Description
When retailing was a far more product-centric industry, merchandising was the principal way a retailer established its brand, its positioning, and to a large extent its relationship with its customers. But in today's omni-channel retailing world, it’s the customers themselves who are defining the relationship with retailers.
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
RIS Thought Leadership Series
Omni-Channel Merchandising
Shares Spotlight with
Marketing and IT
When retailing was a far more product-centric industry, merchandising
was the principal way a retailer established its brand, its positioning,
and to a large extent its relationship with its customers. But in today’s
omni-channel retailing world, it’s the customers themselves who are de-
?ning the relationship with retailers. The move to omni-channel retail-
ing, with store, online, mobile and social channels all viewed and man-
aged as touchpoints within a common shopping/brand experience, has
created new complexities in merchandising. New sources of customer
data, the demand for more accurate forecasts, the need for enterprise-
wide inventory visibility and the desire to create tailored, localized
product assortments has today’s merchants working closely with newly
empowered marketing and IT departments. But while merchandising’s
clout within the retailing organization may have diminished, its impact
on the overall business has in many ways expanded. Even in a customer-
centric world, products and how they are presented are still basic pillars
of a retailer’s ongoing success.
I NSI DE:
3 Applying Insights
Across Channels
4 Unifying Shopping
Experiences
6 Bigger Roles for Marketing
7 Digital Merchandising
Capabilities
In partnership with
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RIS Thought Leadership Series I February 2012 I 2
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
What’s at Stake for Retailers
Even in the distant days when retailers operated in one or, at
most, two channels (i.e. stores and paper catalogs), merchan-
dising was a far from simple process. It encompassed planning,
selecting, distributing and pricing products that the retailer
hoped would appeal to their customers. In a product-centric
industry, merchandising was the principal way a retailer es-
tablished its brand, its positioning, and to a large extent its
relationship with its customers.
In today’s omni-channel retailing world, it’s the custom-
ers themselves who are de?ning the relationship with retail-
ers. Products themselves are increasingly commoditized, par-
ticularly since digital commerce can almost instantly bring an
enormous range of items almost immediately to a shopper’s PC,
smartphone or tablet device.
In addition, the move from multi-channel retailing (store and
e-commerce channels operating semi-autonomously, albeit
with numerous cross-channel linkages and synergies) to omni-
channel retailing (store, online, mobile and social channels all
viewed and managed as touchpoints within a common shop-
ping/brand experience) has created new complexities in mer-
chandising. For example, retailers must choose whether to make
their entire product line available in all channels or to segment
their offerings, based on the characteristics of each touchpoint
or its place in a non-linear shopping process.
“Ideally, retailers will become ever more strategic with their
omni-channel merchandising efforts,” says RIS News Group
Editor-in-Chief Joe Skorupa. “For example, customers’ digi-
tal commerce searches and the composition of their online
market baskets can show which products are most often pur-
chased together. Identifying these af?nity products results in
more cross-selling and upselling, driving higher sales and im-
proving margins. Smart retailers will carry these insights into
the store environment, using signage and shelf placement to
physically ‘link’ these go-together products for their brick-and-
mortar customers.”
Retailers will also need to become even more adept at using
their digital channels as “endless aisles,” circumventing the
square footage limitations of brick-and-mortar stores by elec-
tronically providing customers with access to their full mer-
chandise lines. “An omni-channel approach to merchandising
frees retailers to create unique, memorable in-store experienc-
es, devoting space and resources to product demonstrations,
how-to seminars and other in-person-only solutions – without
worrying that they have failed to display every available color,
size or model of a given product,” says Skorupa.
Even for retailers with less ambitious plans, it’s important to
get their merchandising right in all the channels they operate
in. “In a recovering economy, precision-based cross-channel
merchandising is being seen as mission critical for address-
ing selling pressures, customer af?nity issues, and higher Gross
Margin Return on Inventory Investment,” according to Aber-
deen Group retail analyst Sahir Anand.
“Ignoring store and channel merchandising inadequacies (with
symptoms such as growing customer dissonance, high mark-
downs as a result of low full-price sales, and declining prof-
itability) is one of the leading causes of failure/store shut-
downs,” Anand writes in Mission-Critical Merchandising and
Replenishment, a June 2011 Aberdeen report.
Sharing the Spotlight
One result of these converging trends has been that within the
new omni-channel retail organization, merchandising’s once
pre-eminent role must now be shared with some “co-stars,” pri-
marily marketing and information technology.
Marketing departments now have charge of the all-important
storehouse of customer data, collected from an increasing num-
ber of touchpoints, that’s needed to feed today’s merchandising
processes. Marketing also has ownership of the communication
vehicles to reach customers – not just through traditional mass
T A K E A W A Y
Omni-Channel Choices:
Merchandising decisions now include
choosing which products to offer and pro-
mote in store, Web, mobile and emerg-
ing social channels, while still providing a
consistent customer experience
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RIS Thought Leadership Series I February 2012 I 3
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
media but via even more targetable methods, including e-mail,
SMS texts, and fast-emerging location-based and social retail-
ing channels.
The combination of marketing and IT can be powerful. IDC Retail
Insights’ Greg Girard provides the example of a smartphone- or
shopping buddy-wielding grocery shopper. The retailer’s loyalty
data indicates she typically buys small pack premium products
and displays a price-inelastic preference for organic produce,
and what the shopper has scanned into her basket depicts the
“shopping mission” she is on today. “With this information in
hand a food retailer should contextualize and present a high-
margin upsell or cross-sell she’d be delighted to take,” Girard
noted in “Retail Revenue Management 2.0,” August 2011 RIS
News. “When she does she is a happy customer with a bigger
basket and a fatter margin for the retailer.”
