A dynamite example of IT transformation

CIO Canada –

Meet Alexia. She's a 16-year-old girl-next-door type who lives in the suburbs. She's "close to her parents, does well in school and gets a weekly allowance. She likes casual clothes with a sexy fit, and tends to dress like her friends for acceptance and reassurance. She aspires to be an adult, but is sometimes childlike. Outgoing and well-connected to her friends, she has started discovering new things and wants more of them -namely travel, cars and boys. And to do that, she often feels she needs to look the part.

Alexia is the fictional but representative example of the target customer Michel Joncas and his colleagues keep in mind as they develop the technology that powers the Garage chain of stores that operate in shopping malls across the country. On

the other end of the spectrum is Rachel, a single 28-year-old who rents a small loft, is confident, witty and likes to have fun. A Rachel is more likely to shop at Dynamite, the other brand of stores the company owns and operates primarily in Quebec.

It's not unusual for major retailers to create personas of the most likely people to come to their stores, but traditionally that kind of information would have primarily been useful to the marketing and sales departments. Joncas, however, used Alexia and Rachel as the building blocks for an IT strategy that begins with internal hardware and applications to increase efficiencies along with external customer-facing social media tools that nurture relationships with both new and loyal customers. As the vice-president of IT at Groupe Dynamite in Montreal, his efforts may be indicative of major changes affecting the retail industry -changes that will largely depend on a skillful blend of both consumer and enterprise technologies.

Joncas was the keynote speaker at an event hosted by IDC and the Retail Council of Canada in Toronto in April that focused on the "omnichannel" customer.

In other words, customers that may use a retailer's Web site, its Facebook page, the actual store, a 1-800 number or a combination of channels to engage with the company. While many U.S. chains have already been rolling out customerfacing apps and revamping internal IT infrastructure to create greater throughput and efficiencies, the picture here is far less bright. According to a survey of approximately 150 retailers IDC conducted earlier this year, only 14 per cent of Canadian retailers fall into the camp that has successfully transformed store experiences through mobile technology. The majority, 35 per cent, admitted they are essentially "non-mobile" so far, with only potential plans for pilot projects.

"A lot of it is about thinking about the theatre of the store -What does it feel like to the customer?" said Leslie Hand, research director of IDC Retail Insights. "What will make them want to shop at your store more than anybody else's?"

Late last year an article in Bloomberg BusinessWeek talked about the rise of the "mission shopper," who comes to a store with all their online research complete, with no intention of staying any longer than is necessary to grab an item and pay for it. Retailers are now reconfiguring stores to encourage browsing, the magazine said, with wider aisles to accommodate strollers, along with lower shelves and displays so shoppers need look no higher than 10 feet.

For Joncas, it all starts with betterservice, which is why Groupe Dynamite is doing a pilot program that will see iPads distributed to employees along with IP phones. "We had two-way radios in the past, so the business case was all based on the ability to broadcast messages to our employees from a central office," he said, adding that the devices will also offer access to Web-based applications. "Instead of going to a computer, they can do it in a store in any area. That increases productivity."

Groupe Dynamite will build upon that productivity by funneling more information to store associates, like a live feed on traffic data, what's happening in the store, conversions, sales, and so on. The stores use cellular waves as a backup in case

of emergencies. "You have to have a plan B when the phone line is completely ripped in the shopping centre or things like that," he said.

Groupe Dynamite provides available and secure Wi-Fi access for its entire office community. Its infrastructure includes Motorola RS409 scanners, EWB100 push-totalk over WLAN enterprise wireless badges and the Digi Connect WAN series of cellular/WiMAX gateways/routers provides serial or Ethernet to high-speed cellular capability. There's usually a very small back office in each store or warehouse, but, "Working on a computer in the back not really efficient," Joncas said.

While empowering employees is important, getting closer to customers is critical. Joncas said Groupe Dynamite realized early on that its target market was likely to be highly engaged in social media, which why it started establishing

a Facebook presence almost two years ago.

"We discovered we simply have to listen to our customers," he said. "When we launched a text message promotion, we could measure on our (customer) surveys if there was an impact. It's the same thing with Facebook.

While the Garage brand has some 310,000 Web mail addresses of customers, it has more than 455,000 Facebook connections, making it an increasingly strategic channel. One of its early successes was conducting a contest to search for a real-life Garage model, where photos would be uploaded and voted on through its Facebook page. This was supported by in-store collateral with QR codes to drive further awareness. Joncas said the company has also used Facebook polls to better understand its target market.

A more recent contest featured videos that indicated a fighting couple could either make up or breakup. Customers could vote on how the story should end by sending a text message vote to Facebook, or even to YouTube.

"You have to have people dedicated, full-time, looking at this," he said. "That's one of the most important lessons we've learned."

While the customer-facing and internal IT Joncas is using to transform Groupe Dynamite serve many business needs, he told the IDC event he realizes there's a need for better integration. That's one of the reasons why, last year, Oracle announced that Groupe Dynamite had signed on as a customer of its Retail Suite for POS. This includes Oracle Retail Merchandising System, Oracle Retail Store Solutions, Oracle Retail Demand Forecasting and Oracle Retail Price Management. "We want to link all of these things together."

IDC uses a maturity model to gauge the level of interactive retailing in Canada, Hand said. The model ranges from non-mobile to foundational (where retailers are doing pilots around mobility), engaged (where they're making specific mobile investments), empowered (where they have enabled upsell/cross-sell apps, as well as apps for customers), to transformed retailers that fully empower employees and customers. Only 14 per cent of retailers in Canada, however, are in the engage to transform phases, according to Hand. Most are doing nothing at 35 per cent. That's a problem, because given the nature of this market, the competition around interactive retail is bound to get intense without warning.

