Oracle Retail’s fit-for-purpose portfolio uniquely brings choice and can support agility at any scale. We provide retailers the ability to achieve exception-based retailing so that employees don’t have to search to work.
As fashion retailers look to reduce inventory and avoid excessive markdowns - forecasting precision - at the style and size level becomes critically important. However, given the speed at which retailers must make informed decisions, accurately forecasting sales at this level of granularity is difficult to manage, unless you apply data science techniques.
One possible forecasting approach is to forecast at the item level (either style or color), and then spread the forecast down to the item’s sizes. However, the spread-down approach requires predicting the fraction of sales that will occur for each size. This set of fractions is called the size profile of the item, and estimating the profile from the item’s historical sales is the size profile problem.
The Problem To Consider
Clothing customers may purchase a nearby size if their preferred size is out of stock, possibly inflating sales of other sizes. Retailers using Oracle Retail’s Size Profile science service assume that such substitution effects are small, and so are not worth the trouble to account for.
Not long ago, retail was an industry centered on the store and the transactions that occurred in it, and the chief marketing officer (CMO), if there even was one, was tasked with establishing and maintaining the integrity of the retailer’s brand. As retailers pivot to putting the customer at the center of their universe and aim to develop individualized connections, amplify customer advocates and turn loyalists into evangelists, the modern retail CMO’s role is stretched across the entire business.
In a new guidebook, we look at how pivoting to the customer experience expands the role of the CMO and how KPIs are evolving — from Customer Acquisition Cost to Customer Engagement Score. What follows are a few key takeaways to drive better brand engagement and loyalty.
The Retail CMO has More Responsibility — and More Power — than Ever Before
Now overseeing business functions spanning commerce, customer care, and even logistics, it’s only natural the role is no longer defined solely as Chief Marketing Officer. A CMO by any other name may face their own unique challenges:
Chief Data Officer: Call me when you need to put departmental and channel loyalties aside and take a cold, hard look at the numbers.
The Head of Retail: Call me when you’re tired of brick-and-mortar and ecommerce teams fighting over scraps for their channels.
Chief Customer Officer: Call me when an unsatisfied customer takes a shipping complaint to social media, as all your followers watch.
What’s Next on the Horizon for Retail CMOs?
As the voice of the customer becomes increasingly influential on brand perception and loyalty, and the conversation between brands and consumers expands from B2B to B2I2C (The Loyalty Divide), the CMO role will extend to all points of interaction. Here are three interaction points that should be on the CMO’s radar:
The Point of Service: with the integration of data from commerce and customer loyalty, the POS is the primary opportunity to upsell consumers with advanced clienteling programs, and capture promotion redemption to understand promotion efficacy and predict next-best offer.
Order Management: when customers receive an offer, which can’t be redeemed because of inventory inaccuracies the marketing team is sunk. Opening up endless aisle in stores and online gives retailers the ability to satisfy customers at the point of intent. Further, optimizing the fulfillment of the items not only ensures customer satisfaction but also drives margin.
BOPIS Traffic: the fastest growing omnichannel journey, buy online pick up in store (BOPIS), can be a phenomenal channel for marketing to deliver personalized offers to a highly engaged audience.
Retail Marketing KPI Evolution: Moving from Next Practice to Best Practice
An old concept by a new name, key performance indicators (KPIs) bring clarity to the chaos and provide businesses with a high-level grasp of where they stand. The challenge is, with a myriad of responsibilities, and literally thousands of KPIs to consider, how do CMOs determine which KPIs really matter and when do you know it’s time to upgrade your dashboard?
Best Practice Customer Lifetime Value: Numeric forecast of customer profitability considering factors like Avg. Order Value, Repeat Purchases, Time Between Purchases, and Customer Cost.
Next Practice Customer Projected Lifetime Value: The projected total lifetime value of a customer, which is modeled by predicting the number/value of future purchases a customer will make and combining that with their purchase history.
Best Practice Customer RFM: A concatenation of three customer scores: Recency (R), Frequency (F), and Monetary (M), with each number having a range from 1 to 5. Customers who purchased recently, are frequent buyers, and spend a lot are assigned a score of 555.
Next Practice Customer Engagement Score: A composite customer score ranking their overall engagement with your business on a scale of 1 to 10, with 10 being the best score.