IT not only suffuses today’s most effective marketing tech-
niques; it’s also providing the means for retailers to gain a bet-
ter understanding of what customers want – which is, after all,
one of the basics of merchandising. Recent RIS News research
identi?ed the varied technological tools retailers are using to
sense customer demand. Four in 10 retailer respondents already
have technology to measure store traf?c and mobile site/appli-
cation traf?c, as well as the ability to collect real-time, item-
level sales data across channels.
Nearly as many (38.5%) are monitoring social media for men-
tions of their company or its products, and a total of 46.1% will
be updating this technology in 2012. (See Figure 1.)
T A K E A W A Y
Apply Insights Across Channels:
Purchasing af?nities revealed by analyzing
online shopping patterns can be applied
in stores to create cross-selling adjacen-
cies and to support context-aware offers
in mobile channels
Source: RIS News, November 2011
Retailers are using increasingly sophisticated and
varied tools to sense customer demand in stores and
across channels, but many face challenges in using
this data to execute on their merchandising strategies
What Does Your Company do to More Accurately
Sense Customer Demand?
Measure website traffic
Monitor promotions with campaign
management tools
Measure store traffic
Measure mobile site/app traffic
Collect real-time, item-level sales
data across channels
Monitor social media for
company/product mentions
Use exception-based reporting
to identify demand spikes/dips
40% 20% 8%12% 20%
40% 8%12% 16% 24%
38.5% 34.6% 11.5%
3.8%
11.5%
76.9% 15.4% 3.8%
3.8%
37.5% 25% 20.8%
4.2%
12.5%
40%
4%
24% 20% 12%
45.8% 16.7% 25% 12.5%
Up-to-date tech in place
Updating now
Will begin updating in 2012
Will begin updating in 2013
No plans
Figure 1
(Continued on page 6)
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I N D U S T R Y
I N S I G H T
RIS Thought Leadership Series I February 2012 I 4
Merchandising Challenge:
Marry Channel-Speci?c View with
Uni?ed Shopping Experience
Hari Shetty, Vice President and Head of Retail, and Ronojoy Guha, General Manager
and Head of Retail Consulting, Wipro Technologies
Q: Traditionally, merchandising has been a power-
ful force within the retail organization. Overall, how
is the move toward more omni-channel operations
changing merchandising’s role?
HARI SHETTY: The traditional retail model was much more
product-centric, while the new model is more customer engage-
ment-centric. And we do see a huge shift in how merchants
traditionally did their work versus how they’re expected to do
it going forward, a change that’s more visible in specialty re-
tailing than in other verticals. One key development is in the
relationship between marketing and merchandising. They had
worked together before, but without close alignment. Now the
relationship between merchandising and marketing has to be
extremely close, to make sure their strategies are aligned to
deliver a uni?ed customer experience. Marketing has estab-
lished a lot of dominance, and that will continue to increase.
Q: What are some of the speci?c merchandising-re-
lated challenges retailers are facing as they become
more omni-channel in nature?
SHETTY: For most of the customers that we work with, a
big challenge is that historically each of their channels was
operated by a different business unit. On a big-picture level,
integrating these business units and building uni?ed systems
around merchandising – whether for forecasting, visibility,
supply chain or logistics – has been a key issue. Many people
look at this as a technology issue, but I believe it’s really
more of an organizational change issue.
RONOJOY GUHA: Let’s take the supply chain as an ex-
ample. Most retailers manage replenishments to the store
and the e-commerce channel separately. This made operating
sense in a multi-channel world, where each channel operated
independently of each other and focused on different capabil-
ity sets, i.e. store replenishment was built around providing
palletized orders while e-commerce ful?llment was focused
on picking and packing individual orders. In the new omni-
channel world, however, retailers will need to focus on build-
ing uni?ed supply chain capabilities that can handle both
e-commerce and store demand simultaneously, allowing cus-
tomers to order, receive and return product regardless of the
channel they use.
Q: Are there areas where retailers have had some
success in become more omni-channel operators?
GUHA: Yes, we feel inventory visibility is one such area.
While most retailers are still struggling with it, some retailers
have done a great job in providing true inventory visibility,
both online and in stores. When combined with uni?ed fore-
casting, inventory visibility provides a strong building block
to an omni-channel experience. Without them, things like ful-
?lling e-commerce orders directly from stores requires a lot of
process and technology work to accomplish. But it’s important
to note that today, there’s no retailer that we could say is of-
fering customers a truly omni-channel experience. It’s a work
in progress for almost all retailers.
In the new era of customer engagement-cen-
tricity, “the relationship between merchandis-
ing and marketing has to be extremely close,
to make sure their strategies are aligned to
deliver a uni?ed customer experience.”
—Hari Shetty, vice president
and head of retail,
Wipro Technologies
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I N D U S T R Y
I N S I G H T
RIS Thought Leadership Series I February 2012 I 5
Q: If that’s the case, what are some things retailers
can do to differentiate themselves in the way of provid-
ing a customer-friendly omni-channel experience?
SHETTY: From the customer’s perspective, I’d say that a re-
tailer’s ability to suspend and then resume a transaction at any
point, and in any channel, is key to providing an omni-channel
experience. Whether the ‘suspension’ occurs to educate the cus-
tomer or to handle the commerce, ful?llment or service aspects
of a transaction, that ability to suspend and resume in all chan-
nels is what shoppers are looking for. Accomplishing this means
integrating across various solution sets and also deciding which
one will be the master in terms of controlling the entire customer
experience, so master data management also becomes an impor-
tant underlying technology, whether it’s in terms of item data or
having a uni?ed view of the customer.
