Retail

Why Isn’t Retail OmniReadi?

Ditching the Card Networks

16. 40. 100. Three numbers out of 800 from the Q3 OmniReadi Index that tell the whole story of what retail segments are really omnireadi and who’s faking it until they make it. Vantiv’s head of core products, Scott DeAngelo, tells Karen Webster in this week’s episode of Data Drivers why it’s the “forcing mechanisms” behind those numbers that tell the real story.

 

Necessity is the mother of invention, and when it comes to retailers, necessity also spawns omnichannel evolution.

The PYMNTS Q3 OmniReadi Index, done in collaboration with Vantiv, is one built on 800 disparate data points, with the big picture trends capturing the way people shop across brick-and-mortar and mobile devices. The key, as Karen Webster noted in the Data Drivers series, is the ability to accommodate the consumer wherever he or she might shop.

And in the latest examination, the retailer’s ability to do that doesn’t really even need 800 numbers to tell the story. In fact, it needs only three: 16, 40 and 100.

First — 16 percent.

That’s the level of improvement in the top omnireadi merchants examined as part of this quarterly study, showing that retailers, such as those in sporting goods, are getting better. And in Webster’s discussion with Scott DeAngelo, head of core products at Vantiv, a term surfaced several times: forced mechanism.

In other words, change ignited by an external force.

“The general answer any time you see several or more top players in any sector do something right like this, there’s some ‘forcing mechanism’ … in the case of sporting goods,” DeAngelo noted, “the perfect storm” of mass merchants who’ve gotten into the space, the speciality stores that have gotten into the space and the online merchants who’ve gotten into the space.

“Those three things hit retail from multiple angles,” DeAngelo noted. “Walmart and Target, for example, are two retail behemoths that have become the place to go for footballs and cleats, among other items. Then, there are specialty stores that have emerged against the traditional sporting retailers, with niches in fashion, such as lululemon or Old Navy. And, of course, there’s no shortage of online threats.”

DeAngelo said such forcing mechanisms prompted the rise of increasing customer specialization and what he termed “very tangible” segments within sporting goods — notable among them the team sports segment, for example, or workout enthusiasts.

Both of those things have come together, DeAngelo said, to produce a customer willing to try a new product.

“Combine all these things,” he posited, and as a brick-and-mortar firm, the only way to solve for this five to seven years ago would have been to start thinking about omnichannel. Back then, he said, “consumers were starting to showroom.” The ubiquitous example here has been the consumer electronics store, where, for example, shoppers entered the Best Buy store, looked at the TVs and then went and bought that TV somewhere else.

“The sporting goods retailers,” he said, “are very good at saying, ‘if I am REI or I’m Bass or Dick’s Sporting Goods, I can showroom for myself.’” The consumer can come in, try out a product and then decide the way to buy — onsite, online or pick up at another location. In the example of a camping trip, “the 20 things that you need, it’s easier for me to put them in close proximity on a website,” while harder to do in a physical store aisle.

Which brings us to the second number — 40 percent.

As Webster noted, the next number, 40 percent, represents the decline in lower-scoring merchants in segments like grocery. DeAngelo noted that “with box and subscription meal services and the always increasing threat of Amazon Prime, specifically Amazon Prime’s Pantry … the traditional forcing mechanism hasn’t been there,” but now, there are “toes in the water,” with Kroger and other firms getting in omnichannel. There has not (yet) been the threat of losing “huge chunks” of users.

But look toward the bifurcation between the nonperishable and perishable aisles, he continued. The in-store buying experience will be less impacted, even with Blue Apron and others moving into the perishable goods that are consumed. But nonperishables are under siege, where bulk goods, such as paper towels and toilet paper, can be bought once a month on a recurring basis from a player like Amazon Pantry. For the grocers, then, omnichannel becomes imperative to “survive, let alone thrive,” said DeAngelo.

The “order ahead” mindset should also push into the grocery area, said DeAngelo, taking a cue from restaurants, where consumers are able to save time and effort to pick up, say, cough or cold medicine or other items that need not be examined.

The last number — 100 percent.

A positive number on the face of it, and in this case, as Webster said, the data uncovered in the latest OmniReadi deep dive found that the best-scoring merchants use purchasing history to fine-tune omnichannel activity with consumers.

“Purchase history becomes important for the many retailers that did not have strong loyalty programs in place and so didn’t have transaction-level data in place,” said DeAngelo. He used the example of a retailer getting information that 100 gallons of milk and 100 cases of Oreo cookies had been sold in their store in any given month.

The ability to know how many consumers bought milk without the cookies — or vice versa — can give rise to cross-selling opportunities that drive sales lift. Thus, the potential combination of thousands and even tens of thousands of SKUs, and the ability to link to a customer level versus just having total sales data can change everything. The data shows the promise of forcing mechanisms, which, as DeAngelo noted, “adds pressure” to a firm to change, often for the better and can be, in fact, “blessings in disguise.” 

——————————

New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Click to comment

TRENDING RIGHT NOW