No longer centered on maintaining a brand, today’s CMOs focus on the customer and every surrounding factor. When the only constant is change, there’s no time for rigid systems, silos or departmental turf wars. No matter their title, retail CMOs, and marketing leaders face no easy task and need technology they can rely on to keep up.
One of the world’s largest apparel companies, boasting TOMMY HILFIGER and CALVIN KLEIN, invests in retail technology to support growth
PVH Asia Limited, a wholly owned subsidiary of PVH Corp. [NYSE: PVH], one of the world’s largest apparel companies, has selected Oracle Retail to modernize its customer experience and store technology. PVH owns iconic brands including CALVIN KLEIN, TOMMY HILFIGER, Van Heusen and IZOD. PVH Asia will implement Oracle Retail Xstore Point-of-Service and Oracle Retail Customer Engagement to connect with the next generation of consumers. The solution will be rolled out in stores across China, Hong Kong, Macau, Taiwan, Singapore, Malaysia, South Korea, and Japan.
“PVH continues to experience extraordinary growth. As we compete and grow across Asia, we wanted to ensure our technology partner understands and supports local business requirements of a modern customer experience,” said Eileen Mahoney, executive vice president, chief information officer, PVH Corp. “After a competitive evaluation, Oracle emerged as the best choice to support our business.”
“We are honored to partner with PVH Asia. We recognize that retailers need to deliver added value to win favor with the next generation shoppers,” said Mike Webster, senior vice president, and general manager, Oracle Retail. “With a 360 view of the consumer, we can help PVH empower associates and allow them to deliver relevant and local offers.”
About PVH Corp.
PVH is one of the most admired fashion and lifestyle companies in the world. We power brands that drive fashion forward – for good. Our brand portfolio includes the iconic CALVIN KLEIN, TOMMY HILFIGER, Van Heusen, IZOD, ARROW, Speedo*, Warner’s, Olga and Geoffrey Beene brands, as well as the digital-centric True & Co. intimates brand. We market a variety of goods under these and other nationally and internationally known owned and licensed brands. PVH has over 38,000 associates operating in over 40 countries and $9.7 billion in annual revenues. That’s the Power of Us. That’s the Power of PVH. *The Speedo brand is licensed for North America and the Caribbean in perpetuity from Speedo International Limited.
Oracle Retail Cross Talk 2019
We are honored to serve a growing community of retailers like PVH Asia. Please join us in Minneapolis, Minnesota to celebrate customer success and share best practices among retailers. Register today and join 200 retail executives at this exclusive forum.
Join our upcoming webcast as retailer Maui and Sons Chile discusses how they scaled operations, and can now easily add new sales channels.
Maui and Sons, now in over 100 countries, is a well-known global surf and skateboard apparel brand with a complex supply chain. When Maui and Sons' executives ran into obstacles scaling operations in Latin America, they decided to rethink their technology approach. After 40 years of success, and now with 10,000 size and color assortments per season, Maui and Sons decided it was time to ride a new wave to effectively document, automate and organize processes.
After a competitive assessment, Maui and Sons Chile chose to modernize with Oracle Retail Merchandising System and Oracle Warehouse Management Cloud. Oracle Database and Middleware solutions also support their retail foundation. This new operational wave helped Maui and Sons gain deep insights into its merchandising, to better serve its mission of selling high-valued brands for young lifestyle consumers across in-store and online channels.
Bringing in Oracle Retail, Maui and Sons established a foundation for future growth by streamlining inventory, adding new sales channels, and more effectively serving the needs of its customers.
Top Improvements Discussed on the Webcast Include:
Surpassed obstacles to scale operations
Enhanced connections with supplier, inventory, and stores
Ability to quickly add new sales channels
Accelerated customer value
More efficiently run a complex supply chain for product design and 100+ worldwide suppliers
If ever there was a doubt as to the value of footfall in a store, Kohl’s recent decision to accept Amazon returns at all its stores confirms its vote for more traffic regardless of intent, even returns. Upon announcing it will accept Amazon returns at all of its stores, Kohls’ stock price jumped by 12 percent.
