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Are Retailers Omnichannel Ready? Bill Hardgrave Auburn University

Are Retailers Omnichannel Ready?

Are Retailers Omnichannel Ready?

Are Retailers Omnichannel Ready?

Are Retailers Omnichannel Ready? Almost 80% of retailers believe they are “omnichannel ready”

The Omnichannel house Inventory Accuracy

Omnichannel Ready? Retailer claim: 99% inventory accuracy Reality: 990 out of 1000 items in a category

Inventory Accuracy Reported IA: 87% PI=actual PI<actual PI>actual Frozen Home 31% 21% 48% 25% Floor care 39% 33% 28% 9% Small appl. 31% 20% 49% 17% Electronics 39% 13% 48% 30% Boys wear 61% 18% 21% 8%

Seamless Customer Experience • Must blend the two channels into one seamless channel – completely invisible to the consumer

Test of Seamlessness • Logged on off-site via laptop • Made a purchase (shipped to home) • Made a purchase (pick up in store) • Searched for several items • Opened app • Searched for several items; no recognition of above • Went to the store; used store WiFi • Picked up items; browsed in store for items browsed on-line • Result: Store did not associate my online presence with my in-store presence

Omnichannel Ready? Retailer claim: SfS pick rate of 100% Reality: Items only go on pick list if more than 8 in stock

SfS • 35-65% pick rate issues • One retailer: 80% pick declines • 43% at least tried SfS last year • Potential: national retailer reducing sales floor space and using for mini-fulfillment center

Omnichannel Ready? Retailer claim: 99% BOPIS fulfillment Reality: Filling 99% of orders not canceled by customer Reality: 70% of BOPIS orders in one category cancelled due to short search window; customers were given option to ‘cancel’ order (but: 40% attachment for those that are successful)

BOPIS • Great potential! • More than 60% offer BOPIS • 60% of Lowe’s online orders are BOPIS • 43% of Home Depot’s online orders are BOPIS • 67% of surveyed consumers indicated using BOPIS at least once in past 6 months • 75% of BOPIS users bought something else

BOPIS • “Hidden” use (ROBIS) – 74% check before going to store • For one retailer: • 28% BOPIS customers made unplanned purchases • >$18M on ~2M transactions

BOPIS • But … • 17% of retail apps display in-store quantities • 31% of customers describe BOPIS as smooth process • 24% of BOPIS orders not ready, despite message otherwise • 67% of BOPIS customers had a bad experience of some type

Test of BOPIS • While in store (without using store app or store WiFi) • Randomly select items from at least 5 categories • Go to website via mobile device • Check availability of items shown online against actual shelf quantity • Initiate BOPIS order: How many? When?

Test of BOPIS • What can be considered BOPIS? • Pick up in 1 hour? • Pick up in 4 hours? • Pick up next day? • Pick up in XX days?

Departments Sampled

Test of BOPIS: Examples • Electronics: • 3 on shelf; 3 available for pickup in 4 days • Toys: • 7 on shelf; 7 available for pickup in 2 days • Automotive: • 10 on shelf; 10 available for pickup the next day • 2 on shelf; only 1 available for pickup in 2 days • Wiper blades: ‘pair’ – both with 5+ on shelf; one available for pickup today; one available for pickup in 4 days. • Office supplies: • 7 on shelf; not available for pickup

Test of BOPIS: Examples • Tools: • 2 on shelf; website shows 17 in stock; 2 allowed for pickup • Garden: • 4 on shelf; website shows 15 in stock; 4 allowed for pickup • 4 on shelf; website shows 2 in stock; 2 allowed for pickup • Bath: • 4 on shelf; website shows 4 in stock; 4 allowed for pickup

Test of BOPIS: Examples • Housewares: • 4 on shelf; not available for pickup • 4 on shelf; 4 available for pickup • 4 on shelf; 3 available for pickup • Shoes/apparel: • 1 on shelf; ‘only 26 available for purchase’; only 1 available for pickup • 2 on shelf; ‘not available for store pickup’

Test of BOPIS: Examples • Electronics: • 2 on shelf; ‘only 1 left’; 1 available for pickup • 2 on shelf; not available for pickup • Kitchen: • 5 on shelf; ‘only 1 left’; 1 available for pickup

Test of BOPIS: Examples • Books: • 1 on shelf; ‘call store to reserve’ • 3 on shelf; ‘quantity 2’ • 2 on shelf; ‘out of stock at this store’ • 2 on shelf; ‘limited quantity’

Test of BOPIS: Examples • Apparel: • 5 on shelf; ‘unavailable at this location’ • 4 on shelf; ‘1 left’ • 3 on shelf; ‘out of stock’ • 9 on shelf; does not appear on website

Test of BOPIS: Examples • Will not show quantity at store until you add it to cart, then will let you know whether or not store has it • Will not show a store until you select the quantity and place into cart; then will show store that has it

Test of BOPIS: Examples • One retailer allows you to order anything for BOPIS, but then cancel it if they can’t fill it, rather than checking/trusting inventory count to keep you from ordering.

BOPIS Performance Retailer Accurate Unavailable More on shelf Less on shelf A 0% 60% 32% 8% B-1 4% 84% 0% 12% C-1 8% 60% 4% 28% D 8% 0% 92% 0% E 8% 48% 4% 40% F 12% 24% 40% 24% G-2 16% 8% 28% 48% H-2 16% 0% 36% 48% I 16% 48% 24% 12% 24% 24% 52% 0% J 28% 20% 36% 16% K 40% 8% 40% 12% L 44% 4% 32% 20% M 60% 36% 4% 0% N 80% 0% 8% 12% O P-1 84% 4% 12% 0%

Test of BOPIS: Observations • Hedging: waiting to check; delaying the pickup • No clue: no pattern of under or over • Faux BOPIS • Hiding inventory: setting high thresholds

Hiding Inventory 100% 75% 50% > 2 units > 2 units 25% 0% SKUs

Hiding Inventory 100% 75% > 1 unit > 1 unit 50% 25% 0% SKUs

Hiding Inventory 100% 1 unit > 0 units 75% 50% 25% 0% SKUs

Hiding Inventory > 0 units Individual Stores

Customer Experience • To deliver a great customer experience, retailers must be fundamentally sound • It starts with inventory accuracy • 81% of retailers indicate inventory accuracy is an obstacle to omnichannel

Inventory Accuracy: Traditional Replenish- ment Inventory Product Customer Sales Accuracy availability satisfaction Forecast Inventory

Inventory Accuracy: Omnichannel Replenish- ment Inventory Product Customer Sales Accuracy availability satisfaction Forecast Inventory Expose inventory Ship from Unplanned Search BOPIS/ Store purchases ROBIS

Omnichannel Ready? • Retailers struggle with providing the simplest of the omnichannel capabilities: BOPIS • Only 1 retailer among those we tested would be considered BOPIS capable

Thank you

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