Question: What are the top three fundamental issues on the minds of retailers today?

Lindsay Carpen, Junction Solutions: The top three fundamental issues haven’t really changed a whole lot over the past few years. It’s still protecting the brand you’ve spent years and a lot of time and money and effort building up. The second thing is staying relevant to their customer. And the third thing is making sure that they have a consistent customer experience. All three of those have their own unique challenges, especially given today’s environment.

Question: What do you view as some of the biggest challenges retailers faced concerning mobility?

LC: What mobility means for the retail industry is that it’s a pretty big and fundamental shift in the way that retailers interact with their customers. It also is a big shift in the way that customers deal with retailers in general. There’s this idea that you have, for example, a web site, and some stores, and maybe you have a catalog, and with mobile coming along, a lot of those distinctions are becoming more and more blurred. You have this idea that maybe the customer doesn’t really care what channel they buy from.

Then you also have this other idea that this is happening very, very fast, especially when you have a retailer who deals with a younger demographic. The adoption rate is amazing,
and the lever of information sharing is something we might be uncomfortable in doing. That’s not even a concept to a lot of these younger customers. And so part of staying relevant with the brand to this younger generation is understanding how to adopt mobility and interact with these customers who have now fully embraced this technology. If you deal with retailers that don’t have that younger demographic yet, they all see it coming. They’re all wondering, “When is it going to happen to us? When is it going to be all of a sudden a situation where we have to have all of our associates on Facebook and Twitter and being able to interact with everybody on every specific technology level there is?”

Question: How do you see the social network sites influencing the retailers and what can a retailer do to ensure their success and participation in that?

LC: People think of Facebook and others such as Foursquare as well. But there are a lot of flavors of social networking out there. Most retailers are staying pretty defensive. You have
this brand that you’ve built over the years, and you have to put that brand personality on a web site and interact with people or provide a different way of having your present customers interact with that brand. And right now I’ve seen where they have put a site up and there’s been a defensive play where they’ve managed the interactions that have been on the site. I don’t think it’s happened yet where anyone has figured out exactly how to monetize that.

What I see is a trend towards going local and using the social networking sites to kind of further carve up the demographic that they have. So then you have a store or a group of stores in a specifically geographic region that’s got any chance of using the social networking sites to interact with the customers locally and provide that experience at a local level, rather than trying to manage everybody as one giant group. So that’s something I would expect to evolve over time and continue to grow, and that’s really the only way I’ve seen that people have been able to monetize that.

Question: What does it mean to be a customer centric retailer? Should retailers strive to be “customer centric” and, if so, what are some things they should be doing?

LC: Along with this idea of staying relevant, being customer centric has always been on a retailer’s mind. You don’t want to be caught in a position where you have products or services that your customers don’t want anymore; you’ve gotten away from what they want—you’re dead. So customer centric is understanding your customer, whether it’s specifically understanding what customers want or understanding your sweet spot of your best customers. Different types of retailers approach this problem in different ways. For example, you’re J. Crew and you’ve got a history of growing up as a direct marketer or cataloger, and you think of customers as specific individuals that fit into specific groups. If you’re mainly a brick-and-mortar retailer, when you think of customers, you’re trying to come up with personalities for your customers and attribute behaviors to those personalities.

What’s happening now is that the things that the direct marketers are doing as far as identifying and understanding specific customers is going to become more and more relevant in brick-and-mortar retail. And that the access to customer information willingness, at least for the younger customers who provide that information, is going to open up this whole new world for retailers to interact with customers on a deep and personal level. And it’s also going to allow them to kind of define their brand better within a certain demographic so they won’t have to be everything to everybody—they’ll be everything to the people they care about.

In the past five years, they’ve had new opportunities to be customer centric. Things like understanding who your customers are, specifically by using loyalty programs where they identify themselves upfront, or some other social networking means. Or they come in using a coupon for a promotion that they got from an email interaction, to some way of closing the loop on that marketing effort you’re doing and understanding that that customer making that purchase is very important. I see a lot of tools out there today to do that. Certain retail segments are going to lend themselves better to that—high fashion, where you have a specific relationship with all your customers, But if you’re somebody like Dick’s Sporting Goods, and you don’t exactly know everybody that’s coming into your store, that’s going to be a little bit harder.