There are many reasons for a consumer to engage (purchases, returns, services, repairs, bill payments, genius bar appointments), and infinite interaction points across the retailers’ website, physical store, call center, etc. The term “customer journey” has become so cliché and overused that to many the activities resulting from a particular journey may seem random, but absolutely the store traffic and other attributes of the journeys whose role it is to create “identifiable traffic” are very predictable and can be planned for. Further, the insight to be gleaned from this traffic is hugely valuable in planning future retail performance.
The value of journeys associated with identifiable traffic is twofold:
an opportunity to convert and sell and
moments are created that offer an ability to endear the retailers’ brand and serve customers that surround a store (Net Sales and net promoter score (NPS), being the two core KPIs).
The best news is that identifiable traffic derived by both “buy on-line pick up in store” (commonly categorized as BOP traffic) as well as “buy online and return in store” is highly predictable and can be forecasted with a high degree of accuracy. The following focuses on conversion of BOP traffic. NPS will be covered in a subsequent blog post.
Buy Online (Pick-up in Store) and (Return in Store) Create Predictable Traffic
BOP has become a popular “collect and receive” option as customers increasingly expect instant gratification associated with same day pick-up for shopping that occurs wherever and whenever. Take for example, Home Depot; circa 45 percent of online orders are picked up in their stores, according to Internet Retailer – this generates a high volume of in-store visits from known customers, and gives the retailer clarity into who is in their stores and when. Our most recent consumer research, The New Topography of Retail, found that 77 percent of consumers use BOP every day, several times a week or once a week. Most retailers should anticipate their percentage of BOP traffic will continue to grow, and peak during high volume periods especially during holiday trading.
Kohl’s has affirmed its confidence in the opportunity that returns’ journey traffic creates, and the traffic associated with returns is growing at an increasing pace across the industry. According to eMarketer, 75 percent of shoppers prefer to return online orders in-store. While this creates great pains for retailers on several levels, there is no mistaking that online returns to stores creates traffic. Traffic to be converted as well as on-line shoppers surrounding a store to be identified. With online sales’ growth, returns traffic is so important that retailers are beginning to identify a store’s role in location plans. In fact, some stores’ primary role is weighted more to customer satisfaction as a returns location than to its P&L performance (sales). This is one tactic to deal with inventory intake. With the right mindset and capabilities, retailers can turn this traffic into revenue.
Planning for and Converting Identifiable Traffic
Identifiable traffic is where the customer entering a store is identified. In the case of BOP, every transaction is identified: it is assigned an Order ID, and that Order ID has an attachment to a product or item. The Order ID is tied to the customer engagement record as well as “collect and receive instructions” for the order (aka pick up at store 123). On that Customer Engagement record is a trove of data about that customer. Not just PII which is somewhat irrelevant, but attribution of every purchase they have ever made as well as collect and receive preferences. You know their size, their buying behavior (regular price or first mark down), and can develop a deeper understanding of their preferences, tastes and begin to predict what offers will best resonate with them. The insight can then be used by the retailer to programmatically convert the traffic in the store with personalized offers. Offers intended to enhance the brand, save a sale or increase wallet share and affinity of the identifiable traffic.
As the retail industry continues to pivot to a healthier balance of qualitative customer management (net promoter score, for example) versus the sole focus of quantitative merchant (product lifecycle management) centricity of years ago, retail processes and best practices will continue to evolve, and “next practices” will emerge. The pace of the evolution and what’s possible in part will be determined by the mix of identified transactions as a percentage of total transactions. Retailers that have a higher percentage of identifiable transactions will be able to predict with higher precision what offers are most likely to land with their customers as well as are in a better position to create and forecast traffic.
To learn more about designing offers that increase the value and satisfaction for identifiable traffic, look out for part two of this blog post.
Notebook-based data science tools make it easier for retailers to turn their data into a powerful business asset
The competition in retail is fierce and great products alone are no longer enough. Whether shopping online or in person, customers want seamless, personalized shopping experiences. Helping retailers compete by making better use of their data, Oracle continues to weave significant artificial intelligence(AI) and machine learning capabilities into its Retail Insights and Science Suite.
With new features, such as notebook-based data science tools, retailers can quickly deploy new data science-driven solutions to further engage and delight customers across channels. As an example, a retailer can build machine learning models within their Oracle Retail solutions to extract insights from images, sense demand from social media, or re-balance inventory to maximize productivity.