"While I was here, I visited the Toronto Eaton Centre," she said. "I didn't do an exact accounting, but I estimated that maybe 40 to 50 per cent were global retailers, brands I sees everywhere she goes around the world. Some of these companies, they just have to decide to turn it on anywhere, and then it's here."

OMICHANNEL RETAILERS IN ACTION

Leslie Hand is standing with her legs slightly apart, her head bowed over the smart phone in her hands, pretending she is in a checkout line frantically doing price comparisons before handing over her credit card.

bile retail were based on work by U.S. firms. Some ideas that Canadian SMB retailers might steal include:

" Guess: Using customer relationship management (CRM) data, the company is allowing customers to share offers

and product info with friends via social media platforms like Facebook, and pushes targeted and personalized content and offers.

" REI: Rather than try to avoid comparison shopping, the outdoor clothing chain has mobile apps and Web sites that encourage consultative/interactive selling, showing technical characteristics that differentiate various product lines. This information is being delivered on a kiosk as well, with mobile POS planned later this year.

" Pacsun: The clothing manufacturer has created a photobased electronic "lookbook" where you can engage with someone in the store and walk through outfit combinations on a tablet.

" Lowes: In an effort to appeal to home renovators, an application called MyLowes allows customers to easily track their online and in-store purchases so they'll only get exactly what they

need for a particular project.

" Stop&Shop: We've all gotten used to self-checkouts like those stationed in IKEA, but this grocer's app lets customers scan items on their own iPhone as they shop. This can make it easier for stressed out parents, because the child can do the scanning, increasing engagement. Once they're done, customers simply walk to the self-checkout lane, scan their frequent shopper card and pay.

Hand also profiled up-andcoming retail chains that Canadians may never have heard of, like C.Wonder, which sprang to life complete with mobile POS, a mobile inventory system, integrated RFID, and even apps that allow adjustable lighting and choice of music in fitting rooms.

"You just have to imagine: What if you didn't have all this legacy business and technology, and could start from scratch?" she asked, adding that retailers should study customer behavior to ensure they optimize the right channel for the right purposes. Smart phones might be great for research, but holding up a tablet, she said, "This is the device where they tend to actually pull the trigger and buy something."

--SS

This is a portrait of the "omnichannel" shopper, the kind of customer all Canadian retailers need to begin cultivating, according to the research director for IDC's Retail Insights division, who spoke at a summit on retail and mobility in Toronto last April.

Hand defined omnichannel shoppers as those customers who want to interact with retailers via multiple channels, but who also want to see consistent levels of service, regardless of touchpoint. This means trying to get that person standing in the checkout aisle to look up from their device, see other items on a shelf or talk to an associate on the floor. It also means locationbased offers via SMS or text message, and even point of sale kiosks inside the store.

"They need their sales staff not running around the store putting product away, but helping the customer with mobile devices," she said, describing the ideal state as "O3" -omnichannel optimization and orchestration.

A good example of a Canadian retailer who has already started down the path to O3 is Black's Photo, which in the last year has added more than 350 kiosks to their chain and built out a significant portion of their business online. According to Phil Chapman, vice-president of imaging and business development at Black's Photo Corp., a big shift happened when the company was acquired by telecommunications carrier Telus Corp. Now, every Black's sales associate is carrying a smart phone with them, and has rolled out apps that let customers order prints for pickup and pull images from Facebook or Picassa for printing.

"Our focus is about being on the go. More images being captured now than ever. The problem is that people may not be doing anything with them," he said. "Our job is to make sure they do."

While Hand praised Canadian Tire for its apps and kiosks as well as a recent e-commerce app from Sears Canada, most of her more cutting-edge examples of mobile retail were based on work by U.S. firms. Some ideas that Canadian SMB retailers might steal include:

" Guess: Using customer reationship management (CRM) data, the company is allowing customers to share offers and product info with friends via social media platforms like Facebook, and pushes targeted and personalized content and offers.

" REI: Rather than try to avoid comparison shopping, the outdoor clothing chain has mobile apps and Web sites that encourage consultative/interactive selling, showing technical characteristics that differentiate various product lines. This information is being delivered on a kiosk as well, with mobile POS planned later this year.

" Pacsun: The clothing manufacturer has created a photobased electronic lookbook where you can engage with someone in the store and walk through outfit combinations on a tablet.

" Lowes: In an effort to appeal to home renovators, an application called MyLowes allows customers to easily track their online and in-store purchases so theyll only get exactly what they need for a particular project.

" Stop&Shop: Weve all gotten used to self-checkouts like those stationed in IKEA, but this grocers app lets customers scan items on their own iPhone as they shop. This can make it easier for stressed out parents, because the child can do the scanning, increasing engagement. Once theyre done, customers simply walk to the self-checkout lane, scan their frequent shopper card and pay.

Hand also profiled up-andcoming retail chains that Canadians may never have heard of, like C.Wonder, which sprang to life complete with mobile POS, a mobile inventory system, integrated RFID, and even apps that allow adjustable lighting and choice of music in fitting rooms.

You just have to imagine: What if you didnt have all this legacy business and technology, and could start from scratch? she asked, adding that retailers should study customer behavior to ensure they optimize the right channel for the right purposes. Smart phones might be great for research, but holding up a tablet, she said, This is the device where they tend to actually pull the trigger and buy something.

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