Q: Retailers have tried to forecast what custom-
ers will want in making their merchandising deci-
sions. How is the omni-channel trend, and the pro-
liferation of new customer data sources, affecting
these processes?
SHETTY: Some retailers have used their customer relationship
management (CRM) systems as information sources and also for
customer engagement, but we’re seeing that traditional CRM sys-
tems are inadequate for meeting next-generation retailing needs
– particularly in the area of customer engagement. In part that’s
because CRM systems have depended on collecting customer data
primarily from within the retailer’s four walls.
We are now seeing the opportunity to use social media ‘listen-
ing platforms’ that provide data from outside those four walls.
Retailers will be able to mix and match this with intelligent data
from within their enterprise to gain deeper insight into effective
customer engagement, acquisition and retention and to translate
those insights into merchandising decisions.
GUHA: Eventually, these social media platforms will be used to
reach out to customers. Today, retailers are just trying to capture
and analyze this information, but eventually they will be more
effective in understanding how their customers behave and be
able to establish a true dialogue with customers through social
retailing networks.
Q: Are there other examples of how retailers can take
advantage of the unique elements of each channel they
operate in? Should they establish channel-speci?c mer-
chandising strategies?
SHETTY: It is important to take a channel-speci?c view, while
still unifying the customer’s buying experience. For instance,
online channels provide global reach and are excellent for in-
formation-intensive products as well as being able to compete
on price. In the store, key drivers include product presentation,
creating a memorable shopping experience and using more lo-
calized pricing. At this point, the mobile channel is being used
primarily to engage the customer, contextualize their experience
by relating them to the shopper’s actions at a point in time and
in?uencing an impulse buy.
GUHA: The question many retailers are trying to answer is how
they can in?uence buying behavior in one channel to overlap
with and move into another channel. For example, we’re work-
ing with retail customers on the challenge of trying to convert/
in?uence buyers who have begun their engagement in the online
channel to carry the shopping experience through to the store,
where they can then be in?uenced to buy both core and other af-
?nity products. In doing this, the retailer ensures that they man-
age to keep customers engaged and also in?uence their overall
market baskets. What this means is that retailers not only need
to understand the contextualization factors for each channel,
they also need to devise strategies for each channel that will
help keep the customer engaged and in?uence them to migrate
upward on the value curve.
SHETTY: This points out that when we talk about omni-chan-
nel operations, it’s not a single solution or set of capabilities
that retailers need to acquire. It’s more about conceptualizing
the new ways of engaging with customers, and using tech-
nology and organizational change to adapt to and in?uence
that relationship. •
“It’s important to note that today, there’s no
retailer that we could say is offering custom-
ers a truly omni-channel experience. It’s a
work in progress for almost all retailers.”
—Ronojoy Guha, general manager
and head of retail consulting,
Wipro Technologies
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RIS Thought Leadership Series I February 2012 I 6
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
Advanced IT solutions are also critical for what many indus-
try experts identify as a basic building block of omni-channel
merchandising: enterprise-wide inventory visibility, delivered
in real time. Knowing which products are where (e.g. en route
from a supplier, in a distribution center, en route to a store, in
a store’s back room, on the shelf or already sold) at any given
time provides retailers with an omni-channel view of the impact
of merchandising decisions that have already been made.
Such visibility also opens the door to adjusting merchandising
execution based on updated forecasts or real-world events, e.g.
transferring product to a store (or channel) conducting a pro-
Source: Aberdeen Group, May 2011
Improving forecast accuracy is a higher strategic
priority for non-store channels, while creating tailored,
localized assortments and improving merchandise pre-
sentation are more critical in the store environment
0%
Top Strategic Merchandising Actions
(Stores vs. non-store channels)
Arrive at an optimal mix of 'Standard'
and 'Precision' merchandise
Improve multi-supplier network
Improve quality of
merchandise presentation
Create tailored, specific, precision
merchandise assortments
Improve demand forecast accuracy
Stores
Other Channels
55%
64%
39%
18%
39%
18%
27%
18%
27%
motional campaign that is much more successful than originally
anticipated. In addition, inventory visibility is a prerequisite
for the increasing number of retailers that are using all avail-
able channels for ful?llment rather than maintaining separate
supply chains for e-commerce and stores.
Merchandising Priorities
Sensing customer demand is critical, but retailers must then
use this data to create an accurate demand forecast. Improving
demand forecast accuracy is a top strategic action for 57% of
retailers, according to a May 2011 Aberdeen Group survey, and
it’s a higher priority for non-store channels than brick-and-
mortar ones. (See Figure 2.)
Another key priority is creating tailored, localized merchan-
dise assortments as a way to meet the needs of speci?c stores,
customer groups and categories. Such assortments are created
using data analytics-led processes that include purchase histo-
ries, demographics, product af?nity identi?cation and personal-
ization, in addition to traditional product attributes. Retailers
can also apply store tiering or clustering analysis, creating as-
sortments that go beyond the simple “A, B, C” store designa-
tions that suf?ced in the past.
Non-store channels are ahead of brick-and-mortar channels in
the race to localize: only 18% of the former identify creating
tailored assortments as a top strategic action, less than half
the 39% for store channels. “This is explained by the fact that
non-traditional channel assortments have always been more
personalized as the digital media has features such as site navi-
gation, search, and other ways of capturing customer behavior
data,” writes Aberdeen’s Anand.