“Notebook-based solutions offer open source without the hassles,” according to Forrester1. They leverage innovations in open source machine learning to enable data scientists to create models in their development languages of choice, such as Python or R. As such, they can speed new learnings that can both enhance the customer experience and bottom line results.
A leading Saudi Arabia pharmacy retailer, Nahdi Medical Company, applied these principles when they needed to create a new AI and machine learning model that could correlate customer engagement with marketing campaigns to identify and reward loyal customers.
“By taking the innovative predictive models provided by Oracle Retail Science Platform Cloud Service and coupling them with our analytics intellectual property, we’ll be able to understand and predict our guests’ behavior which will give us the opportunities to serve them better,” said Dr. Ayman Abdalazem, head of business intelligence and analytics, Nahdi Medical Company. “Selecting a cloud platform for data science has enabled us to quickly implement the solution while minimizing technical debt and accelerating the value we extract for Nahdi Medical Company.”
Standout Features of the Oracle Retail Insights and Science Suite
With the Retail Science and Insights Suite business leaders and data scientists can deliver faster decisions with greater precision and innovations that drive tangible results.
“Most machine learning projects fall short on delivering tangible business benefits. Not because the innovation is misaligned with a business objective but because it is difficult to operationalize innovation,” said Jeff Warren, vice president, Oracle Retail. “The Retail Science Platform delivers the standardization and controls that enterprises need to accelerate their new offerings and swiftly integrate them into their business workflows. With the addition of notebook-based tools, our solution is a force to be reckoned with in predictive analytics and machine learning for the retail industry.”
Customer Lifetime Value, RFM and Engagement Score are now available in the Retail Insights suite so that retailers can manage to essential, modern retail KPIs associated with acquiring and retaining customers.
Affinity Analysis enhancements that enable retailers to drill down into critical information and answer questions such as, “How do affinities for a particular store compare to the region?” and “What were the halo effects of a particular event?”
“Retailers all know they need advanced analytics and retail science to drive their business forward, but they don’t all have the luxury of hiring on a data science team,” said Marc Koehler, solution director, Oracle Retail. “We continue to enhance Oracle Retail Insights and Science Suite to provide retailers with packaged insights and science applications, including Customer Insights Cloud Service and Offer Optimization Cloud Service, as well as the innovation workbench so that they can leverage best of both worlds.”
From inventory to in-store service, Kamal Osman Jamjoom Group LLC supports double-digit growth with modern retail technology
Kamal Osman Jamjoom Group (“KOJ”) believes that trust is the secret to success with customers, staff and business partners. One of the most established retail groups in the Gulf region, KOJ operates more than 700 stores with nine brands across seven countries. To meet service level expectations and optimize goods coming from three distribution centers, KOJ needed a more unified view of operational data. By modernizing with Oracle Retail, KOJ was able to improve store operations and drive higher levels of customer satisfaction through reliable, accurate merchandise availability. Today, a real-time view into inventory data has resulted in stock accuracy levels averaging 99.99 percent for online and 98.5 percent for in-store.
“KOJ is responsible for our own highly successful brands and multiple well-regarded international brands, with high growth rates. With the complexity of managing multiple brands and regions we needed greater control over products and inventory to support and exceed customer service levels,” said Ian Halliwell, deputy chief executive officer, Kamal Osman Jamjoom. “By leveraging the Oracle Retail platform, we have gained efficiencies and confidence fueled by an enterprise view of demand and our ability to fulfill inventory requirements across locations and touchpoints.”
“Oracle continues to make significant investments in innovations that help retailers like KOJ keep pace with market and consumer expectations. By leveraging the integrated capabilities of Oracle Retail, KOJ can continue to grow its business and refine strategies to meet performance, growth and customer objectives,” said Mike Webster, Senior Vice President and General Manager, Oracle Retail.
Join us in Minneapolis to hear more stories like KOJ's. We are pleased to showcase over 25 retail brands on the program agenda. Register Today!
Banana Republic is latest Gap Inc. brand to go live with Oracle Retail cloud offerings
Following the success of Oracle’s Retail Cloud solutions at Intermix, Banana Republic is the latest Gap Inc. brand to go live on the solution. Banana Republic is a global apparel and accessories brand available online and in over 600 company-operated and franchise retail locations worldwide.