Question: What effects will the cloud have on retailers and what should they be doing today to ensure success in the cloud?

LC: When I think of the cloud and specifically how retailers are working with the cloud, it’s an extension of the relationship that they have with their customers. Right now, a big-deal thing is to send an email receipt to a customer. That’s the extent of the cloud interaction right now – send them email, which is not much of a cloud interaction. As time goes on, that relationship between the customer and the retailer can be much deeper, as far as understanding exactly what that customer has purchased or what they might want to purchase, what their wish list is. It’s kind of merging that web experience, which is very personal and deep, with what’s happening in the store. So it’s the idea that the customer has their own cloud and they’re interacting with the store with that information. As long as the retailers have their eye on customers, trying to make sure they have a good, relevant customer experience with them, this will evolve into something that’s more meaningful for any customer that wants to do it.

Question: IT has dramatically changed over the years, but retailers are often still using older technology. How can retailers get the data they need to grow and manage their business with this older technology?

LC: I’ve run into many businesses that have had older IT infrastructures. At one time, I guess they invested in what they believed was best of breed solutions. The larger retailers really embrace this, and pretty much any retailer you walk into, you’re going to see seven or eight major systems all tied together, trying to work together in different ways. What’s happened is the amount of effort and overhead just to stay even has grown. It’s a real weight around their neck. Specifically, when that’s a technology that’s been around and a lot of things are running on it, or a technology that’s been around since before the Internet was invented.

If you want to move into the next generation – the idea of the next generation is that all of these applications and functionalities are interoperable – and the idea of having dozens of people keying things and reconciling between systems, and just trying to get the data in the right place so you can look at it, are things that are going to go away. And it’s not going to be something that you’re going to have to spend money on. So there’s a chance for mid-level or even bigger customers to leapfrog over top of these other retailers that have this huge burden from an IT standpoint. They’ll be able to direct their resources into other things.

Question: What should retailers do to become more efficient and balanced while increasing their dependence on technology? How can they manage the cost of IT when everyone wants to increase investment in IT? Where will they need to support their dependence on IT?

LC: Well, IT is not the end; it’s the means to an end. Becoming efficient and balanced – what exactly does that mean? Different retailers might have a different opinion of that. There’re plenty of retailers out there that might want to not necessarily think that IT is this major thing to have to deal with. They’re more worried about making sure that they have a relevant brand for their target demographic and that they have a consistent customer experience. And they’re going to use technology as a tool to do that.

I’d say that there’s a certain amount of ongoing IT spending that every company is going to have, and then there’s this idea of capital expenditures that’s going to allow us to absorb the latest technology to improve business. What I think that any retailer should really be thinking about is “What does my customer experience demand of my IT department? What does my brand experience demand of my IT department? And how do I take that brand experience and customer experience and move from where I am now to that right now to where I need to be?” So unless you’ve done those steps and connected those processes together, you’re not going to really understand how to answer that question. Companies that have a vision of five years out, this is what we’re going to look like, or two years out, this is what we’re going to look like. Then they’re doing this and they are really revisiting their whole idea of what their IT spend should be.

Question: Where should retailers increase usage of technology when IT budgets are shrinking?

LC: It’s really about where can you make the biggest impact, and when you’re specifically on the front lines with the customer, whether it’s through the web site or in the store, addressing any issues related to a consistent customer experience or being relevant to the customer are a big deal, top line things. Outside of that, the “big bangs” are things like managing inventory. I’ve seen plenty of companies that are doing merchandise planning themselves, and they’re missing big opportunities to extract a lot of value out of their business by being smarter about how they manage their inventory. A lot of those kinds of projects pay for themselves in less than a year. So you’re looking at projects to invest in that you want to get a quick payback on, then I suggest that you look at merchandise planning.

And another one, believe it or not, is workforce management. We’ve seen where the amount of time that a store manager typically has to spend on scheduling and time entry and vacation
planning and swapping schedules can be reduced by as much as 75%. And what that translates to is more time on the floor with customers. So there are projects out there, there are technologies out there that have very fast paybacks and make an impact on the business that should be considered.