T A K E A W A Y
Magnify Marketing’s Role:
Retailers’ marketing departments
have access both to customer data
and targeted communication vehicles
that are crucial to successful omni-
channel merchandising
Figure 2
(Continued from page 3)
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RIS Thought Leadership Series I February 2012 I 7
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
Source: Aberdeen Group, May 2011
Non-store channels are far ahead of stores in
achieving a centralized data repository for merchan-
dise data, and have been better able to integrate
customer demographic and purchase data with
merchandise management systems
Top Knowledge and Performance Management
Capabilities (Stores vs. non-store channels)
Stores
Other Channels
Interface purchase history and demographic
Ability to integrate order management data
(weeks from order to delivery)
with merchandise management system
Generate metric driven reports for evaluating
merchandising's effectiveness
Single, centralized product/merchandise
data or information repository
Ability to adjust buy plan and open-to-buy
requirements with short-term shifts in revenue
plan and inventory cost targets
58%
55%
52%
52%
82%
73%
91%
48%
55%
45%
Digital Merchandising Capabilities
Non-store channels also have the lead over their brick-and-
mortar brethren in a number of technology-enabled capabili-
ties. Just over half (55%) of store channel respondents have a
single, centralized product/merchandise data repository, com-
pared to 91% of non-store channel respondents. (See Figure 3.)
E-commerce channels also outstrip stores in generating metric-
driven reports for evaluating merchandising’s effectiveness,
73% to 52%. There’s an even wider gap in the ability to inter-
face purchase history and demographic data with a merchandise
management system: 48% for stores, 82% for non-stores.
Some of these gaps are related to the technology-oriented
nature of digital commerce. As noted, the move from multi-
channel to omni-channel retailing is forcing the store side of
the business to play catch-up in certain key areas. Retailers are
seeing the need to gather all customer data and all merchan-
dise data into centralized locations rather than keeping it in
channel-speci?c silos.
In addition to being a better ?t with the omni-channel retail-
ing model, centralization also opens the door to using today’s
faster, less expensive “Big Data” analytical tools to discover
hidden insights at the intersection of large volumes of customer
and product information.
“Retailers increasingly understand that the days of the ‘Mer-
chant Prince’ have passed, and successful merchandising truly
resides in a combination of technology AND the informed opin-
ions of not only merchants, but also marketing, store operations,
e-commerce personnel and other Line of Business executives,”
according to Paula Rosenblum and Steve Rowen. (Twenty-?rst
Century Merchandising Takes Hold, RSR Research, August 2011.)
All in all, there’s a growing recognition that omni-channel mer-
chandising and information technology are already inextricably
linked. In 2010, 24% of retailers responding to an RSR survey
about their merchandising plans for the coming three to ?ve
years said they were moving away from home-grown systems
toward an integrated suite; in 2011 the ?gure rose to 29%.
There were also increases in those seeking greater integration
between point solutions (27% in 2010, 29% in 2011) and those
seeking more innovative delivery models such as Software as a
Service (16% vs. 19%).
T A K E A W A Y
Improve Inventory Visibility:
Enterprise-wide, real-time inventory vis-
ibility provides a high-level view of omni-
channel merchandising decisions and
also facilitates faster reactions to new
challenges and opportunities
Figure 3
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RIS Thought Leadership Series I February 2012 I 8
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
Most tellingly, in 2010 nearly one in ?ve (18%) said they had
no merchandising system plans at all in 2010. By 2011 that
?gure had dropped to zero. (See Figure 4.)
As the number and type of decisions around merchandising mul-
tiply along with new channels and customer touchpoints, and
as executing on those decisions becomes a greater challenge,
retailers will turn to both sophisticated marketing tools and
advanced IT solutions. Merchandising’s clout within the retail-
ing organization may have diminished as retailing itself has
changed, but merchandising’s impact on the overall business
has in many ways expanded. Even in a customer-centric world,
products and how they are presented are still basic pillars of a
retailer’s ongoing success.
T A K E A W A Y
Localize, Localize, Localize: Apply the
assortment tailoring tools developed in
digital channels to localize merchandise
offerings in brick-and-mortar stores and
other sales channels
Source: RSR Research, August 2011
Retailers are increasingly recognizing that
integrated, industry-standard merchandising systems
are a necessity in today’s omni-channel environment
Merchandising System Plans for the Next 3-5 Years
2010
2011
No plans
Seeking to eradicate the spreadsheet
wherever possible
Moving away from home-grown applications
toward point solutions
Seeking more innovative delivery
models like SaaS
Seeking greater integration
between point solutions
Moving away from home-grown applications
toward an integrated suite
24%
29%
27%
29%
16%
19%
6%
13%
8%
10%
18%
0%
A b o u t W i p r o
Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourc-
ing company, that delivers solutions to enable its clients to do business better. Wipro Technologies delivers winning business outcomes
through its deep industry experience and a 360 degree view of “Business through Technology” – helping clients create successful and
adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering
innovation and an organization wide commitment to sustainability, Wipro Technologies has over 120,000 employees and clients across
54 countries.
With over 25 years in the global delivery of technology services, Wipro Technologies provides best in class retail solutions for transform-
ing and managing your business through a comprehensive set of offerings in e-business, Stores, Multi-Channel Retailing, Supply Chain,
Merchandising and Analytics/BI for the retail industry. We bring additional value to clients and nurture innovative solution development
through our investments in Centers of Excellence in Supply Chain Planning and Execution; Merchandizing and Pricing, RFID, Pharmacy in
Retail, Store Operations and Data Analytics. For more information, please visit www.wipro.com.
Figure 4
RIS_TL2_0212_V3.indd 8 4/24/12 12:28 PM
doc_488752736.pdf
When retailing was a far more product-centric industry, merchandising was the principal way a retailer established its brand, its positioning, and to a large extent its relationship with its customers. But in today's omni-channel retailing world, it’s the customers themselves who are defining the relationship with retailers.
