really help inform this new strategy. So there are myths that can be held within the organization that can be debunked with the right data. I do think data can also help you understand how you want to place your product in your stores and where you want to place the product in the stores. For example, when you understand what product is being bought in combination together, it can change your merchandising strategies. It can change the product strategies of what colours you carry, what sizes you should carry. So I do think the data, the systems and the machine learning of that data can really help inform strategies.

Julia Dietmar

I remember from my previous experiences at large retailers, at least in the early days. Maybe it has improved in recent years that there was always friction between the online guys and in-store guys. The friction came from, if I implemented some new channel strategies and I am responsible for store sales, you basically cannibalizing my revenues and sales. What have you seen as a resolution to this? How do people actually resolve this? Because I'm seeing, even with Macy's and others that there's definitely a lot more inclusiveness if you will? There is a lot more omnichannel experiences so to speak that are popping up there. So there must be some organizational changes that have happened in those retailers.

Eileen Rizzo

Yeah. So to go back to your earlier question about what are some of the biggest challenges or roadblocks when building out those complex systems and I would say the biggest challenge is an organizational structure and financial operations. If you're not willing to rethink the organization and how the business is measured and the KPI is used to measure, it can create significant roadblocks to actually delivering on that strategy. So P&Ls are critical from managing expense, labour, shipping but having a separate P&L for your online business from your stores really starts to push the boundaries of when you get the sale, who gets the credit for the sale? who gets the sale for your purposes of bonus calculation? what's your inventory churn measurement? If you're starting to measure churn looking at inventory that was not actually used to fulfil the sale because you generated the sale in-store but filled it online or vice versa and then with the returns processing and who gets credit or not for the return is also another big factor. So my experience has shown that having a definitive strategy and approach to ensure that the right incentives are provided and the right behaviour comes out of this for the customer and not necessarily the business, it's going to make or break a strategy and the success of an implementation.

Julia Dietmar

That's great. Going back to a question about data; You mentioned earlier that product onboarding is very important and critical in providing rich data for even monitoring customer behaviour much less for getting product displayed correctly to the customer, but also we need that for monitoring and personalizing customer experiences. What have you seen as good tactics in reaching product data and getting that complete and consistent data across your suppliers and presenting it to the customer in the forum that is good enough for a customer to make an informed decisions about the product?

Eileen Rizzo

Yeah I think first and foremost there has to be a single merchant voice with the vendor and that merchant's voice has to be all-inclusive of the customer and your digital strategy. So in order to make sure that the sales associate has an image of the product and has the copy of the product and the features and benefits of a product, when a merchant is going the market they need to request of the vendor or the partner in providing that information and if the vendor isn't going to be providing it and you're all private label and make yourself then you have to have and ensure that the merchants are providing content on 100% of the product regardless of where it's being placed. That way you can ensure that when the customer is moving into a digital storefront when they're in-store looking at a digital display and searching a product or whether online or on their mobile device if the product is only carried in the store you still want to be able to represent that product to the customer on that device and I do think again that goes back to the organization. Are you organizationally structured with two separate teams who are merchants for brick and mortar separate from your merchants for Ecom; if you're a single merchant, do you have the workflow enabled to ensure all of that information is provided upfront. Many retailers still have maybe the merchants purchasing the product but in a separate site merchandising team or the product that's enabled online in getting the images and the features and benefits and with that separated workflow; it still provides challenges from that perspective.

Julia Dietmar

How do you ensure that the data that comes in from numerous suppliers is actually consistent across all of the suppliers or is it something that's handled within the retailer?

Eileen Rizzo

Well again, I think this is where it comes down to every retailer has its own hierarchy. They have their own definition of attributes. If you're not getting that from the vendors and partnering in your nomenclature, this to me is where again data and machine learning and AI can really assist in terms of using the information to help auto-assign and reduce the workload for a merchant to be able to auto-assign the classification or the attribution.

Julia Dietmar

That's very interesting because that's exactly where we're trying to help the retailers. I'm curious what have you seen in terms of savings. I don't know if you can quote any dollar amounts but maybe savings in labour in hours that site merchants are spending on onboarding products. How much can AI and machine learning can speed up that process?

Eileen Rizzo

I think that technology is to a point where it can increase the process ten if not twenty-four and so really helping with a degree of certainty I'm sure that the data that is provided with the product images or with the product master itself and leaving it to a review portion for the merchant to correct anything and review it again depending on the process and how you're able to do it. Of course, some businesses are a little bit more challenging than others. But I think you can see anywhere from a three to a ten or twenty-fold reduction in work effort.

