By Paula Rosenblum, Managing Partner
6/3/2008
We could have had our pick of multi-channel stories this week, and provided pithy commentary on most all of them. But the two announcements that really jumped out at us were Nordstrom announcing a roll-out of “Buy on-line, pick up in stores” and Barnes and Noble rolling out a mobile commerce (mCommerce) site tailored for Blackberry and Windows Mobile users.
Nordstrom’s Cross-Channel Initiative
The gist of Nordstrom’s announcement was that the company waited until it fully integrated its inventory and ecommerce systems to begin its foray into cross-channel retailing. On the one hand, you’ve really got to applaud Nordstrom for taking the time to get the integration right. Our research into multi-channel retail (and frankly into all aspects of retail technology) consistently shows unwieldy technology infrastructures keep retailers from taking advantage of new business opportunities. On the other hand, our research also shows that despite these unwieldy infrastructures, most retail winners “bruted their way” to cross-channel retailing…insuring – by hook or by crook – that customers could buy on-line and pick up in stores no matter how tricky an exercise it proved to be. And by any measure, Nordstrom is very late to the cross-channel party.
Nordstrom’s announcement comes on the heels of weak Q1 total and comparable store sales and a small gross profit decline for the 2007’s full year (even though comparable store and chain sales improved over that period). If the trends shown by our research hold, we would expect leveraging the multi-channel customer to help Nordstrom improve on those results, most especially the its gross margin. Cross-channel customers are consistently more profitable, and tend to be more affluent than their single channel peers. We’re not naïve enough to ignore the downside impact of gas at $4.00+ a gallon, but Nordstrom has a history of using technology to drive better results and we would never bet against them. Even the Nordstrom customer is shocked by spending $100 to fill her SUV gas tank, so pre-planned trips, where she is sure what she wants is actually in the store and waiting for her will work to Nordstrom’s advantage.
We hope that Nordstrom’s system integration is not just fully integrated, but also flexibly integrated. We expect circumstances to drive it into more channels soon, as evidenced by our next story of the week – Barnes and Noble’s new mobile web site.
The Inexorable March Towards mCommerce Continues – Welcome to bn.com
RSR has been banging the drum about Mobile Commerce (mCommerce) for a long time. US-based companies are behind the rest of the world in using the smart phone for commercial purposes (besides picking the next American Idol) but there are clear signals (ouch! Bad pun alert!) it’s about to catch up. First, in April 2008 Amazon announced its TextBuyIt application that allows customers to comparison shop and order directly from the comfort of their mobile devices. Now, Barnes and Noble announced a new mobile web site, tailored for Blackberry and Windows smart phones. Customers can browse, find inventory at store locations and buy the books, DVDs, toys and gifts of their choice. All they need is a strong set of thumbs and a smart phone.
This type of site empowers the customer in many different ways. There’s the obvious…I’m in someone else’s book store who doesn’t have what I want, so I do a quick locator to find the item I want at bn.com. But then there’s the not-so-obvious…which puts the customer totally in the driver’s seat. Picture this – you’re at a Barnes and Noble bookstore looking for a specific title. You ask an employee to help you find the book. The somewhat distracted employee says “It should be over in aisle xx, with the other self-help books.” You’re frustrated, because you’ve been scouring that aisle and you can’t find it. The employee replies, “Well then, we must be out of stock on that title.” You pick up your handy little smart phone and say, “I see here that you have it in stock at this store. May I speak with your manager please?”
It could be that the book is oversized and actually on a bottom shelf, it could be that the book was just received and is sitting in the back room waiting to be put out on the floor, or maybe the perpetual inventory isn’t exactly right. In any case, all of a sudden an otherwise frustrated shopper is empowered. Of course, if all else fails, she can go ahead and order it through TextBuyIt, but she suddenly has options she didn’t have before.
These two initiatives are signs of the times. It’s a multi-channel / cross-channel world. While these channels still seem to provide some retailer advantage, soon they’ll become simply table-stakes, or the price of entry into successful retailing. We encourage retailers to be prepared.
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