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
RIS Thought Leadership Series
Omni-Channel Merchandising
Shares Spotlight with
Marketing and IT
When retailing was a far more product-centric industry, merchandising
was the principal way a retailer established its brand, its positioning,
and to a large extent its relationship with its customers. But in today’s
omni-channel retailing world, it’s the customers themselves who are de-
?ning the relationship with retailers. The move to omni-channel retail-
ing, with store, online, mobile and social channels all viewed and man-
aged as touchpoints within a common shopping/brand experience, has
created new complexities in merchandising. New sources of customer
data, the demand for more accurate forecasts, the need for enterprise-
wide inventory visibility and the desire to create tailored, localized
product assortments has today’s merchants working closely with newly
empowered marketing and IT departments. But while merchandising’s
clout within the retailing organization may have diminished, its impact
on the overall business has in many ways expanded. Even in a customer-
centric world, products and how they are presented are still basic pillars
of a retailer’s ongoing success.
I NSI DE:
3 Applying Insights
Across Channels
4 Unifying Shopping
Experiences
6 Bigger Roles for Marketing
7 Digital Merchandising
Capabilities
In partnership with
RIS_TL2_0212_V3.indd 1 4/24/12 12:28 PM
RIS Thought Leadership Series I February 2012 I 2
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
What’s at Stake for Retailers
Even in the distant days when retailers operated in one or, at
most, two channels (i.e. stores and paper catalogs), merchan-
dising was a far from simple process. It encompassed planning,
selecting, distributing and pricing products that the retailer
hoped would appeal to their customers. In a product-centric
industry, merchandising was the principal way a retailer es-
tablished its brand, its positioning, and to a large extent its
relationship with its customers.
In today’s omni-channel retailing world, it’s the custom-
ers themselves who are de?ning the relationship with retail-
ers. Products themselves are increasingly commoditized, par-
ticularly since digital commerce can almost instantly bring an
enormous range of items almost immediately to a shopper’s PC,
smartphone or tablet device.
In addition, the move from multi-channel retailing (store and
e-commerce channels operating semi-autonomously, albeit
with numerous cross-channel linkages and synergies) to omni-
channel retailing (store, online, mobile and social channels all
viewed and managed as touchpoints within a common shop-
ping/brand experience) has created new complexities in mer-
chandising. For example, retailers must choose whether to make
their entire product line available in all channels or to segment
their offerings, based on the characteristics of each touchpoint
or its place in a non-linear shopping process.
“Ideally, retailers will become ever more strategic with their
omni-channel merchandising efforts,” says RIS News Group
Editor-in-Chief Joe Skorupa. “For example, customers’ digi-
tal commerce searches and the composition of their online
market baskets can show which products are most often pur-
chased together. Identifying these af?nity products results in
more cross-selling and upselling, driving higher sales and im-
proving margins. Smart retailers will carry these insights into
the store environment, using signage and shelf placement to
physically ‘link’ these go-together products for their brick-and-
mortar customers.”
Retailers will also need to become even more adept at using
their digital channels as “endless aisles,” circumventing the
square footage limitations of brick-and-mortar stores by elec-
tronically providing customers with access to their full mer-
chandise lines. “An omni-channel approach to merchandising
frees retailers to create unique, memorable in-store experienc-
es, devoting space and resources to product demonstrations,
how-to seminars and other in-person-only solutions – without
worrying that they have failed to display every available color,
size or model of a given product,” says Skorupa.
Even for retailers with less ambitious plans, it’s important to
get their merchandising right in all the channels they operate
in. “In a recovering economy, precision-based cross-channel
merchandising is being seen as mission critical for address-
ing selling pressures, customer af?nity issues, and higher Gross
Margin Return on Inventory Investment,” according to Aber-
deen Group retail analyst Sahir Anand.
“Ignoring store and channel merchandising inadequacies (with
symptoms such as growing customer dissonance, high mark-
downs as a result of low full-price sales, and declining prof-
itability) is one of the leading causes of failure/store shut-
downs,” Anand writes in Mission-Critical Merchandising and
Replenishment, a June 2011 Aberdeen report.
Sharing the Spotlight
One result of these converging trends has been that within the
new omni-channel retail organization, merchandising’s once
pre-eminent role must now be shared with some “co-stars,” pri-
marily marketing and information technology.
Marketing departments now have charge of the all-important
storehouse of customer data, collected from an increasing num-
ber of touchpoints, that’s needed to feed today’s merchandising
processes. Marketing also has ownership of the communication
vehicles to reach customers – not just through traditional mass
T A K E A W A Y
Omni-Channel Choices:
Merchandising decisions now include
choosing which products to offer and pro-
mote in store, Web, mobile and emerg-
ing social channels, while still providing a
consistent customer experience
RIS_TL2_0212_V3.indd 2 4/24/12 12:28 PM
RIS Thought Leadership Series I February 2012 I 3
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
media but via even more targetable methods, including e-mail,
SMS texts, and fast-emerging location-based and social retail-
ing channels.
The combination of marketing and IT can be powerful. IDC Retail
Insights’ Greg Girard provides the example of a smartphone- or
shopping buddy-wielding grocery shopper. The retailer’s loyalty
data indicates she typically buys small pack premium products
and displays a price-inelastic preference for organic produce,
and what the shopper has scanned into her basket depicts the
“shopping mission” she is on today. “With this information in
hand a food retailer should contextualize and present a high-
margin upsell or cross-sell she’d be delighted to take,” Girard
noted in “Retail Revenue Management 2.0,” August 2011 RIS
News. “When she does she is a happy customer with a bigger
basket and a fatter margin for the retailer.”