Julia Dietmar

That's great. So that means that there is definitely a lot of efficiencies that AI and machine learning can actually bring to a retailer which will not only result in savings on labour but also since you're able to onboard the product onto your online store much faster, you can put it in front of the customer much faster so that the revenue potential can increase as well.

Eileen Rizzo

Absolutely. It goes back to then also being able to digitize your entire product catalogue which not every retailer does today.

Julia Dietmar

One last thing that I kind of wanted to talk to you about, I remember at Macy's you did something very innovative with machine learning for buyers. Can you talk a little bit about that?

Eileen Rizzo

Sure, yeah. When the product is being received from a market perspective with a line sheet, I'm using the combination of the line sheet and an image app market to run it through the machine learning and auto-assign product attributes to know whether it's a short sleeve top or a long sleeve top of the neck versus a cowl neck versus a turtle neck, the colour. There's a whole host of attributes that would normally have been the work of the buyer or the vendor that then could all be automated by using machine learning.

Julia Dietmar

That's very interesting because that is one of the use cases that I personally would not have even thought of as something that is absolutely needed because to most of us as customers, those processes are almost not visible.

Eileen Rizzo

Yeah. Most people think of it as when a site merchant is getting the product ready to go live on-site, How do I assign the attribution once I have the formal photograph coming out of the top of the photography process or the retouching process? When you wait to that tail end of the process, depending on the ability to actually get every product photographed etc. But knowing it earlier in the life cycle, product attribution is critical to optimizing your assortments for your customers. So again you have back to that omnichannel strategy. The right product is in the right place.

Julia Dietmar

So going back to the omnichannel strategy, do you believe that this concept of omnichannel strategy concept is going to be around for a while or are we moving to something a little bit different? What are some retail trends maybe you're seeing brands adopting in the near future?

Eileen Rizzo

Yes, I do think omnichannel is going to be around for quite a and I think what we're starting to see and we'll continue to see is more blurring between digital and store. For example, virtual reality in-store to help somebody whether it be with furniture or personal design of products and bringing the technology to help me design the sweater that I want; to have it in the colour that I want; with that design that I want. Voice commerce, while I think it's still several years away, the new generations are being raised on technology and with Alexa in the home and every home as it's increasing and increasing year over year, I think that voice commerce is going to become something we're going to see increasing over the next three to ten years.

Julia Dietmar

Yeah that's actually very interesting. I've even seen demos of a little robot in the store. I don't remember which store it was; helping with the returns. When the customer again actually approached the robot in the store and scanned the receipt and talked to it. Yeah definitely, it has a lot of promise. So there is some research on CMO Council about marketers feeling like they lack the necessary talent, technology and processes to master omnichannel and brand marketing. Do you think this is true?

Eileen Rizzo

I think it's true particularly from a talent perspective. If you think about my earlier comments where you've got your traditional brick and mortar that would have traditional marketing or direct mail, TV, radio or print and growing that as a separate business and channel to your digital online business. What I haven't seen is a lot of marketing talent that has had exposure to digital and print natively and understanding how to plan, how to execute and again how to measure. And I think increasingly with the number of vehicles growing between SMS, push email, social, traditional print, the attribution of that sale and understanding the return on ad spend and the number of impressions served to a customer that actually drives them to purchase gets increasingly complex. I do think there are technologies out there that can aid marketing but again some of them can be more difficult to implement if your customer data isn't clean and isn't centralized and adequately merged together. So understanding your online customer and issue the same as the customer shopping in-store with a different credit card.

Julia Dietmar

Yeah. If a brand or a retailer were to experiment with omnichannel for the very first time, what are some lessons that you would have for them?

Eileen Rizzo

Yeah, I do think having a very clear vision and roadmap of what you want to build and how you want to build it to deliver on that strategy, flexibility and agility that's needed for the customer, you really have to lay out that vision, the data and understand how to architect it in a way that is going to be agile and flexible to meet the growing needs or desires of that customer. So actionable lessons have been focusing on a current feature, function or capability and not necessarily tying it back to the bigger vision. Things can get developed from a technology perspective in a way that is prohibiting or limiting of future change to that strategy and it takes longer to deliver to the customer and speed is critical in today's market.

Julia Dietmar

Well Eileen, thank you very much for those insightful lessons and for being part of the Vue podcast.

Eileen Rizzo

Thank you for having me. It's been great. Thank you, Julia.

Julia Dietmar

As we continue to look at the ever-changing retail landscape, there is so much to talk about. There is AI, virtual models, individualized shopping experiences and the ability to individualize those experiences at scale. Join us on our next episode of The Retail Podcast by Vue.ai. Until then goodbye.