“To meet the evolving needs of our global customers and how they want to shop, we need to simplify and scale operations. By adopting the Oracle Retail Cloud Service, we can maintain a consistent and modern merchandising platform that drives greater productivity through automated best practices,” said Sally Gilligan, chief information officer, Gap Inc.
Gap Inc. partnered with Oracle to deploy Oracle Retail Merchandising Cloud Service and Oracle Retail Integration Cloud Service, powered by the Oracle Cloud Infrastructure, to drive operational agility and furnish the Banana Republic business teams with better intelligence.
For example, the combined solutions allow Banana Republic to synchronize merchandising operations from buying to inventory valuation. Moreover, daily tasks such as managing purchase orders and sales auditing are made more efficient and effective with the modern user interface that delivers exceptions and alerts to show buyers a path to resolution or items that require attention. With a single view of inventory, product data and transaction details, Banana Republic users have the data needed to do their jobs more effectively and easily.
“Oracle has long collaborated with Gap Inc. on their journey to the cloud and is honored to be part of this latest transition with Banana Republic,” said Mike Webster, senior vice president, and general manager, Oracle Retail. “The retail market is evolving faster than ever before, and Oracle’s cloud solutions are providing Gap Inc. and its brands the clarity and flexibility to shift with the demands of their business and customers.”
In addition to migrating complex retail and financial workloads to the cloud, Gap Inc. is also looking to seamlessly connect front-end and back-end functions by moving from a private cloud to Oracle Cloud Infrastructure leveraging various Oracle technologies, including Oracle Exadata Cloud Service and Java Cloud Service as foundation for a Retail Integration Hub and Oracle GoldenGate for real-time data replication.
Gap, Inc will speak at Cross Talk June 10-12th. Oracle Retail Cross Talk retail forum will bring together 200+ retail executives on June 10-12, 2019 in Minneapolis, MN. Our registration is filling up nicely. We already have over 130 retail executives from 12 countries coming together to share best practices and build relationships among our community. Retail executives and their teams gather together for 2.5 days followed by the CAB and some Oracle Retail User Group sessions. Gap, Inc. joins other retailers on the program including Estee Lauder, Bata, Maui & Sons, International Shoppes, James Avery, Best Buy and several others. View all the speakers and join us today!
Gartner reports that worldwide spending on digital commerce platform technology is projected to reach $8.544B by 2020 with 14 percent annual growth. Current conditions support the mounting pressures for ecommerce leaders to strengthen their digital commerce strategy:
Ecommerce is the primary retail growth engine expected to reach 15.1 percent of retail by 20221
81 percent of retail shoppers start their buying journey with online research2
71 percent of consumers report a fast, responsive online experience is important to their shopping experience3
Today’s ecommerce leaders are faced with these five top challenges:
Ecommerce IS Retail: Digital has become one with the physical retail environment and omnichannel is the driver merging these environments. Consumers are looking for convenience when buying a product, regardless of channel. Many retail executives are faced with the task of integrating their ecommerce units with their store units and treating ecommerce as part of the retail environment rather than a separate channel, or even a separate store. This means integration of services, capabilities, inventories, and data.
Capitalizing on Data: Speaking of data, the next challenge ecommerce is facing comes from the expansion of the ecommerce function to be part of a holistic brand solution rather than an autonomous side business. Leading retailers are working to build in efficiencies from ship from store, omnichannel solutions like BOPIS, and new KPIs beyond conversion rates and AOV. The retailer needs to capture and measure data in new ways – including in-store shopping data, loyalty data, etc. This means new data visualization, targeting, cross-digital/physical impact, and using this data to improve monetization in local stores.
Personalization at Scale: Without a doubt, personalization has been a key factor for retailers for several years. Developing the 1:1 relationship with the customer has been the holy grail for retailers. The Ecommerce VP continues to strengthen their tools and capabilities to reach this goal. Opportunities are opening where additional customer data can now be used to better understand the individual customer and personalize the customer experience through automated, smart algorithms. This means added commerce tools, new machine learning, and cross-application data sharing.
Worldwide Expansion: Over 1.8 billion users purchased products online in 2017.4 Countries like China, India, Indonesia, and Mexico continue to grow ecommerce faster than the US and the UK.5 For the ecommerce leader, this translates into localization of everything on the site, payments, and delivery. The laundry list is long for internationalization. This means addressing issues like taxes, currencies, cross-border transactions, talent, cross-border fulfillment, onsite language translation, local customs, privacy, and government regulations.