IT not only suffuses today’s most effective marketing tech-
niques; it’s also providing the means for retailers to gain a bet-
ter understanding of what customers want – which is, after all,
one of the basics of merchandising. Recent RIS News research
identi?ed the varied technological tools retailers are using to
sense customer demand. Four in 10 retailer respondents already
have technology to measure store traf?c and mobile site/appli-
cation traf?c, as well as the ability to collect real-time, item-
level sales data across channels.
Nearly as many (38.5%) are monitoring social media for men-
tions of their company or its products, and a total of 46.1% will
be updating this technology in 2012. (See Figure 1.)
T A K E A W A Y
Apply Insights Across Channels:
Purchasing af?nities revealed by analyzing
online shopping patterns can be applied
in stores to create cross-selling adjacen-
cies and to support context-aware offers
in mobile channels
Source: RIS News, November 2011
Retailers are using increasingly sophisticated and
varied tools to sense customer demand in stores and
across channels, but many face challenges in using
this data to execute on their merchandising strategies
What Does Your Company do to More Accurately
Sense Customer Demand?
Measure website traffic
Monitor promotions with campaign
management tools
Measure store traffic
Measure mobile site/app traffic
Collect real-time, item-level sales
data across channels
Monitor social media for
company/product mentions
Use exception-based reporting
to identify demand spikes/dips
40% 20% 8%12% 20%
40% 8%12% 16% 24%
38.5% 34.6% 11.5%
3.8%
11.5%
76.9% 15.4% 3.8%
3.8%
37.5% 25% 20.8%
4.2%
12.5%
40%
4%
24% 20% 12%
45.8% 16.7% 25% 12.5%
Up-to-date tech in place
Updating now
Will begin updating in 2012
Will begin updating in 2013
No plans
Figure 1
(Continued on page 6)
RIS_TL2_0212_V3.indd 3 4/24/12 12:28 PM
I N D U S T R Y
I N S I G H T
RIS Thought Leadership Series I February 2012 I 4
Merchandising Challenge:
Marry Channel-Speci?c View with
Uni?ed Shopping Experience
Hari Shetty, Vice President and Head of Retail, and Ronojoy Guha, General Manager
and Head of Retail Consulting, Wipro Technologies
Q: Traditionally, merchandising has been a power-
ful force within the retail organization. Overall, how
is the move toward more omni-channel operations
changing merchandising’s role?
HARI SHETTY: The traditional retail model was much more
product-centric, while the new model is more customer engage-
ment-centric. And we do see a huge shift in how merchants
traditionally did their work versus how they’re expected to do
it going forward, a change that’s more visible in specialty re-
tailing than in other verticals. One key development is in the
relationship between marketing and merchandising. They had
worked together before, but without close alignment. Now the
relationship between merchandising and marketing has to be
extremely close, to make sure their strategies are aligned to
deliver a uni?ed customer experience. Marketing has estab-
lished a lot of dominance, and that will continue to increase.
Q: What are some of the speci?c merchandising-re-
lated challenges retailers are facing as they become
more omni-channel in nature?
SHETTY: For most of the customers that we work with, a
big challenge is that historically each of their channels was
operated by a different business unit. On a big-picture level,
integrating these business units and building uni?ed systems
around merchandising – whether for forecasting, visibility,
supply chain or logistics – has been a key issue. Many people
look at this as a technology issue, but I believe it’s really
more of an organizational change issue.
RONOJOY GUHA: Let’s take the supply chain as an ex-
ample. Most retailers manage replenishments to the store
and the e-commerce channel separately. This made operating
sense in a multi-channel world, where each channel operated
independently of each other and focused on different capabil-
ity sets, i.e. store replenishment was built around providing
palletized orders while e-commerce ful?llment was focused
on picking and packing individual orders. In the new omni-
channel world, however, retailers will need to focus on build-
ing uni?ed supply chain capabilities that can handle both
e-commerce and store demand simultaneously, allowing cus-
tomers to order, receive and return product regardless of the
channel they use.
Q: Are there areas where retailers have had some
success in become more omni-channel operators?
GUHA: Yes, we feel inventory visibility is one such area.
While most retailers are still struggling with it, some retailers
have done a great job in providing true inventory visibility,
both online and in stores. When combined with uni?ed fore-
casting, inventory visibility provides a strong building block
to an omni-channel experience. Without them, things like ful-
?lling e-commerce orders directly from stores requires a lot of
process and technology work to accomplish. But it’s important
to note that today, there’s no retailer that we could say is of-
fering customers a truly omni-channel experience. It’s a work
in progress for almost all retailers.
In the new era of customer engagement-cen-
tricity, “the relationship between merchandis-
ing and marketing has to be extremely close,
to make sure their strategies are aligned to
deliver a uni?ed customer experience.”
—Hari Shetty, vice president
and head of retail,
Wipro Technologies
RIS_TL2_0212_V3.indd 4 4/24/12 12:28 PM
I N D U S T R Y
I N S I G H T
RIS Thought Leadership Series I February 2012 I 5
Q: If that’s the case, what are some things retailers
can do to differentiate themselves in the way of provid-
ing a customer-friendly omni-channel experience?
SHETTY: From the customer’s perspective, I’d say that a re-
tailer’s ability to suspend and then resume a transaction at any
point, and in any channel, is key to providing an omni-channel
experience. Whether the ‘suspension’ occurs to educate the cus-
tomer or to handle the commerce, ful?llment or service aspects
of a transaction, that ability to suspend and resume in all chan-
nels is what shoppers are looking for. Accomplishing this means
integrating across various solution sets and also deciding which
one will be the master in terms of controlling the entire customer
experience, so master data management also becomes an impor-
tant underlying technology, whether it’s in terms of item data or
having a uni?ed view of the customer.
Q: Retailers have tried to forecast what custom-
ers will want in making their merchandising deci-
sions. How is the omni-channel trend, and the pro-
liferation of new customer data sources, affecting
these processes?
SHETTY: Some retailers have used their customer relationship
management (CRM) systems as information sources and also for
customer engagement, but we’re seeing that traditional CRM sys-
tems are inadequate for meeting next-generation retailing needs
– particularly in the area of customer engagement. In part that’s
because CRM systems have depended on collecting customer data
primarily from within the retailer’s four walls.
We are now seeing the opportunity to use social media ‘listen-
ing platforms’ that provide data from outside those four walls.
Retailers will be able to mix and match this with intelligent data
from within their enterprise to gain deeper insight into effective
customer engagement, acquisition and retention and to translate
those insights into merchandising decisions.
GUHA: Eventually, these social media platforms will be used to
reach out to customers. Today, retailers are just trying to capture
and analyze this information, but eventually they will be more
effective in understanding how their customers behave and be
able to establish a true dialogue with customers through social
retailing networks.
Q: Are there other examples of how retailers can take
advantage of the unique elements of each channel they
operate in? Should they establish channel-speci?c mer-
chandising strategies?
SHETTY: It is important to take a channel-speci?c view, while
still unifying the customer’s buying experience. For instance,
online channels provide global reach and are excellent for in-
formation-intensive products as well as being able to compete
on price. In the store, key drivers include product presentation,
creating a memorable shopping experience and using more lo-
calized pricing. At this point, the mobile channel is being used
primarily to engage the customer, contextualize their experience
by relating them to the shopper’s actions at a point in time and
in?uencing an impulse buy.
GUHA: The question many retailers are trying to answer is how
they can in?uence buying behavior in one channel to overlap
with and move into another channel. For example, we’re work-
ing with retail customers on the challenge of trying to convert/
in?uence buyers who have begun their engagement in the online
channel to carry the shopping experience through to the store,
where they can then be in?uenced to buy both core and other af-
?nity products. In doing this, the retailer ensures that they man-
age to keep customers engaged and also in?uence their overall
market baskets. What this means is that retailers not only need
to understand the contextualization factors for each channel,
they also need to devise strategies for each channel that will
help keep the customer engaged and in?uence them to migrate
upward on the value curve.
SHETTY: This points out that when we talk about omni-chan-
nel operations, it’s not a single solution or set of capabilities
that retailers need to acquire. It’s more about conceptualizing
the new ways of engaging with customers, and using tech-
nology and organizational change to adapt to and in?uence
that relationship. •
“It’s important to note that today, there’s no
retailer that we could say is offering custom-
ers a truly omni-channel experience. It’s a
work in progress for almost all retailers.”
—Ronojoy Guha, general manager
and head of retail consulting,
Wipro Technologies
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RIS Thought Leadership Series I February 2012 I 6
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
Advanced IT solutions are also critical for what many indus-
try experts identify as a basic building block of omni-channel
merchandising: enterprise-wide inventory visibility, delivered
in real time. Knowing which products are where (e.g. en route
from a supplier, in a distribution center, en route to a store, in
a store’s back room, on the shelf or already sold) at any given
time provides retailers with an omni-channel view of the impact
of merchandising decisions that have already been made.
Such visibility also opens the door to adjusting merchandising
execution based on updated forecasts or real-world events, e.g.
transferring product to a store (or channel) conducting a pro-
Source: Aberdeen Group, May 2011
Improving forecast accuracy is a higher strategic
priority for non-store channels, while creating tailored,
localized assortments and improving merchandise pre-
sentation are more critical in the store environment
0%
Top Strategic Merchandising Actions
(Stores vs. non-store channels)
Arrive at an optimal mix of 'Standard'
and 'Precision' merchandise
Improve multi-supplier network
Improve quality of
merchandise presentation
Create tailored, specific, precision
merchandise assortments
Improve demand forecast accuracy
Stores
Other Channels
55%
64%
39%
18%
39%
18%
27%
18%
27%
motional campaign that is much more successful than originally
anticipated. In addition, inventory visibility is a prerequisite
for the increasing number of retailers that are using all avail-
able channels for ful?llment rather than maintaining separate
supply chains for e-commerce and stores.
Merchandising Priorities
Sensing customer demand is critical, but retailers must then
use this data to create an accurate demand forecast. Improving
demand forecast accuracy is a top strategic action for 57% of
retailers, according to a May 2011 Aberdeen Group survey, and
it’s a higher priority for non-store channels than brick-and-
mortar ones. (See Figure 2.)
Another key priority is creating tailored, localized merchan-
dise assortments as a way to meet the needs of speci?c stores,
customer groups and categories. Such assortments are created
using data analytics-led processes that include purchase histo-
ries, demographics, product af?nity identi?cation and personal-
ization, in addition to traditional product attributes. Retailers
can also apply store tiering or clustering analysis, creating as-
sortments that go beyond the simple “A, B, C” store designa-
tions that suf?ced in the past.
Non-store channels are ahead of brick-and-mortar channels in
the race to localize: only 18% of the former identify creating
tailored assortments as a top strategic action, less than half
the 39% for store channels. “This is explained by the fact that
non-traditional channel assortments have always been more
personalized as the digital media has features such as site navi-
gation, search, and other ways of capturing customer behavior
data,” writes Aberdeen’s Anand.