Mobile Influence: Mobile commerce transactions volume will eclipse desktop transactions this year.6 More important is the fact that the personal nature of the smartphone enables the consumer to pull out their phones while they’re shopping in the store engaging with products, pulling product information, and comparing prices or styles. New in-store capabilities such as self-checkout on mobile phones, mobile loyalty information, and mobile payment options like ApplePay are increasingly impacting sales. The retail digital manager has more on their plate to worry about than simply conversions. This means integration of back-end systems in real time, endless aisle capabilities, new payment gateways, and building and maintaining loyalty app functionality for potentially large customer bases.
Optimize Your Digital Commerce Strategy
Ecommerce sales are on course to deliver double-digit growth for years to come, reaching 17 percent of retail sales by 2022.7 But even more important is the pivotal role that every ecommerce experience plays in determining a customer’s next purchase, inclination to visit stores, and long-term loyalty to the brand. A future-proof digital commerce strategy that addresses today’s top challenges and meets retailers’ business goals is a must.
Delivering modern shopping experiences with yesterday's technology doesn’t work. Leverage Oracle’s breadth and depth in retail to put control in your hands to simplify your technology footprint, innovate faster, and deliver AI-driven experiences that drive engagement and loyalty wherever your shoppers are.
Speak to every customer with drag & drop, audience-specific content & promotions
Experiment & optimize with built-in A/B testing and lift analysis
Support Brand, Business Model, & International Expansion
Direct to consumer & wholesale with one platform
Deploy multiple brand & country sites with one platform
Support for over 35 global languages & 60 currencies
Open frameworks for pricing, promotions, payments, tax, & shipping
Capitalize on the Continued Rise of Mobile & Smart Devices
Speed time-to-market with 60+ mobile-first storefront widgets
Optimize experiences on any device with responsive & adaptive layouts
Streamline checkout with mobile payments framework for Apple Pay
Sell everywhere with API-first commerce-as-a-service to connect smart devices in headless & microservices architectures
Smart digital retail execs can address challenges with the right set of tools. Strong digital leadership in retail begins with knowing your destination and follows with having the right resources to take you there.
If you missed the John Lewis & Partners webcast, you'll want to catch the 'Single View of Inventory' webcast replay here. In this 45-minute session, Rachel Callan, Partner & Senior Strategy Manager and Susan Young, Partner & Head Of Merchandising share their journey of a large-scale implementation centered around Oracle Retail Merchandising System and Oracle Retail Pricing. They dive into how they streamlined processes to launch products online faster with greater product description accuracy, which will lower return rates and also share tips for other retailers that are considering making similar changes to their merchandising systems.
Why John Lewis & Partners Needed to Change
In addition to wanting to fix inconsistent processes, move away from unreliable data, and untangle the spaghetti of old legacy systems, John Lewis & Partners knew it was time to make a change to its foundation because:
Product stock was becoming harder to manage
Its supply chain was becoming increasingly expensive
Customers were changing the way they were shopping (now, 45% of John Lewis & Partner's sales come from online)
Changes the Project Team Delivered to the Business
John Lewis & Partners was able to streamline over 60 processes, engage with over 2,500 suppliers to get better product information and reduce 7,000 product attributes down to 2,000. The project has allowed them to deliver business benefits to many parts of the business including; buying teams, merchandising teams, online teams, and business support teams.
Retailer Tips - What Was Learned Along the Way
Finding the right vendors to work with should include reference visits to understand all journeys
When engaging all areas of the business in design, make sure you also discuss the complex areas to define all possible business and technology pain points
Don't underestimate the complexity of legacy integration and data migration
Recognize the positive contributions of team members throughout the project to create forward momentum
Standardize relationships with your suppliers by figuring out what you want to know and asking all of them for it in the same way
Put a data governance team in place to clean up bad and inconsistent data, and make sure you have a system and people focused on keeping it clean going forward
Key Project Outcomes
John Lewis & Partners is happy with the speed to launch that they gained with online products, which will lead to lower returns. Rachel Callan, Partner & Senior Strategy Manager at John Lewis & Partners said, "we can we get our products displayed on our website faster now with all the right information. The accuracy of the data that we are presenting online will lead to lower returns because our customers now have a clearer picture of the item they are buying."