T A K E A W A Y
Magnify Marketing’s Role:
Retailers’ marketing departments
have access both to customer data
and targeted communication vehicles
that are crucial to successful omni-
channel merchandising
Figure 2
(Continued from page 3)
RIS_TL2_0212_V3.indd 6 4/24/12 12:28 PM
RIS Thought Leadership Series I February 2012 I 7
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
Source: Aberdeen Group, May 2011
Non-store channels are far ahead of stores in
achieving a centralized data repository for merchan-
dise data, and have been better able to integrate
customer demographic and purchase data with
merchandise management systems
Top Knowledge and Performance Management
Capabilities (Stores vs. non-store channels)
Stores
Other Channels
Interface purchase history and demographic
Ability to integrate order management data
(weeks from order to delivery)
with merchandise management system
Generate metric driven reports for evaluating
merchandising's effectiveness
Single, centralized product/merchandise
data or information repository
Ability to adjust buy plan and open-to-buy
requirements with short-term shifts in revenue
plan and inventory cost targets
58%
55%
52%
52%
82%
73%
91%
48%
55%
45%
Digital Merchandising Capabilities
Non-store channels also have the lead over their brick-and-
mortar brethren in a number of technology-enabled capabili-
ties. Just over half (55%) of store channel respondents have a
single, centralized product/merchandise data repository, com-
pared to 91% of non-store channel respondents. (See Figure 3.)
E-commerce channels also outstrip stores in generating metric-
driven reports for evaluating merchandising’s effectiveness,
73% to 52%. There’s an even wider gap in the ability to inter-
face purchase history and demographic data with a merchandise
management system: 48% for stores, 82% for non-stores.
Some of these gaps are related to the technology-oriented
nature of digital commerce. As noted, the move from multi-
channel to omni-channel retailing is forcing the store side of
the business to play catch-up in certain key areas. Retailers are
seeing the need to gather all customer data and all merchan-
dise data into centralized locations rather than keeping it in
channel-speci?c silos.
In addition to being a better ?t with the omni-channel retail-
ing model, centralization also opens the door to using today’s
faster, less expensive “Big Data” analytical tools to discover
hidden insights at the intersection of large volumes of customer
and product information.
“Retailers increasingly understand that the days of the ‘Mer-
chant Prince’ have passed, and successful merchandising truly
resides in a combination of technology AND the informed opin-
ions of not only merchants, but also marketing, store operations,
e-commerce personnel and other Line of Business executives,”
according to Paula Rosenblum and Steve Rowen. (Twenty-?rst
Century Merchandising Takes Hold, RSR Research, August 2011.)
All in all, there’s a growing recognition that omni-channel mer-
chandising and information technology are already inextricably
linked. In 2010, 24% of retailers responding to an RSR survey
about their merchandising plans for the coming three to ?ve
years said they were moving away from home-grown systems
toward an integrated suite; in 2011 the ?gure rose to 29%.
There were also increases in those seeking greater integration
between point solutions (27% in 2010, 29% in 2011) and those
seeking more innovative delivery models such as Software as a
Service (16% vs. 19%).
T A K E A W A Y
Improve Inventory Visibility:
Enterprise-wide, real-time inventory vis-
ibility provides a high-level view of omni-
channel merchandising decisions and
also facilitates faster reactions to new
challenges and opportunities
Figure 3
RIS_TL2_0212_V3.indd 7 4/24/12 12:28 PM
RIS Thought Leadership Series I February 2012 I 8
RIS THOUGHT LEADERSHIP SERIES Omni-Channel Merchandising Shares Spotlight with Marketing and IT
Most tellingly, in 2010 nearly one in ?ve (18%) said they had
no merchandising system plans at all in 2010. By 2011 that
?gure had dropped to zero. (See Figure 4.)
As the number and type of decisions around merchandising mul-
tiply along with new channels and customer touchpoints, and
as executing on those decisions becomes a greater challenge,
retailers will turn to both sophisticated marketing tools and
advanced IT solutions. Merchandising’s clout within the retail-
ing organization may have diminished as retailing itself has
changed, but merchandising’s impact on the overall business
has in many ways expanded. Even in a customer-centric world,
products and how they are presented are still basic pillars of a
retailer’s ongoing success.
T A K E A W A Y
Localize, Localize, Localize: Apply the
assortment tailoring tools developed in
digital channels to localize merchandise
offerings in brick-and-mortar stores and
other sales channels
Source: RSR Research, August 2011
Retailers are increasingly recognizing that
integrated, industry-standard merchandising systems
are a necessity in today’s omni-channel environment
Merchandising System Plans for the Next 3-5 Years
2010
2011
No plans
Seeking to eradicate the spreadsheet
wherever possible
Moving away from home-grown applications
toward point solutions
Seeking more innovative delivery
models like SaaS
Seeking greater integration
between point solutions
Moving away from home-grown applications
toward an integrated suite
24%
29%
27%
29%
16%
19%
6%
13%
8%
10%
18%
0%
A b o u t W i p r o
Wipro Technologies, the global IT business of Wipro Limited (NYSE:WIT) is a leading Information Technology, Consulting and Outsourc-
ing company, that delivers solutions to enable its clients to do business better. Wipro Technologies delivers winning business outcomes
through its deep industry experience and a 360 degree view of “Business through Technology” – helping clients create successful and
adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering
innovation and an organization wide commitment to sustainability, Wipro Technologies has over 120,000 employees and clients across
54 countries.
With over 25 years in the global delivery of technology services, Wipro Technologies provides best in class retail solutions for transform-
ing and managing your business through a comprehensive set of offerings in e-business, Stores, Multi-Channel Retailing, Supply Chain,
Merchandising and Analytics/BI for the retail industry. We bring additional value to clients and nurture innovative solution development
through our investments in Centers of Excellence in Supply Chain Planning and Execution; Merchandizing and Pricing, RFID, Pharmacy in
Retail, Store Operations and Data Analytics. For more information, please visit www.wipro.com.
Figure 4
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doc_488752736.pdf